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Unformatted text preview: A Framework for Analyzing Customer Expectations within Service Science Yen-Hao Hsieh, Department of Management Information Systems, National Chengchi University, No. 64, Sec 2, ZhiNan Rd., Wenshan Distric, Taipei City 116, Taiwan ROC [email protected] Yi-Syuan Chen, Department of Management Information Systems, National Chengchi University, No. 64, Sec 2, ZhiNan Rd., Wenshan Distric, Taipei City 116, Taiwan ROC [email protected] Yu-Ting Lin, Department of Management Information Systems, National Chengchi University, No. 64, Sec 2, ZhiNan Rd., Wenshan Distric, Taipei City 116, Taiwan ROC [email protected] Hsiao-Chen Liu, Department of Management Information Systems, National Chengchi University, No. 64, Sec 2, ZhiNan Rd., Wenshan Distric, Taipei City 116, Taiwan ROC [email protected] Ruei-Lin Kuo, Department of Management Information Systems, National Chengchi University, No. 64, Sec 2, ZhiNan Rd., Wenshan Distric, Taipei City 116, Taiwan ROC [email protected] Soe-Tysr Yuan, Department of Management Information Systems, National Chengchi University, No. 64, Sec 2, ZhiNan Rd., Wenshan Distric, Taipei City 116, Taiwan ROC [email protected] ABSTRACT Understanding customer expectations is an important and essential issue in the field of service science. For instance, what factors would particularly affect the desired service level and the adequate service level of customer expectations? How can producers fulfill the variable needs for customer satisfaction? Hence, this study based on the domain knowledge of expectations is to propose a framework which aids in producing the service tactics for service providers. Our research aims to fit in different industries and leads the variety of providers to a better course of customer expectation management. This study employs application scenarios focusing on product-based service industries in order to demonstrate the utility of the framework proposed. Keywords: customer expectation, service encounter, zone of tolerance. INTRODUCTION Nowadays, businesses begin to understand the importance of the relevance between customer satisfaction and customer expectations in service encounters. Furthermore, service science that intends businesses to have efficient services via IT is a new development academic field recently. Understanding what customers expect, what factors influence customer expectation and how producers can fulfill the variable needs for customer satisfaction are becoming important issues in service science. There were researchers exploring the issues about customer expectation and the factors influencing the customer expectation so as to realize the reasons that would result in the sweat spots or fail points of the services. However, customer expectations are multifaceted and capricious, and thus it has yet to obtain a clear course of actions about how to practice services in terms of the states of customer expectation Since the last thing service providers would like to do is to disregard the customer expectations, it is necessary to develop a framework that can provide service providers with the development guidance on their operational strategies to deliver exactly what they should serve in accord with the fluctuations of customer expectations. In other words, there is a strong need of explicit methods for providers to utilize the existing findings for establishing strategies of service operation that can facilitate their business in accelerating the degree of the customer satisfaction. Previous studies have provided a concrete conceptual model of expectation. Theories explicating the nature of expectations, such as the zone of tolerance, elicited arguments about the factors affecting the size and the position of the zone (i.e., determinants of expectation). However, even then it was still a tough task to deliver the services matching right to various customer expectations. Service providers consequently must find a way to develop their operational strategies (so-called tactics) flexible enough to satisfy each customer without violating the service strategy (namely, the goal of business). This study based on the knowledge of expectations previously developed aims to propose a new framework that can aid in developing the service tactics for service providers to get out of the dilemma. For the purpose of assisting in the tactics of business operations in correspondence with customer expectations, it’s important to understand that customers engage themselves in the process of service production and delivery (i.e., service encounters). Customer participation in service encounters makes service tactics that are variously formed so that producers can develop particular a service episode (aiming at an individual customer) when delivering the service. Herewith, we define service tactics as the combination of customer efforts and producer efforts (i.e., continuity of co-production). Through manipulating the expectations (by engineering the factors which influence the expectations), businesses can then gain the capability of providing services swinging with customer expectations accordingly (or vice versa) and then reach an all-win situation (what is so called eco-efficiency). Generally, our research aims to fit in different industries and leads the variety of providers to a better course of developing the service episodes. Nevertheless, in the paper we will focus on service episode scenarios for product-based service industries. These scenarios will be demonstrated by applying