Marketing Research in

Service Industry
Marketing Research and
Management
– Functional roles of Marketing Research
1. Descriptive Role
2. Diagnostic function
3. Predictive function
Listening to customer
through social media
– DIGITAL DETECTIVES
They hunt vigorously through social media for consumer comments
and complaints. They monitor blogs, twitter forums, facebook –
everywhere their customers might be talking about them.
When they find a complaint, they immediately send the response,
this provides rapid response to the problem.
Not all companies
pay attention to
social media, and
this failure can hurt
them
Market Research Process

DEFINE THE
PROBLEM AND DEVELOP THE COLLECT THE
RESEARCH RESEARCH PLAN INFORMATION
OBJECTIVES

ANALYZE THE PRESENT THE

MAKE THE DECISION
INFORMATION FINDINGS
To discover customer requirements or expectations for service

To monitor and track service performance

To assess gaps between customer expectations and perceptions Research

Objectives for
To identify dissatisfied customers, so that service recovery can be attempted
services
To determine customer expectations for a new service

To monitor changing customer expectations in industry

To forecast future expectations of customers

 Develop the Research Plan

DATA SOURCES RESEARCH RESEARCH SAMPLING PLAN CONTACT METHOD

APPROACHES INSTRUMENTS
Primary and Secondary Observational research, Questionnaires and Sampling Unit, sample size, Mail, Telephone, Personal,
Focus group research, Survey Qualitative measures sampling procedure online
research, Behavioral research

Prof. Roshni Tijoriwala

When should a service firm not conduct
market research?

If the decision related

to service has already Lack of clear objectives
been taken

If sample does not

Data collected is not
represent the desired
put much to use
population.
Segmentation, Targeting
and Positioning
Segmentation

Act of dissecting the marketplace into submarkets that require

different marketing mixes

Targeting

Process of reviewing market segments and deciding which

one(s) to pursue

Positioning

Establishing a differentiating image for a product or service in

relation to its competition
Market – All consumers are not alike because they have different
needs, desires, wants, background, educational levels
segmentation and experiences.
– The process of dividing a market into distinct subsets
(segments) of consumers with common needs or
characteristics and selecting one or more to target with
a distinct marketing mix
STP Process
 Bases for Segmenting Consumer
Markets
Segmentation bases, or variables, which are characteristics of individuals,
groups, or organizations, to divide a total market into segments.

Demographic
Geographic segmentation
segmentation

Psychographic
Behavioral segmentation
segmentation
Geographic Segmentation
Demographic Segmentation

Age & life-

Life stage
cycle stage

Race & Gender

culture

Generation Income
 Family Life Cycle
d
Hon
ey moo Parenthoo
ne hood
rs arent
Post-p Dissolution
ho od
r
c helo
B a
Psychographic

– Social Class
– Lifestyle
– Personality
Behavioral Segmentation

Occasions User status

Attitude Usage rate

Buyer-
Loyalty status readiness
stage
– Occasions: Ex. Air Travel is triggered by occasions related to business,
vacation, or family.
– User Status:
Non Users
Ex-users
Potential Users
First time Users
Regular Users
– Usage Rate Light, Medium, Heavy products users
Usage rate segmentation

– Heavy, Medium and Light Users

– About 25% of all those who drink beer account for 75% of all beer
consumed. Therefore, most companies direct their advertising
campaigns to heavy users rather than spending money trying to
attract medium or light users. This also explains the successful
targeting of light beer to heavy drinkers under the positioning that
it is ‘ less filling’ ( and thus can be consumed in larger quantities)
than regular beer.
– Buyer-Readiness Stage:

Unaware of the product

Some are aware

Some are Informed

Some are Interested

Some Desire the product

Some Intend to buy

– Loyalty Status

1. Hard core Loyal

2. Split Loyal

3. Shifting Loyal

4. Switchers
– Geographic Segmentations:
– Countries: India, Gulf Countries, US and South Asian Region including Pakistan.
– Regions: Metro Cities, Tier 1,2,3 cities and Villages.
– Gender: Male and Female
– Income Group: Lower to Upper Middle class
– Targeting:
– Children, Teenagers and Young Adults
– Families
– Positioning:
– Kurkure is positioned as a fun and quirky snack that is consumed by both genders irrespective age.
– This can be seen as the taglines used are “ Is kahani mein bhi kurkure hona chahiye” , “Kurkure Family” and
“Tedha Hai Par Mera Hai “
Targeting

Undifferentiated targeting
Differentiated targeting
Concentrated targeting
Positioning
What is Positioning?

