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  • A Framework For Managing Consumer Expectations

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    Customer expectations may be unjustified. Infeasible. Or unproductive to meet. The authors identify three broad approaches to the shaping of customer expectations. These include human resource management, framing, and compliance.

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    A Framework for Managing Consumer Expectations

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    Customer expectations may be unjustified. Infeasible. Or unproductive to meet. The authors identify three broad approaches to the shaping of customer expectations. These include human resource management, framing, and compliance.

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    23 visualizações22 páginas

    A Framework For Managing Consumer Expectations

    Enviado por

    ayyappananeesh4989
    Customer expectations may be unjustified. Infeasible. Or unproductive to meet. The authors identify three broad approaches to the shaping of customer expectations. These include human resource management, framing, and compliance.

    Direitos autorais:

    Attribution Non-Commercial (BY-NC)
    Baixe no formato PDF, TXT ou leia online no Scribd
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    Joma of ve Foes Mang 1137-158 © 1986 iver Ace ten: Boron Marc The Ne A Framework for Managing Customer Expectations Emory Unter Nbr en Une Abarat. Maing san Bae wun tat Sms sould et reed ators nod 6 ‘ie cuter stsaien Of, bev coor expen ye weed, we yeaa, {he to mt. Tee aed obese an Raid The aos Heel thee bed eps te ‘torn of une expectations: use managers fing coc. Te Ses toa wi te pe expectation duping as wae cash pa od sas ofthe ot tote tch poe er Keyword: managing ewomereyecitns During a busy lunch hour, the wait a the drive-in window of a fast-food restaurant was inating alot of customers. The similar wait was causing oo unusual reaction among the ‘walkin or dinein customers. The difference is atibuabeo the assurapion, inadvertently ‘ade by divin customers, thar the ven service is designed for speed its ot. The ‘management needs teducti its customers abouthe tre atribute ofthe drive-in service that itis designed for convenience, not speed False expectations lead to dissatisfied customers and can seriously impact a firm's prof- itabitity. In one study of 348 “ritca incidents” in which Noel, restaurant, and sine employees recalled difficult nd uncomfortable communications with customers, flly 75% ofthese incidents could be atribued to the fact that customer expectations exceeded the bility ofthe service system to perform—the other 25% were due to objectively shoddy service (Nyquist, Bite, and Booms, 1985). Given the high costs of expectation failure, itis important fora fm to ensure that is customers hold realistic expectations about its products and services. ‘The purpose of ths paper it deni te strategies for manag ing diverse customer expectations, specially the sategies to shape them where necessary Figure | gives a bint’ eyeview ofthese sategis, which ate discussed below. Managing Especiations: Accommodation, Aeration, or Abandonment Businesses have two possible avenves to managing customer expectations: (j) accom: ‘modating the expectation, and (i) altering (i.e, shaping) them, Of course, when ether approach fils, third option exits, namely to abandon the customer, Both accommodation and alteration approaches ae uilized by business firms in Ge academic Hteratre, how ‘ever the alteration approach has not recived much systematic tention. Before turning {o an exposition ofthe alteration option, the focus ofthis paper, we briefly describe the sccommodation option 138 DSH SHEN AND BARWARI MITTAL "Thre Siraiogis of Managing Customer Expectations & we 1 Maung come expen A sate Accommodation ‘Accommodating failing expectations hasbeen a major goal of macketing for many ‘decades now; indeed the discipline is defined as satisfying customer needs wants (Kodle 1994; Levi, 1960). The accommodation response has generally taken three forms: (i) Produet or service innovations, (i) Segmentation, ching, and positioning; and (ii) TOM, quality, and customer satisfaction movement (See Figure |.) Productservice innovations have been a primary means to meeting or exceding the rising expectations of consumers (oter, 1994). Inthe as 50 years. product choices salable to consumers ave urgeoned manifold, and technological breakthroughs hve brought forth products unthinkable oaly