the framework we propos. The rest of this paper is organized as follow. Section 2 introduces the theoretical background on customer expectation. Section 3 presents our analysis framework. The last section concludes the research and gives directions for future studies. LITERATURE REVIEW Service Encounter Satisfaction Model James L. Walker (1995) proposed that the conceptualized service encounter satisfaction model which is divided into three separate stages of disconfirmation. This model considers “how zone of tolerance” and core and peripheral service performance influence customer satisfaction. In the first stage evaluation, the customer encounters the peripheral service, before he/she consumes the core service. The appearance of a physical evidence of services plays a critical role on the consumers’ willingness. Peripheral service performance is a vital part of the total service offering. In the second stage evaluation, the core service is more anticipated by the consumer. Levitt (1983) and Hill (1986) argued that service consumers expect the core aspect to be paramount and marketers must understand that precluding dissatisfaction (with the core service) is a prerequisite for satisfying customers. Czepiel et al. (1985) suggested that only small deficiencies in the core service performance can be overcome. The conceptualized service encounter satisfaction model separates the second stage from the first stage and third stage evaluation. In the third stage, it’s for the post-core-service delivery interaction; it’s also a peripheral component in the overall offering service. McGill and Iacobucci (1992) also demonstrated that pre-consumption and post-consumption comparison standards are different. Bitner et al. (1990) found that it was not necessarily the failure of the core service alone that led to dissatisfaction, but it was the employee’s response to that failure. In this stage, service provider can save the dissatisfying core service to satisfied one through doing the effort. The third stage evaluation can influence the overall service encounter evaluation. In the overall encounter evaluation, it is a function of the three separate evaluation stages, and it’s the final evaluation to define the overall service encounter is satisfaction, dissatisfaction or neutrality. Service Encounter Triad Active participation of the customer in the service production process is one distinctive feature of services. The service encounter means that a moment of truth occurs during every customer-employee interaction. The services encounter triad catches the relationships among in the service which three parties involved and shows possible source of conflict (as shown in Fig. 1). In order to control service delivery, the contact personnel fallow normal rules and procedures, which are made by service providers, to restrict contact personnel’s autonomy and judgment while serving customers. However, customers could feel unsatisfied because of the restriction in service encounter. Eventually, the customer and contact personnel are in the interactive relationship. Service Efficiency Contact Efficiency Customer Perceived l Figure 1. The service encounter triad Source: M. R. Solomon, and C.F. Surprenant Customer Expectation In the beginning of a service delivery process, customers are looking forward to their service encounter with eager anticipation; in other words, what customers expect to acquire from the service provider defines customer expectation. Moreover, expectations are viewed as desires or wants of customers, i.e., what they feel a service provider should offer more than what would offer. Owing to a standard of comparison in the expectations, customers could judge service providers’ performance (Parasuraman et al., 1988). In 1991, Parasuraman et al. proposed that understanding customer expectations of service played an important role for delivering superior service. Previous researches had presented that how customers assess the performance of a service provider was based on the single level of expectation standard, which meant customer felt a service provider should offer. However, recent researchers kept evolving and extending the conceptual model of expectations, putting a lot of effort to pinpoint the critical element within customer expectations. These researchers offered multi-levels of customer expectations (Parasuraman et al., 1991; Zeithaml et al., 1993; Walker & Baker, 2000). According to their propositions, multiple standards would be more likely to completely understand the customer expectations of service. Parasuraman et al. (1991) proposed that customer service expectations comprise two levels: desired and adequate. Desired expectations represented the level of service a customer hopes to receive, defined as the level at which the customer wanted the service to perform. It was a combination of what the customer believed “can be” and “should be,” while adequate expectations, a lower level of expectation, considered to be customer’s acceptable level of performance. It was relied on the customer’s assessment of what the service “will be” (Zeithaml et al., 1993). The latter was the basic expectation level for customers to determine the service performance, whereas the former expectation level, which was higher than adequate expectation, could attract the customers, i.e., customers might be surprised and overwhelmed while the service providers were reaching or exceeding customer expectations. These actions directly made the customers tend to think the performance better and be satisfied with