– Positioning is the act of designing the company’s offering and image to occupy
distinctive place in the minds of the target market.
•1.Points of Difference

• Points of difference are attributes/ benefits that

consumers strongly associate with a brand/product,
positively evaluate, and believe that they could not find
to the same extent with a competitive brand/product.

• Points of difference are usually in line with the Unique

Selling Proposition and are critical in defining the
competitive advantage of your products.

Eg. Fast-food chain Subway offers healthier meals than

other quick-serve restaurants because its sandwiches have
fewer grams of fat
•2.Points of Parity

• Associations that are not necessarily unique to the brand but

may be shared with other brands.

• While POPs may usually not be the reason to choose a brand,

their absence can certainly be a reason to drop a brand.

Category point of parity  Competitive point of parity is

means that the brand offers
necessary but not necessarily
sufficient category features.
Eg. A bank will not be suitable,
for example, unless it offers
adequate ATM service.
designed to negate a competitor’s
point of difference.
Eg. Lifebuoy soap will establish
competitive POP with Dettol soap
by claiming that it has germ
killing qualities and vice versa.
Consumer Decision Making
Customer Decision Making: Pre-purchase Stage
The Three-Stage Model of
Service Consumption

Service Encounter Stage

Post-encounter Stage
 Key Concepts
1. Pre-Purchase Stage Need Arousal
Awareness Of Need
Information Search
• Clarify Needs Evoked Set
• Explore Solutions
• Identify alternative service Products and Service Suppliers
Evaluation Of Alternatives: Search, experience and
credence attributes
• Review Supplier Information Perceived Risk
(e.g., advertising, brochures, websites etc.)
• Review information from third parties Formation Of Expectation
(e.g., published Reviews, ratings, comments on web, blogs,  Desired Service Level
complaints to public agencies, satisfaction ratings, awards) Predicted Service Level
• Discuss Options with Service Personnel Adequate Service Level
• Get Advice and feedback from third party advisors, customers Zone of Tolerance

Make Decision on service purchase and often make reservation

Pre-purchase Stage - Overview

Pre-purchase Stage •Customers seek solutions to aroused

needs
•Evaluating a service may be difficult
•Uncertainty about outcomes Increases
• perceived risk
Service Encounter •What risk reduction strategies can
Stage
• service suppliers
develop?
•Understanding customers’ service
•expectations
Post-encounter Stage •Components of customer expectations
•Making a service purchase decision
Need Arousal
– Decision to buy or use a service is triggered by need arousal

– Triggers of need:
– Unconscious minds (e.g., personal identity and aspirations)
– Physical conditions (e.g., hunger )
– External sources (e.g., a service firm’s marketing activities)

– Consumers are then motivated to find a solution for their need

Courtesy of Masterfile Corporation

Information Search
– Need arousal leads to attempts to find a solution

– Evoked set – a set of products and brands that a consumer considers during the
decision-making process – that is derived from past experiences or external sources

– Alternatives then need to be evaluated before a final decision is made

Information search

Clarifying between the 2 options

Explore more solutions

or
Evaluating Alternatives – Service Attributes

– Search attributes help customers evaluate a product before purchase

– E.g., type of food, location, type of restaurant and price

– Experience attributes cannot be evaluated before purchase

– The consumer will not know how much s/he will enjoy the food, the service, and the
atmosphere until the actual experience
– Credence attributes are those that customers find impossible to evaluate
confidently even after purchase and consumption
– E.g., hygiene conditions of the kitchen and the healthiness of the cooking ingredients
 How Product Attributes Affect
Ease of Evaluation

