Customer decision-making is a cognitive or thinking activity that precedes the behavioral act of physically buying a product or using a service.
The nature of decision-making effort and its rigour is shaped by the customer’s analysis of the purchase situation and calculation of the probable risk to which a customer might be exposed if the purchase decision is made incorrectly.
There would be little or no need to exercise caution if there is no possibility of the customer getting exposed to undesirable consequences as a result of a purchase.
In other words, the nature of decision-making efforts is directly dependent on the importance the customer attaches to making a correct buying choice. It is this imperative that dedicates the customer’s involvement in decision-making.
When customers decide to buy a service to meet an unfilled need, they go through what is often a complex purchase process. This process has three separate stages:
1. Pre-purchase Stage: The decision to buy and use a service is made in the pre-purchase stage. Individual needs and expectations are very important here because they influence what alternatives customers will consider.
If the purchase is routine and relatively low risk, customers may move quickly to selecting and using a specific service provider.
But when more is at stake or service is about to be used for the first time, they may conduct an intensive information search (contrast how you approached the process of applying to college versus buying a pizza or a hamburger).
The next step is to identify potential suppliers and then weigh the benefits and risks of each option before making a final decision.
i. Problem Recognition: Problem or need recognition results a consumer recognizes a difference of sufficient magnitude between what is perceived as the desired state of affairs and what is the actual state of affairs, enough to arouse and activate the decision process.
The “actual state” refers to the way in which a need is already being met, and the “desired state” is the way a person would like for the need to be satisfied.
This process integrates many of the concepts that have been discussed earlier in the previous chapter.
For example, consumer information processing and the motivation process are highly relevant here. Consumers must become aware of the problem or need through the processing of information arising internally or externally. They then become motivated.
Thus, the process of problem recognition means that the consumer becomes aroused and activated to engage in some purposeful purchase-decision activity.
ii. Search for Information: Once a need is felt, a customer decides to purchase a product/service to fulfill his need.
In order to make the right product/service choice, a customer needs to search for information regarding the product/service that would fulfill his need.
Compared to the purchase of a good, the purchase of a service does not allow a customer to return the service to the service provider if the service fails to meet his expectations.
Further, since services embody more experience qualities than search qualities, information pertaining to services is not readily available.
iii. Pre-experience Evaluation: Consumer sets are extremely important for marketers who want to attempt to influence alternative evaluation.
Consumers evaluate goods and services based on the benefits offered to them; if the benefits of a brand are important to the consumer, the brand has a good chance of becoming part of the consumer’s retrieval set and, from there, becoming part of the consideration set from which a final selection is made.
To assess benefits offered by goods and services, consumers use a range of evaluative criteria. These are the means through which consumers compare product classes, brands, vendors, and so on.
As the consumer is engaged in search activity, he or she is also actively engaged in information evaluation.
Evaluation involves those activities undertaken by the consumer to appraise carefully, on the basis of certain criteria, alternative solutions to market-related problems.
The search process determines what the alternatives are, and in the evaluation process, they are compared so that the consumer is ready to make a decision.
2. Service Encounter: After deciding to purchase a specific service, customers experience one or more contacts with their chosen service provider.
The service encounter stage often begins with submitting an application, requesting a reservation, or placing an order.
Contacts may take the form of personal exchanges between customers and service employees or impersonal interactions with machines or computers.
In high-contact services, such as restaurants, healthcare, hotels, and public transportation, customers may become actively involved in one or more service processes.
Often, they experience a variety of elements during service delivery, each of which may provide clues to service quality.
The term “service encounter” has attained widespread use in marketing speeches, articles, and research in a few short years.
Types of Service Encounter
Three types of encounters can be differentiated. These are:
1. Remote Encounters: Services have been initially considered to be the performance of actions involving direct interaction between the provider and the customer.
But now, with the advent of new technologies, the service exchange is also getting intermediated with the application of technologies.
Remote encounters occur when a customer interacts with the service without any direct human contact.