the service. In addition, in each service delivery process, customer service expectations were dual-level and dynamic. The level of desired and adequate expectation could vary from customers to customers and, potentially, from one situation to the next for the same customer (Zeithaml et al., 1993). Those situations differed from various industry sectors might even cause different expectation levels, enlarging the complexity of customer expectation. Antecedents of Zone of Tolerance Zeithaml et al. (1993) noted that the zone of tolerance of a customer would be influenced by several complex and multiple factors within service encounters. In other words, the desired and adequate service levels could change spontaneously because customers have physical and mental vibrations about services. Accordingly, the zone of tolerance would become wide or narrow naturally. Zeithaml et al. (1993) proposed a comprehensive framework of service expectations and clarified customer expectations by eleven antecedent factors which could affect the desired service level and the adequate service level (as depicted in Figure 2). Zeithaml et al. (1993) addressed that desired service expectations are determined by enduring service intensifiers and personal needs. Enduring service intensifiers are stable and individual factors that lead customers with a high sensitivity to be served. One factor of enduring service intensifiers is the derived service expectations. For example, customers’ expectations will be affected and thus derived by other parities. Another factor is the customer’s personal service philosophy which is the customer’s attitude about what “perfect” service means and adaptable service during service encounters. Personal needs are conditions or states necessary to customers’ physical and psychological well-beings. For example, a patient with high social or dependency needs could have high expectations concerning assurance and professional capability for the hospital staff. There are five factors about adequate service of the customer’s expectations: transitory service intensifiers, perceived service alternatives, customer self-perceived service role, situational factors and predicted service. Transitory service intensifiers are individual, provisional and short-range factors that lead customers with a high sensitivity to be served. For example, a patient could have higher expectations to care about responsiveness of the hospital staff when he is anguished in an emergency. Perceived service alternatives are the feelings of customers which they can acquire services from other provides. For example, if customers can choose alternative service provider or types of services, their levels of adequate service could get high determinately. Customer self-perceived service role are “the customers’ perceptions of the degree to which they themselves influence the level of service they receive.” Customers’ normative expectations are partially influenced by how well they believe that they are performing their own roles. Situational factors are service-performance contingencies in which customers are perceived to be beyond the control of the service provider. For example, when catastrophes happen, such as earthquakes or typhoons, customers would recognize that insurers are full of service demand. Customers would decrease their service expectations in this moment. The last factor that affects the level of adequate service expectations is predicted service. For example, when customers could know what service they acquire, their levels of adequate service would be changed by different qualities of services. There are two categories of information searching about product quality which are divided into external and internal searching factors. However, not only the desired service level but the predicted service would be affected by external and internal factors. The external factors include three types which are explicit service promises, implicit service promise and word-of-mouth communications. Explicit service promises, such as advertisements, personal selling or contracts, are communications about services which are made to customers by providers. Zeithaml et al. (1993) stated the influence of explicit service promises on service expectations based on the intangibility of services. The second factor is implicit service promises which “lead to inferences about what the service should and will be like.” The important elements of implicit service promises are price and tangibles. For example, a customer wants to buy an insurance form several firms which have different charges. The customer may consider that firms with high prices must provide them perfect service in high quality. Word-of-mouth communication is another important factor which influences desired service level of customers’ expectations and predicted service. In addition, word-of-mouth is personal and non-personal statements which proffer customers what the service encounter will be. At last, the internal factor is past experience which refers to customers’ previous exposure to service encounters. For example, when a customer wants to buy insurance from insurance firms, he would cogitate and consider about the experiences of insurance services in the past to make a correct decision. ENDURING SERVICE INTENSIFIERS Derived expectations Personal service philosophies PERSONAL NEEDS EXPLICIT SERVICE PROMISES Advertising Personal selling Contracts Other communications EXPECTED SERVICE Desired Service TRANSITORY SERVICE INTENSIFIERS Emergencies Service problems PERCEIVED