Most Goods Most Services

Easy Difficult
To Evaluate To evaluate

Clothing Restaurant Meals Computer Repair

Chair Lawn Fertilizer Education

Motor Vehicle Haircut Legal Services

Foods Entertainment Complex Surgery

High In High In High In

Search Experience Credence
Attributes Attributes Attributes

Source: Adapted from Valarie A. Zeithaml , “How Consumer Evaluation Processes Differ Between Goods & Services,” in J.H. Donelly and W. R. George, Marketing of
Services (Chicago: American Marketing Association, 1981)
Type of Risk
Functional – unsatisfactory performance outcomes
Financial – monetary loss, unexpected extra costs
Temporal – wasted time, delays leading to problems
Physical – personal injury, damage to possessions
Examples Of Customer Concerns
Will this training course give me the skills I need to get a
better job?
Will the dry cleaner be able to remove the stains from
the jacket
Will I lose money if I make the investment
recommended by my stock-broker?
Will repairing my car cost more than the original
estimate
Will I incur a lot of unanticipated expenses if I go on this
vacation?
Will service at this restaurant be so slow that I will be
late for my afternoon meeting?
Will the renovations to our bathroom be completed
before our friends come to stay with us
Will I get hurt if I go skiing at this resort?
Will I fall sick if I travel abroad on vacation?
Psychological – fears and negative emotions
Social – how others may think and react
Sensory – unwanted impact on any of five
senses
How can I be sure that this aircraft will not
crash?
Will the doctor’s diagnosis upset me?
What will my friends think of me if they
learnt that I stayed at this cheap motel?
Will my relatives approve of the restaurant I
have chosen for the family reunion dinner?
 Will I get the view of the parking lot rather
than the beach from my restaurant table?
Will the hotel bed be uncomfortable?
Will I be kept awake by noise from the
guests in the room next door?
Will my room smell of stale cigarette
smoke?
Will the coffee at breakfast taste disgusting?
Strategic Responses to Managing Customer Perceptions of Risk

Free trial (for

services with high Advertise (helps to
Display credentials
experience visualize)
attributes)

Use evidence Encourage

Offer Service and
management (e.g., customers to
money back
furnishing, preview website,
guarantees
equipment etc.) video or brochures

Give customers
Encourage visit to
online access about
service facilities
order status
Factors Influencing Customer
Expectations of Service

Source: Adapted from Valarie A. Zeithaml, Leonard A. Berry, and A. Parasuraman, “The Nature and
Determinants of Customer Expectations of Service,” Journal of the Academy of Marketing Science 21,
Zone of Tolerance

– Consider a bank customer who whishes to cash a cheque in 3 minutes (Desired

level)
– In the past, customers have waited up to 10 minutes (Adequate level)
– The range between 3 minutes to 10 minutes is Range of Tolerance
– Service time below 3 minutes will thrill the customers
– Service time above 3 minutes will annoy customers.
Components of Customer Expectations

Desired Service Level

• wished-for level of service quality that customer believes can and should be
delivered

Adequate Service Level

• minimum acceptable level of service

Predicted Service Level

• service level that customer believes firm will actually deliver

Zone of Tolerance
• Acceptable range of variations in service delivery
Purchase Decision

– Purchase Decision: Possible alternatives are compared and evaluated, whereby the
best option is selected

– Once the customer identify the perceived risk with each offering and developed their
desired, adequate and predicted service level expectation- they are ready to select
best one.

– After making a decision, the consumer moves into the service encounter stage
Service Encounter Stage
 Service Encounter Stage

Key Concepts

Service Encounter Stage Moments of Truth

Service Encounters
Request service from chosen supplier or Servuction System
initiate self-services Role and script theories
Theatre as a metaphor
Service Delivery by Personnel or self-
service
Service Encounter Stage - Overview

Pre-purchase Stage ● Service encounters range from high-

to low-contact
● Understanding the servuction
system

Service Encounter ● Theater as a metaphor for service

Stage delivery: An integrative perspective
 Service facilities

 Personnel

 Role and script theories

Post-encounter Stage
Service Encounter Stage
– Service encounter – a period of time during which a customer interacts directly with
the service provider
– Might be brief or extend over a period of time (e.g., a phone call or visit to the hospital)

– Models and frameworks:

1. “Moments of Truth” – importance of managing touch points
2. High/low contact model – extent and nature of contact points
3. Servuction model – variations of interactions
4. Theater metaphor – “staging” service performances
Moments of Truth