ten yeats ago (eg. laser surgery, cordless and video phones, palmtop computers, hait transplant, et.) Segmentation ha been the second accommodation mechanism, particularly useful when ‘needs, wants, and expectations increase in diversity cross consumers. Target marketing and nching allow firms to exploit marke segments most suited to ther sill and resources, ‘and 0 in turn meet market needs in amore tailored fashion (Sheth, 1990; Webster, 1992) ‘TOM, continuous quality improvement and ether qualiy-enhancement and customer satisfaction programs have recently Become the major iniiatives in American as well as slobal businesses (Business Week, 1987; Hauser and Clausing, 1988; Hellman, 1989) ‘The clarion call of stistactionlguaiy writers nd consultants has ben for organizations A RAMEMORK FOR MANAGING CUSTOMER EXPECTATIONS 139 «endeavor o “meet or exceed customer expectations” (Paacuraman etal, 1985, 1989, 1994; ‘Zeithaml eta, 1988). This has been useful direction forthe fk, operationalizing one ‘of marketng's core properis—customer orientation, and its overarching goal--customer need stisfction ‘The Costs of Accommodation Cleary, the thee accommodation approaches are usefUl up 1 point. Each has its costs nd/o limitations, however. Product and service innovations (a) cannot address expecta: tions inal domains (eg aicbags tht wont ruse the driver's face), or (b) may requ long Teadtimes to atuaize (e', cars needing no oil change), leaving inthe interim, expectation ‘molding stil a task that needs to be done. Moreover, innovations that respond to one set ‘of expectations may make new demands on customers, requiring the inculcation of a new set of expectations. lustratively, more sophisticated, digtized VCRS meet customer ex pectatons or desires for high dey pictur quality, bat they also require greater customer ‘auton aginst feeding low grade tapes. ‘Segmentstion to ha atleast wo limitations, Firs segmentation might be infeasible or isallowed fr public services such s utilities, mail delivery, and police protection (Roth- schild, 1979) And, second, nite sogments, even defined nrrowy sil etal substantial intr-segment expectation variations which need tobe altered rather than accommodated. Finally, quality and satisfaction enhancement efforts also are governed by pragmatics of technical and economic vibility, Aisines cannot entirely eliminate light delays or ver: booked fights, stores cannot entirely ensue short checkout ines, and low price offerings cannot offer the amenities of full-service offerings some customers inndvertently assume and come to expect. Increasingly, marketers ae questioning a runaway obsession with ‘quality improvement to satisfy customer expectations without regid to bottom-line i act of quality efforts (Rust, Zabori, and Keinngham, 1994) The best known divorce of ‘quality upgrade and bottom-line outcome isthe ease of Wallace Company, a 1990 winner ‘of the Malcolm Baldrige National Quality Award, which was force, by soaring quality ‘costs unmatched by revenue gains, to file for Chapter 11 two years late. The new-found ‘quality conservatism now guides and restrain the quality initiatives of such matket leaders as AT&T, UPS, Federal Express, and GTE (Business Week, 1998), ‘The Need for Altering the Customer Especatons (Clearly, many market offerings need enhancement (by product innovations, by segment: specific customization, oc by quality improvements) 3 a8 19 meet o exceed cusiomer expectations. Indeed, we cannot overemphasize the fist requisite for firms to atlempt to sccommodate as many of customs’ expectations as economically feasible, However, ‘many expectations are infeasible o costly to aecommodste, and instead require altering. ‘One way to srt out expectations tha equ ltering is to pot them in relation to what a firm can realistically deliver. In any industry, customer expectations canbe found 1 Vary ‘widely. These varying expectations may range from unrealistically high to unrealistically 140 CDSH SETH AND BANWARL MITTAL Bettman Dat pein Wi vie: pce Osmo ‘Fie? Tete sang sponses compan sing sans, low. Expectations in close vicinity to a firm's seta peformance are deemed relist" these fll in the “one of accommodation’ Expectations too discrepant frm the performance reality are counter productive forthe marketer. If hey are too low as happens with fms who aogir bad reputation, they old no appeal for he firm's offering, II 00 high, they lad to customer dissatisfaction with the firm's performance. Therefore, bath low and high expetations need o be shaped rather ‘han sccommodated Finally, customers with expectations too discrepant o shape need to bbeabandoned, See Figure 2. We urn now o paradigms for shaping customer expeccatios, ‘the major fous ofthis paper Paradigass for Shaping Expectations Defining Expectations Expectations have been recognized ss an important determinant of customer behavior in lassie and curent marketing literatures alike Boulding et al, 1993; Howard and Sheth, 1969; Kaiona, 1951; Oliver, 1980; Olsen and Dover. 