SERVICE ALTERNATIVES SELF-PERCEIVED SERVICE ROLE SITUATIONAL FACTORS Bad weather Catastrophe Random over-demand Zone of Tolerance Adequate Service IMPLICIT SERVICE PROMISES Tangibles Price WORD-OF-MOUTH Personal Expert(Consumer Reports, publicity, consultants, surrogates) PAST EXPERIENCE PREDICTED SERVICE Figure 2. Nature and determinants of customer expectations of service This study intends to propose a framework to aid in the manipulation of customers’ expectations based on the antecedent factors of zone of tolerance, given the understanding that the nature and determinants of expectations of service is important. In addition, this study divides antecedent factors into three categories, which includes need, context and effort, according to the nature and distinction of factors. The need group contains factors of customers’ mental and physiological demands, such as personal needs etc. The context group is about factors happened extrinsically, such like situational factors etc. Moreover, the effort group means that customers would like to expend their money or energy on services (e.g. self-perceived service role). Basically our framework is constructed by above viewpoints. Product Service System A Product Service System (PSS) is the result of an innovation strategy that makes the business focus on selling a system of products and services to fulfill specific customer needs rather than only selling physical product. In other words, by adopting PSS, the company or alliance of companies could provide a more integrated solution to a customer demand, and produce a satisfactory utilitarian result, instead of simply conceiving, producing, and delivering material products. In this changing relation between company and client, the underlying assumption on the customer side was that, what they might achieve in product and service was the thing a user really wants. On the other hands, for the providers, PSS had to develop new relationships and formed partnership among the stakeholders of a value chain. Thus, focusing on a PSS rather than products led the company more progressive with moving toward a new way to interact with customers. Namely, the producers or the service providers could use this approach to stretch their interests further their usual boundaries of both product life cycle phases and connection with other products and services. When the product life cycle phases and connection with other products and services were taken together, it would then result in an integrated solution for the customer. Product life cycle phases included pre-production, production, distribution, use and end-of-life, besides the life cycle framework was made up by the raw materials and energy suppliers, the producers, the retailers, the consumers/customers and the end-of-life managers. It is to say that, a PSS could be referred to as a Sustainable Product-Service System, only when it could actually support the current unsustainable trends in production and consumption to re-orient. The PSS approach was the beginning to achieve an integrated functional solution to meet client demands, and it moved away from phase based servicing and discrete resource optimization, to system resource optimization which was utility based, the environmental benefits, because of the opportunities which arose from broadening the system to be optimized. PSS was winning for the producers/providers, the users and the environment, and thus could be said as win-win solutions. Three main business approaches to PSS could be seen as promising in terms of their win-win potential (systemic eco-efficiency) as below: Services providing added value to the product life cycle. That means a company provided additional services to guarantee functionality and durability of the product. Services providing “final results” for customers. It was the producer maintains the ownership of the products and was paid by the client just for providing the agree results. Services providing “enabling platforms” for customers. It means a company offers access to enable clients to get the results they want. CONCEPTUAL FRAMEWORK In this section we will illustrate our conceptual framework (as depicted in Figure 3) and show how the service providers can employ the framework to further the formulation of their service tactics. As we mentioned earlier, the customers play an active participative role in the service production and delivery process. Based on the service encounter triad (James and Mona, 2006), there are interactions between the three parties - service organization (service provider), contact personnel and customer – in the service encounter. This framework is then described in terms of the three phases: Phase 1: Firstly, a service provider has to classify their objectives into a strategy type. According to different strategy types, such like selling new product or recovery services, each type is associated with a kind of state of expectation. This sate of expectation would capture a promise that while customers are under this kind of expectation (through the organization’s expectation-factor manipulation), the manipulator could not only achieve the objectives but have customer satisfied. For example, when a secondary service provider promotes a new product, their customers’ expectations may be too low, such as the lower adequate service level of customers, to expect a perfect and multi-functional product or service. However, if customers suffer a failure service in service encounters, their expectations should become high for the better recovery service from