– We could say that the perceived quality is realized at the moment of

truth, when the service provider and the service customer confront one
another in arena.
– This interaction can leave a lasting positive or negative impression on a
customer.
– Moments of truth in a hotel, for example, will undoubtedly include (but
not be limited to) booking the room, check-in, check-out, dinner
reservations, dinner ordering, dinner presentation, eating (quality and
quantity of food) and laundry receipt.
Service Encounters Range
from High-Contact to Low-
Contact
– Service involve different levels of contact with service operators.
– Some of these encounters can be very brief and may consist of a few steps,
such as when a customer calls a customer contact centre.
– Others may extend over a longer time frame and involve multiple interactions
of varying degrees of complexity.
– For example, a visit to a theme park might last all day ; a visit to a hospital
might last several days.
Service Encounters Range from High-Contact to Low-
Contact
 Distinctions between High-Contact
and Low-Contact Services
High-contact Service :
 It entails a interaction throughout service delivery between customers and
the organization.
 They enter a service “factory”- something that rarely happens in a
manufacturing environment.
 A hospital is a health treatment factory, an airplane is a flying transportation
factory, an airplane is a flying transportation factory, and a restaurant is a
food service factory.
 Service industries focus on processing people rather than intimate objects,
the marketing challenge is to make the experience appealing for customers in
terms of both the physical environment and their interactions with service
personnel.
Distinctions between High-Contact
and Low-Contact Services
Low-contact Services:
 It involves little physical contact between customers and
service providers..
 The contact takes place through the medium of
electronic or physical distribution channels.
 For example, services by telephone, E-mail and websites.
 Service Encounter Stage
• High Contact • Low Contact
Service Service
• Customer’s exposure takes on
• Little, if any physical contact
a physical and tangible nature
between customer and service
provider
The Servuction Model (Hoffman
and Bateson)
– A servuction model is often used in service marketing to describe
the close involvement of customers in the service production and
experience. It is an amalgamation of two words - services and
production 
–  It is important because of the ‘Inseparability’ attribute of a service
i.e. the production and consumption of a service cannot be
separated from each other. 
 The Servuction System

Source: Adapted and expanded from an original concept by Eric Langeard and Pierre
Eiglier
– The invisible factors considered in a servuction model include the things that
happen within the organization that the consumer does not necessarily see, but
affects their experience. These may include company policies, rules and
guidelines, or a company’s core values.
– The visible factors include the environment, the service providers, and other
consumers. Very good examples of these would be the way a physical store is
designed and kept organized. Another example would be the way a brand’s
frontliners talk to their potential clients.
– Visible part consist of 3 parts:
1. Service scape (Inanimate Environment): It refers to the use of physical evidence
to design service environments. It consists of ambient conditions such as
music, inanimate objects that assist the firm in
completing tasks, such as furnishing and business equipment. All non-living
features present during service encounter.
2. Contact Personnel : Employees other than primary providers that interact with
each other.
Service Provider : Primary provider of core service, such as dentist, physician,
or instructor
3. Other customers: Consumption of services are called as “shared experiences”
since they often occur in presence of other customers.
Theater as a Metaphor for
Service Delivery

“All the world’s a stage and all the men

and women merely players. They have
their exits and their entrances and each
man in his time plays many parts.”

William Shakespeare
As You Like It
– At Disney world the delivery of
service is conceived as drama.
Theatrical Metaphor:
an Integrative Perspective

Good metaphor as service delivery is a series of events that customers experience as a

performance

Service facilities Personnel

• Stage on which drama • Front stage personnel are
unfolds like members of a cast
• This may change from one • Backstage personnel are
act to another support production team

Roles Scripts
• Like actors, employees • Specifies the sequences of
have roles to play and behavior for customers and
behave in specific ways employees
Service facilities

– It is a stage on which drama unfolds.

– E.g., When airline passengers move from the entrance to the terminal to the
check-in stations and then on the boarding gate and finally step inside the
aircraft.
Personnel

– The front-stage personnel are like members of a cast, playing roles as actors in
a drama, and supported by back-stage production team.
– In some instances, service personnel are expected to wear special costumes
when on stage (e.g., uniforms worn by hotel doormen)
 Role Theory

– Like actors, employees have roles to play and behave in specific ways.
– Employees must perform their roles with reference to customer expectations.
– Roles are combinations of social cues that guide and direct behavior in a given setting.
– For example, the role of a hostess in a restaurant is to acknowledge and greet customers, find
out how many people are in their group, and then lead them to a table where they will eat.
 Performance