1979; Parasurainan, Berry, and Ze: thaml, 1991). They have been studied both as comparison standards in pos purchase ‘experience (Oliver, 1980; Prasuraman, Berry. and Zeithaml, 1991) and a brand or object beliefs in pre-purchase decision processes (Fishbein and Ajzen, 1975; Olsen and Dover, 1979; Witkie and Pesseser, 1973) Following a common thread in various views of ex. Psatons in the literature, we define expectations ae "perceived contingencies between any two events (see Tolman, 1952: Vroom, 1968; and Parasuraman, Dery, and Zeithaml, 1991 for definitions, and Oliver and Russel, 1987, nd Van Raa 1991 fo comprehensive reviews). An event isan occurrence of an activity whether physical (ea tee falling) ‘or human a customer complaining). Ths, these can be contingencies between, s, con ‘soming ¢ product and the outcomes experienced (ve pre-purchase brand belies), between ‘an action and an outcome such asthe kind of product care needed to obtain certain prod- vet performance, a contingency between two avibtes such aba high price implying high ‘ualzy, Becween a physical or Social surrounding and cefrle such as how to ata patron |ARAMEWORFOR MANAGING CUSTOMER EXPECTATIONS mat ‘nan upscale restaurant, or between a desired goal and ite antecedent action (eg, “you ‘want to be served, you must take a number”), Defining Shaping ‘We define shaping as “marketer's us of communication and other cues intended 0 alee customer expectations.” Inthe social psychology and elated consumer bchavior literatures, shaping i construed in the context of shaping Behavior rather than expectations (Nord sod Peter, 1980; Rothchild and Gadi, 1981)? The present concern is with changing “cogni- tions (i.e. expectations)—with or without a concomitant behavioral change. Iustrativey, in the fast-food drive-through example, ou gals not to necessarily modify behavior (ie Aiscourage the use of drive-through window), bt rater to rectify an expectation associated ‘ith the behaviors thatthe experience i evaluated more positively. ‘We propose tree paradigms fr shaping expectations: (a) the human resource manage: ‘ment paradigm, Gi the framing paradigm, and (i) the compliance paradigm, ach is discussed in turn. ‘The Human Resource Management Paradigm Human resource management HRM) may be defined ae “strategic, integrated interventions designed to elicit commitment and to develop resourceful humans” (Storey, 1992). The HRM process consists of employee selection > orientation, taining, and education —> performance measurement, feedback and eward-> promotion, transfer, and retiement (se, Bowen, 1986; Fombrun, Tchy, and Devan, 1984; Mathis and Jackson, 1988) Managers tse these HRM processes to shape employee expecatons oftheir role in the organization. ‘Marketing managers must manage customer expectations just as they manage employee expectations—by shaping them. We propose thatthe HRM processes can be transfered, ‘ith some adaptations, managing customer expocations at well ‘Shaping by Selection (Customer selection can bean effective means of managing customer expectations. A firm that serves a broad range of customers with widely varying expectations cannot focus ie efforts on any particular lve of service, and divergent eustomes make divergent demands and thereby confuse and stain the service provider system (Davidow and Uta, 19892; NNormann 1984. Selectivity allows not only more well fiting product or service offering, butt also permits more realistic promises to lure customers. In the absence of selectivity, advertising regresss toward tying to promise everything to everyone, an approsch tht cannot bt “overpromise” Segmentation actually allows and engenders selectivity, and ths i in itself both an ‘expectation meeting and an expectation shaping tool But there are oer mechanisns Ww ODSH SETH AND BANWARI MITTAL, of selectivity which ae not addressed by segmentation. These other mechanisms, called “admission procedures, are discussed hee Marketing firms can practice selection by intiuting customer “admission polices” By requiring a dress code, for example, fine dining restaurants Keep out poorly "socilized™ diners. University National Bank and Trust (UNBT) in Palo Alto admits customers nly by referrals. Tam Melohn, Tomer CEO of North American Too & Die (NATD) sys ofthe ‘customer selectivity: "When larsved at NATD, te customer list was haphazard, Whocrer ‘came through the door was a prospect. We soon developed thre simple ctitera for Fture [NATD customers: (they had to be growing faster than thei competitors (i) they had to ‘be decent people 1 work with; and (i) they had to pay ther bills promptly” nc, 1994). ‘Segmentation and selection (implemented via “selecsive admissions polices") related ‘butnot identical. Both segmentation and selection iaet desirable subgroupsof prospective customers. However, segmentation criteria can be implemented broadly, i. on groups ‘of customers, and by a routnied procedure; in contrat, selective admission procedures require one-cn-one judgment on the part of the “admision approval manager” who acts as the “gatekeeper” University National Bank and Trust (UNBT) in Palo Alt offers a good ‘example of both. Itargets high liquid asset cientle by (a) charging igh monthly fe for low balances, and (b) by admitng customers ony with referrals, These two approaches exemplify. respectively, segmestation and selective admission procedures, ‘The selective admission procedure is particularly useful where segmentations infeasible (e.g. public universities) or wher intra segment diversity canbe futher trimmed only by ‘case-by-case application of selection criteria as in UNBIT, Palo Alto's ue of feral) or where segmentations disallowed on public policy grounds. Ths, open universities eannot practice segmentation but can employ, literally, "selective admissions” polices. Banks that ‘employ more rigorous sereenng of loan applicants, or NATD’s scrutiny of eustomersit wil do business with exemplify ot segmentation bu the selection step of HRM. Furthermore, selectivity isnot merely amater ofexclodingundesiabiecurtomer groups. The “admission policies” purported to screen out non targets ls sina the expected behavior fr those who «are enough to “eck admitance” NATD customers lear to pay ter bills, and customers of UNBT of Palo Alo lear to ensure not writing a bad check. ‘Shaping by Orientation/ Education Training Before she invites you to jump into the company Cadillac and takeoff on a wilderness tour of suburban mansions, country ranches, or seaside condos, seasoned realestate agent ‘raws you into an “oricstation session” designed o size up your desires and means as well 13s to educate you regaeding what you should expec from the properties abou tobe tured. Professors spend the ist hour ina course laying out in deal stdent evaluation procedures and what the course “requires” of students so hat fle student expectations ae minimized. Deciaration of liability in product warning labels rin service contracts (acy cleaner assuming no responsibilty fo color fading) belp to cli customer expectations. The practic of shaping expectations by orientation i lot more common than i realized. ust a ikl, this important practice is ignored by many marketers. Waitersvatenses {in restaurants should but do not always advise patrons if certain mene portions are small A FRAMEWORK FOR MANAGING CUSTOMER EXPECTATIONS 3 ‘or unsuitable fr sharing. New car buyers are not always tld ofthe smell ofthe burning meal or other things they ar likely vo experience during the “break-in period. And not all ruise-lines mail pe-triporenation information to ther passengers, Education is orientation with moc in-depth information tnd opportunities for clarifica- tion of untenable assumptions. Customer education heps in cltfyng the customer role in obttining the intended product performance. Fora wie ranging aay of products, per formance is almost always contingent on certain regimen of product care: automobiles (scheduled oil change et.) efiigertors(pevioke defrosting), self-cleaning electri irons (Ghey are not automatically self-cleaning), halogca lamps (“don't move them when hot), (Degree tr Bela Assiaig te new Expects) Pere 3. Epetation dcp sd managing i formed. But when te outcomes are as yet unidentified or probability of outcomes remsns unknown, ambiguity exists, and expectations re nearly non-exisent or fuzzy (se, Olivet and Winer, 1987 fora detailed discussion), ‘The role of assimilation effort hasbeen theorized in atleast two price Hteratures. First, in the diffusion of innovations literature, discontinuous innovations have been thought be adopted less realy than continuous innovations, and presumably, the former entail