the service provider. In summary, service providers have to apply different strategy types to achieve customers’ expectations based on different service conditions. Phase 2: After completing the stage of state-of-expectation classification, the solution type module, which is a knowledge-based database with three influences (e.g. need, context and effort), is to compile factors that affect customers’ expectations in terms of Zeithaml et al. (1993). The service organization then indicates the factors required to be operated on expectations and how expectations would be effected to pick up directions for forming the service tactics. However, there is no need to employ every direction recommended. The service organization could just assemble some of them into a particular portfolio (i.e., a service tactic) in response to each individual customer. Briefly, a service tactic is an operational way to affect customers’ expectations of service providers. In order to manipulate customers’ expectations availably, combining helpful tactics to form a portfolio is essential and spontaneous. State of Expectation Expectation Type A Desired Type B Type C Type D Strategy types Zone of Tolerance Solution type module Adequate Tactic portfolio Execute Personnel … Customers Figure 3. The analysis framework Phase 3: The service tactics is accordingly executed by personnel or customers themselves. In next section we will conduct two interesting scenarios to manifest the utility of our framework. The first scenario is stated based on services providers’ viewpoint. Another is performed by customers’ viewpoint. Scenario A This scenario assumes that a bicycle company wants to sell a new product within multi-function. The company’s employees on sales spot would tell a customer about the features of the bicycle, such as ridding on steep roads. However, the customer might feel doubtful about whether this product could match his/her needs and the truthfulness of the bicycle functions as the company has asserted. Because the customer is not familiar with the product/service quality of the bicycle, the perceived risk of the bicycle might be in a high level. Nevertheless, the low perceived risk sometimes might also reduce the customer’s expectations. Hence, according to the above statement, the initial desired service level and adequate service level of customer expectation could be low. Our goal is manipulate customers’ expectations, such as raising the desired service level and adequate service level, in order to raise their expectations to purchase the bicycle. Based on the framework we mentioned earlier, the company could have the following operational strategies in order to reach the goal: Explicit service promises The company can post advertisement on the popular portal websites, such like yahoo or Google, which have good selling skills in interacting with customer to raise the desired service level and adequate service level. Word-of-mouth The company can build their customer relationship management system to continue to interact with their customers and build the good reputation of the company for their original customers. The desired service level and adequate service level would then be raised accordingly. Past experience The company can set up an experience room to provide their customers with pre-purchase service experience. Hence, company could implement the virtual reality on the experience room to simulate within the real situation and providers can customize what customers want in real situations. The desired service level and adequate service level can then be raised. Perceived service alternatives New bicycles can be augmented with different functions suggested by customers in order for the company to provide customization solutions for customers. Naturally the adequate service level will be raised. Self-perceived service role Customers could know how to ride the bicycle suitably and how to perform their roles in the experience. If they perform well in the experience room, the adequate service level will be raised. In conclusion, the company can manipulate customers’ expectations through some strategies which utilize the influencing factors according to our framework. Zeithaml et al. (1993) noted that the desired service level is less subject to change than the adequate service level, and then the zone of tolerance will be narrower. Scenario B I took my wife, daughter and her friend to expend this past weekend in Taipei City. We stayed at the ABC Inn based on the recommendation of a fellow group member. It was a good choice. The hotel was comfortable, immaculate and I was impressed with service we received throughout the weekend. The entire staffs from housekeepers to front desk to shuttle drivers were warm and friendly. We were constantly greeted with a smile and a greeting. Every question was promptly answered and the service was perfectly efficient. On Sunday we took the hotel shuttle to the main train station to catch the train into the northern part of Taiwan. The sun was unbearable and in the heat of the afternoon we returned to the hotel. I called the hotel when we were almost reaching to the train station and was assured that the shuttle would be dispatched to pick us up. Then we waited and waited and waited under the heat for almost 30 minutes. At this recovery service moment, both my desired and adequate expectation levels were higher than the first-time service. Because of the situational factors of context, especially for my adequate expectation level, the position of the zone of tolerance was