Sincere Cynical
Performance Performance

It occurs when an actor

It occurs when an actor views a performance only
becomes one with the role as a means to an end, such
that he/she is playing as getting paid for doing
the job
– The success of any service performance depend on how well the role is
performed by the service actor.
– Service employees need to perform their roles according to expectations of
customer, if they do not, the customer may be frustrated or disappointed.
Script Theory

– Much like a movie script, a service script satisfies the sequences of behavior
that employees and customers are expected to learn and follow during service
delivery.
– Employees receive formal training and customers learn scripts through
experience, communication with others, and designed communications and
education.
– Many service dramas are tightly scripted ( consider the formal style of service
in some upscale restaurant settings), which reduces variability and ensures
uniform quality.
– However, not all services involve tightly scripted performances – designers,
educators and consultants.
Patient Receptionist Dental hygienist

1. Phone or appointment
2. Confirm needs and set date
3. Arrive at dental office
4. Greet patient, verify purpose;
direct to waiting room, notify
hygienist of arrival.

5. Review notes on patient

6. Seat in waiting room 7.Greet patient and lead way to treatment room

8. Enter In room and seat in dental 9. Verify medical and dental history, ask about any
chair issues since previous visit.

11. Place protective cover over patient’s clothes

10. Respond to hygienist’s questions 12. Lower dental chair, put on protective face mask,
gloves and glasses
13. Inspect patient’s teeth
14. Place suction device in patient’s mouth
15. Use high-speed equipment and hand tools
16. Remove suction device, complete cleaning
process
17. Raise chair to sitting position ; ask patient to
rinse.
Patient Receptionist Dental hygienist
18. Rinse mouth
19. Remove and dispose off mask and
gloves, remove glasses
20. Complete notes on treatment; return
the patient’s file to receptionist
21. Remove cover from patients
22. Give patient free tooth-brush, offer
advice on personal dental care for future

24. Thank patient and say goodbye

23. Rise from chair
25. Leave treatment room
26. Greet patient; confirm treatment
received, present bill
27. Pay bill
28. Give receipt, agree on date for
next appointment, document agree-
29. Take appointment card on date
30. Thank patient and say good bye
31. Leave dental office
 Role and Script theory complement
each other
Professor and Student Roles:

Role of Professor Role of Student

Deliver a well-structured lecture Come to class prepared and on time

Focusing on the key topics assigned Listen attentively
for that day Participate in discussions
Making them interesting Not disrupt in the class
Engaging students in discussion
Script:
 Students should arrive at the lecture hall before class starts
 Select a seat
 Sit down
 Open their notes
 Professor enters
 Turns on the laptops and LCD Projector
 Greets the class
 Makes any preliminary announcements needed
 Start the class
Post-Encounter Stage
Post-purchase Stage - Overview

Pre-purchase Stage

● Evaluation of service
performance
Service Encounter
Stage
● Future intentions

Post-encounter Stage
Customer Satisfaction with
Service Experience

– Satisfaction: attitude-like judgment following a service purchase or series of service

interactions
– Whereby customers have expectations prior to consumption, observe service
performance, compare it to expectations

– Satisfaction judgments are based on this comparison

– Positive disconfirmation (better)
– Confirmation (same)
– Negative disconfirmation (worse)
Customer Delight:
Going Beyond Satisfaction

– Research shows that delight is a function of three components

– Unexpectedly high levels of performance
– Arousal (e.g., surprise, excitement)
– Positive affect (e.g., pleasure, joy, or happiness)

– Strategic links exist between customer satisfaction and corporate performance

– By creating more value for customers (increased satisfaction), the firm creates more value
for the owners
 Summary
• Key Steps • Customers face perceived risks
1. Need arousal which marketers should reduce
Pre-purchase 2. Information search with some strategic responses
Stage 3. Evaluation of alternative
solutions • Zone of tolerance: Adequate to
4. Purchase decision desired. Dissatisfaction if service
level falls below adequate level.

• Moments of Truth: importance of • Servuction model – variations of

Service Encounter effectively managing touch points interactions
Stage
• High/low contact service model – • Theater metaphor – “staging”
understanding the extent and service performances
nature of contact points

• In evaluating service performance, • Unexpectedly high levels of

Post-encounter customers can have expectations performance, arousal, and
positively disconfirmed, positive affect are likely to lead
Stage confirmed, or negatively to delight
disconfirmed
 Thank You 

Prof. Roshni Tijoriwala