cater mental or physical effort than the latter (McQuarrie and Langmeyer, 1985; Ram and Sheth, 1989; Rogers, 1976). Second, some recent iterate on selfreglation of ati- tudes, intentions, and behavior posits efot a an important mediator of ntnton-behavior correspondence (ef. Bagozz, 1992; Kuh, 1985), ‘Concerning the conditions appropiate for the thee paradigms, we sugges the following research hypotheses. When expectations are fuzzy o nonexistent, and when assimilation fortis low, framing i key to be the appropriate method. To setup expectations where ‘one exist isin fact the essence of faming. Moreover, framing i a reatvely unobtrusive ‘method, and as such would work only if the requisite assimilation effort is low. High effort wil of necessity requite more intusive shaping methods. When expectations are ‘moderately formed, and effort required is moderate as well, HRM methods would be more appropriate, Finally, ifthe expectations are already fully formed, and assimilation effort is high, only compliance procedures woul likely be effective, See Figure 3. Furthermore, we hypothesize a hierarchy of efficacy and efficiency along the two axes in Figure 3: Paradigms are expected to be effective as well for lower levels offrmedness ‘and effort but not for higher levels. Thus, compliance would likely be effective also for 150 {AGO SHED AND BANWAR MITTAL ‘moderately formed and fuzzy expectations, and for expectations requiring lw or moderate ‘ssmilaion effort. Likewise, HRM would be effective also for fuzzy expectations and low assimilation effort, bt is unlikely tobe effective for flly formed expectations And framing is unlikely to be effective for moderately forme or moderate effor conditions and definitely tobe ineffective for fully formed and high assimilation effort expectation, Bu although effective higher vel paradigm i an overkill for lowe levels of expectation and cfr states, and, aecordingly lest ellcien to ulize, ‘The three subprocesses within each paradigm align themselves slong the fine gradations ‘on the effort dimension. Thus, within the effet zone broadly labeled “low.” the tee subprocesses of framing would be more of less effective as follows. Priming is likely to bbe most effective inthe very low effort condition. The other two methods of framing a relatively more intrusive than priming (iret instruction more so than context design). and would be more effective if effort required is moderately low (for context design) ora the Upper end ofthe low effort zone (for dec instruction). Consider a street performer who needs to create sa, thre expectations, otdered hereby an increasing degree of essimilation for (bathe same degre of unformednes) () the show ior children i) pestatosareto ‘donate money, and (i the performance willbe ofan nasal alier worth accommdating ‘inone’s schedule. The first expectation s easy to engender by simply having the performer don aclown or animal costume. The very sight ofthese costumes primes, without conscious fort, the expectation ofa juvenile performance. Forth second expectation the pefermet might pace ha with smal bills in it (contest design).* The third expectation, somewhat ‘hard to believe (i assimilate) fom stretperfrmers, would equie diet suggestion by, Sy; the program announcer that the performer ean acted artis. Likewise, forthe moderately formed expectations and inthe broad range of moderate effort, the tnee HRM procedures are mee o les appropriate depending on te desee of ‘moderate efor entailed. To ilstate, all eustomers have some general expectations that it they test-drive a car, they would be expected to discuss thee interest briefly with the salesperson. (If they don'thave this expectation, direct instruction ofthe framing paradigm would be helpful.) But what if they don't expect it to bean in-depth interview? Then, the “ava temas ce EreRERS wimg NoupMOwa ru sae apa eos sabe Spngewsnpere amps em dos fa oy) sa Sosnpade vom canal fa, uray zowvrianao MINTAABANSETES. op aoe ane mae owsaa LxatNoo « pysn wos “essonponD* — OVREISNV« renbareetnge oxantvan sme 20KO* (NOLLVONGINOLIVINGTHO + NOMDETTS op papa onan ea HL sono sadam mos fy po pe! Ss oe YD 154 | AGDISH SETH AND BANWARI MITTAL rmotoreyele riders, or building codes tha specify or prohibit the use of certain constuction materials). Oetting public policy altered and public mandates enacted requires personal selling (ie. lobbying) to policy makers (Krapfel, 1982), and mass communication forts 1355-108 legtimaton. Inthe area of pricing, unit pricing and price disclosure laws shape customer expectations sgainst