reduced. I placed another call to the hotel and calmly stated that I had called earlier and was checking on the status of the shuttle. I was placed on hold for about a minute and the woman returned to the line. She handled it just as I coach people to do it. She quickly and sincerely apologized and stated that the driver was leaving immediately and would be at the station in less than five minutes. Sure enough, the shuttle was dispatched with the information system and arrived promptly. When the doors to the shuttle opened, the driver, contact personnel, greeted us with a smile and another prompt apology. "I know you've been standing out here in the heat, so I brought you some ice cold water." With that, he handed each of us a bottle of water. He then added, "I'll get you right back to the hotel!" Owing to the hotel policy, which is to fulfill every customer’s personal need and not offend his anticipation, the driver by doing that with gentle and soft voice in order to decrease desire expectation level. This was a classic example of service recovery, which is a strategy type that providers may confront, when service provider dropped the ball: apologize ("I care") and resolve the issue ("the shuttle is leaving immediately"). Based on the framework of this study, the solution type module would indicate key factors (e.g. apology and problems resolving) to confirm what service providers should do. At last the tactic portfolio is conducted as following statement: the staff at the ABC Inn did it one better by anticipating that customers were hot (physically and emotionally) and thirsty and brought something to cool off both customers bodies and our tempers. DISCUSSION AND CONCLUSION In this paper, we first give an overview about the service encounter and customer expectations research. After a critical analysis of the nature and determinants of customer expectations model, we propos a conceptual framework to describe what and how providers could manipulate their customers’ expectations by two interesting and logical scenarios about the product-based services. Based on these antecedents, which Zeithaml et al. developed, we comprehend what factors would particularly affect the desired service level and the adequate service level of customer expectations. However, there are several limitations associated with this paper. First, in order to achieve the satisfaction of customers, service providers should augment or narrow the zone of tolerance substantially depending on different service strategies. Although our research framework is extremely digestible and serviceable, how to categorize service providers’ strategy types based on the domination of customer expectations is an uncertain problem up to now. For example, what marketing or selling strategies service providers need to increase or decrease customers’ expectations is an important issue, nevertheless, literatures are insufficient for us to bind. Second, our research just pays attention to antecedent factors of the zone of tolerance rather than other influences. According to Zeithaml et al (1993), our research mainly tries to find out what and how service providers control their customers’ expectations. In conclusion, this preliminary study provides some ponderable insights and recommendations of customer expectations. Researchers can adopt this framework briskly to build the decision support systems for making service strategies in the future. More research is needed at the zone of tolerance to determine what sizes of the zone should be in terms of different service stages. Furthermore, simulation studies which are adaptable for the complicated problem may be conducted on the basis of this framework. REFERENCES Bitner, M.J., Booms, B.H. & Tetreault, M.S. 1990. The service encounter: diagnosing favorable and unfavorable incidents. Journal of Marketing, 54(1), 71-84. Czepiel, J.A., Solomon, M.R., Surprenant, C.F. & Gutman, E.G. 1985. Service encounters:an overview. Chapter1 in Czepiel, J.A., Solomon, M.R. and Surprenant, C.F. (Eds). The Service Encounter, Lexington Books, Lexington, MA, 3-15. Hill, D.J. 1986. Satisfaction and consumer services. Advances in Consumer Research, 13, 311-5. James L. Walker. 1995. Service encounter satisfaction: conceptualized. Journal of service marketing, 9(1), 5-14. James A. Fitzsimmons & Mona J. Fitzsimmons. 2006. Service Management. New York:NY. Levitt, T. 1983. The Marketing Imagination, The Free Press. New York:NY. Manzini, E. & Vezzoli, C. 2002. Product Service Systems and Sustainability: Opportunities for Sustainable Solutions. Publication of UNEP. ISBN:92-807-2206-9. McGill, A.L. and Iacobucci, D. 1992. The role of post-experience comparison standards in the evaluation of unfamiliar services. Advances in Consumer Research, 19, 570-8. Parasuraman, A., Berry, L. L. & Zeithaml, V. A. 1991. Understanding customer expectations of service. Sloan Management Review, 32(3), 39-48. Parasuraman, Zeithaml, V. A. & A., Berry, L. L. 1988. SERVQUAL: A multiple-item scale for measuring consumer perceptions of service quality. Journal of Retailing, 64(Spring), 12-40. Walker, J., & Baker, J. 2000. An exploratory study of a multi-expectation framework for services. Journal of Service Marketing, 14(5), 411-431. Zeithaml, V. A., Berry, L. L. & Parasuraman, A. 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This note was uploaded on 03/23/2012 for the course ECONOMICS eco 403 taught by Professor Talatafza during the Spring '10 term at Aachen University of Applied Sciences.

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