Consumer Decision Model for a Service Industry Environment
Helen Strong
Consumer Decision Model (CDM) for a Service Industry Environment: Purpose
Consumer decisions are based on different factors in a service environment. This model is provided to remind the marketer that when they are exploring buying decisions in this arena, there is greater emphasis on personal interaction and experiences of service delivery. You cannot hold a service in your hand!
CDM for a Service Industry Environment: Structure and Description
Products are not tangible in such service industries as financial services, management consulting, and even provision of healthcare from your physician. Hence, consumers have a different frame of reference when evaluating the quality of the service. Kugytė and Šliburytė’s (2005) model illustrates that they will depend to a far greater extent on the recommendations of people that they trust, the image of the organization, and their own experience of the supplier. Satisfaction will emerge from the degree to which a service is perceived to have met their requirements.
Customer interaction with the supplier is far more immediate than that of a person purchasing a product. Therefore, customers are far more likely to request that a service be tailored to their needs.
In this environment, consumer perception of the reputation of the supplier, and their trust in the brand are important factors in the
Figure 13.1 Decision making in service industry
Source: Kugyte˙ and Šliburyte˙ 2005
consumers’ decision even to explore the possibility of purchasing a service from the supplier. They will judge the service on the basis of their interaction with the people supplying the service. In particular, to proceed from first contact to a sale, they need to feel comfortable (assured) during the entire sales, contracting, and delivery process.
The ability of the supplier to understand his or her customer’s needs and be counted on to provide the required service level is an important factor in the sales and marketing of services.
The model in Figure 13.1 is featured in Kugytė and Šliburytė’s (2005) article regarding the selection of service providers in an engineering environment.
CDM for a Service Industry Environment: Strategic Considerations
The core product of a service is the central expectation that the consumer has of the encounter. Hence it is critical to identify what makes up this product, and how consumers judge its value.
Since service quality is judged on the caliber of the people delivering the service, it is vital to ensure the skills and motivation levels of your staff. They will make the difference between a mediocre experience and WOW.
Delivery systems and processes need to be designed to operate at optimal speed and efficiency. This is even more important given the fact that generation Y is entering the marketplace with a vengeance.
Customers are sensitive to authentic treatment. Respect them. Listen to them, and care enough to mold your service to their needs. They will come to depend on you.
CDM for a Service Industry Environment: Implementation
Most of the discussion in the section Consumer Decision Model can be applied when considering this model. It is a different rendition of the relationship between the decision factors, selection, and experience of the service delivery. There are, however, some important differences in emphasis.
The researcher will generally use qualitative research (focus groups, in-depth interviews, and possibly observation) to establish the factors that are meaningful in the context of service delivery. These will then be quantified within the target market population to gain insight into the consumer decision drivers in the particular industry.
Particular attention will be given to the following.
Core Product
The researcher needs to uncover the essence of the service product and the way in which it gives satisfaction. If the consumers’ definition of the core product (benefits of the service) has been established, then the elements of the service design and required manner of delivery fall easily into place.
Personal Service
It is the consumer’s definition of service that matters. Hence it could be important to obtain the customers’ ranking of the elements of service according to their contribution to the overall rating of quality service. What attitudes and behaviors of the people providing the service are important?
System and Processes
An annual audit of internal processes is indicated to monitor the communication and work flow to evaluate how they affect the final delivery of the organization’s service. Where are the impediments? What aspects of the system impinge on the quality and value of the service?
Tangibility
The model emphasizes that products are not tangible within a service environment and the consumer can only evaluate the product indirectly through experience of the service and the way in which it is delivered. Some outcomes can be tangible, for example, software that operates in the way it has been specified.
In the absence of visible outcomes, the researcher needs to uncover what signals consumers will use to make the product real. Issues such as presentation of the company image, quality of the personnel, and their communication become important evaluation variables.
CDM for a Service Industry Environment: Conclusions
It is important for suppliers in a service industry to realize the differences that occur because of the nature of the product. They need to be conscious of what is likely to be a more personal relationship with the consumer, and to adjust their behavior accordingly. Many opportunities to gain knowledge about the target market occur throughout the service delivery process. Hence systems should be in place to make this aspect of information gathering an automatic procedure.
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