price gouging and about receiving protection from deceptive pricing practices Zoning Laws restrict busines locations and thus shape expectations about being protected ‘against commercial eneteachment of resdenil areas. Communications aid compliance ‘with the regulation by reminding customers ofthe laws ad implied penalties publicservice adverising, or social advertising, atempts to crate a favorable climate of opinion for complianee, frequently leveraging reference group normative expectations. Ia compliance via group norms, the product element comes ito ply in designing “normative offerings” for institutional markets (eg, business firms" contacts with rnvel agencies which require frequent flyer benefits to accrue to firms rather than employees), Finally, compliance by business procedures too can utilize all marketing mix tools. The ‘design of business procedures pertains to the product element. The prevalent business ractic of one price (i. price net negotiable) shapes customer expectations about receiving 8 fair price (eg, Saturn's “no hagalng” policy), and low price guarantees similarly assure customers to expect a good deal from the merchant. Hours of operation remind customers when they are expected to shop, and in-store surveillance cameras shape expectations about the probability of being caught shoplifting. In general, the visible communication of business procedures helps clarify customer expectations about the role they ate to play while engaging in business transactions, ‘Summary and Conclusion Managing customer expectations is a prerequisite lo creating a satisfied customer, @ quintessential goal of marketing. The predominant approach to achieving this gosl has been to endeavor to meer customer expectations. This approech is lopsided and needs bal. ancing by attempts to shape rather than merely fulileustomer expectations. Marketers have "nder-uilized appropriate shaping strategies. Of course, expectation shaping takes place ‘everyday visa abundant supply of marketing communications but if anything, this shaping {sin the wrong direction, cresting unrealistic expectation by hype and overpeomise—thus ‘making the expectation satisfaction more rather than es elusive ‘This paper identified te specific paradigms for planning expectation shaping scons One of these, the ‘human resource management (HRMO” paradigm suggests that cus. tomer expectations can be managed by some adaptations of the processes of employee ‘management. Justa firms do with employees, they can use the processes of selection ~orientationtraining/education->performance measurement, rewards, and retirement fo ‘manage its customers’ expectations, and consequently thei exchange and consimmation experience. The second paradigm is ha of framing, ie, developing reference points pior to processing information. Within the framing paradigm, thers are three specific mech: anisms: direct instmetion, context setup, and selective priming. Ditetinsrucion ean convey markster expectations abou the customer role in the efficient completion of par A RRAMEWORK FOR MANAGING CUSTOMER EXPECTATIONS 135 chase transaction. “please keep your credit cardready”). Context set up either suggests the comparison standard directly (asin “how much would you expect o pay for this?” ot by physial cues (eg, high-value dollar bills, rather than jst coins, in te collection pans ‘ofstret entertainer), Finally, selective priming of relevant memory is effected by opening vignetes in commercials. Because these thee mechanisms are routinely utilized or occur inevitably, framing occurs whether or not intended. Our discussion raises the necessity (of basing thei deployment on a scrutiny of thei framing effects 0 thatthe expectation futcomes are purported rather than accidental. Final, whea customers lack the normative expectations about adopting salutary products or behaviors, compliance (by law, by refe- cence group norms, or by business procedures) can be an effective mechanisn for shaping expeciations ach marketer should comprehensively inventory and priritize the cutent expectations customers hold (or the lack of them) in thee areas: benefits of the product use, various aspects ofthe exchange process and customer role in it, and customer roe in product care and us. Expectations that are fuzzy or absent aswell as thos that are unrealistic ar both "unproductive for marketer to fll Endeavors to shape them oward realism wil enhance the efficiency of business resources, and will atthe same tim, diminish the incidence of

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