The service encounter is made indirect by the use of some kind of media like a machine as it is done when a bank delivers its services through an ATM or a retailer vends merchandise through an automatic vending machine.
Banks, railways, airways, and courier firms have shifted many of their services from being based on direct encounters to remote encounters based. This is done through the use of telecommunication and the internet.
For example, railway tickets can be booked with the help of a computer through sites. Customers can deposit and withdraw money through electronic transfer mechanisms.
Many times firms encounter customers by sending leaflets, brochures, and other printed information by using mail. These encounters also fall in this category.
Remote encounters are much easier to control because processes and systems or physical objects can be tested and engineered for precise performance.
These encounters are technically driven; therefore, the quality perceptions are shaped by the technical adequacy of the process or object.
2. Phone Encounter or Indirect Personal: This category very precisely defines the encounter to happen using a phone.
The customer and the provider interact, but their interactions are indirect by the telephonic connection.
Unlike the remote encounter, phone encounters involve personal interaction that is two people encounter each other but not face-to-face.
The use of the telephone is fast emerging as a dominant method of service delivery.
For example, banks, insurance companies, matrimonial services, information bureaus, and friendship firms use telephone encounters to sell their services.
This encounter also occurs when some exceptions occur in the use of a physical product or when a customer contacts a service firm over the phone.
Telebanking services and credit card inquiries involve phone encounters, and telephone encounters contain a greater potential for variability.
Besides the dimensions associated with getting connected, such as ease and availability, in these encounters, the customer interacts with some employee.
As the encounter becomes personal, the interpersonal dimensions associated with the interface assume importance.
Though the customer tends to be physically away from the firm, still he or she can form an impression about the organization on the basis of the quality of interactions.
Factors such as the tone of voice, employee knowledge, and effectiveness and efficiency in handling the customer affect the customer’s perception of service quality.
The quality of the telephone system and the technical competence and interactional skills of service providers determine the customer perceptions of service quality.
3. Direct Face-to-Face: As the category name suggests, in these types of encounters, the provider and the customer interact face-to-face.
Services like beauty treatment, surgery, amusement parks, and conventional university education require customers to directly interact with the providers.
Direct face-to-face encounters involve many complications. These encounters often happen in a physical setting. This adds up more dimensions to the interface.
Consider a service consumption experience with an airline. The quality is judged not only on the basis of the technical performance but also in terms of travel, and a host of factors go in quality assessment.
The animated part of the service experience deals with the interpersonal aspects of the exchange in terms of demeanor, attitude, service orientation, courtesy, and friendliness.
The inanimate encounters may take place between the other parts of the service system.
3. Post-purchase Stage: During the post-purchase stage, customers continue a process they began in the service encounter stage — evaluating service quality and their satisfaction/ dissatisfaction with the service experience.
The outcome of this process will affect their future intentions, such as whether or not to remain loyal to the provider that delivered service and whether to pass on positive or negative recommendations to family members and other associates.
After purchasing and using a product or service, the customer evaluates it by comparing its performance with his expectations. A customer is satisfied when the product or service meets or exceeds his expectations.
A satisfied customer becomes brand loyal, brings in repeat business, and gives positive feedback to others about the product or service.
It costs a company much more to attract new customers than to retain them. Therefore, companies today focus also on retaining old customers apart from attracting new customers.
In the context of attracting and retaining buyers, post-purchase evaluation is the connection between the buying process and the development of long-term customer relationships.
Marketers must closely follow consumers’ responses during this stage to monitor the product’s performance and its ability to meet consumers’ expectations.
In the post-purchase stage, buyers will experience one of these four outcomes:
- Delight: The product’s performance greatly exceeds the buyer’s expectations.
- Satisfaction: The product’s performance matches the buyer’s expectation.
- Dissatisfaction: The product’s performance falls short of the buyer’s expectations.
- Cognitive Dissonance (Post-Purchase Doubt): The buyer is unsure of the product performance relative to his or her expectations.