Reference Scales of Service Quality and Satisfaction Judgments: A Reconsideration and Research Agenda

1. Reference Scales of Service Quality and Satisfaction Judgments: A Reconsideration and Research Agenda Stephen L. Vargo University of Maryland

2. Outline of Presentation • Implied Reference Scales--Models and Issues • Partial results of three Studies of Reference Scale Organization • Research Implications and Directions

3. The Research Domain • Reference Scale = The mental “ruler” used in making judgments about marketing phenomena (e.g., service encounters) • Satisfaction • Service-quality • Components: • Standard: A point on the reference scale that the consumer uses in the comparison of external stimuli • Categories (zones, latitudes): Similarly valenced ranges (latitudes) on a reference scale • associated with common (or similar) evaluative judgments (e.g., good or bad).

4. a. Disconfirmation model (single standard) Positive Disconfirmation Negative Disconfirmation (-) (+) Implied Positive Latitude Implied Negative Latitude Expected b. Zone of tolerance model (multiple standard, bounded range) Negative Disconfirmation (Positive Disconfirmation ?) Latitude of acceptance (?) (-) (+) Zone of Tolerance Implied Negative Zone Minimum Tolerable Standard Desired Standard Implied Reference Scales

5. Some Problems with Disconfirmation and Zone Models • What is appropriate single standard • e.g. expected, desired, deserved, or adequate performance (Bolton and Drew 1991; Boulding et al. 1993; Spreng and Mackoy 1996) • Nature of Standard (and therefore comparison) • e.g., “vector attribute” or “ideal point” (Teas 1993) • Expectations and perceptions not independent • “we see what we expect to see” (Pieters, Koelemeijer, and Roest 1996)

6. Implied Reference Scales (2) Latitude model of social judgment theory (multiple standard, anchor-based) Latitude of objectionability Latitude of objectionability Latitude of acceptance (-) (+) Most acceptable Most Objectionable Latitude of Noncommitment

7. Reference Scale Types and Issues • Major reference scale models • Single-standard comparison models—e.g., disconfirmation model (Oliver 1980 ) • Boundary-driven, zone models—e.g., zone of tolerance model (Parasuraman et al. 1994 ; Woodruff, et al 1983 ) • Anchor-based, latitude models—e.g., latitude of acceptance (Social judgment theory) (Anderson 1973; Miller 1977 ) • Issues • Nature of standards--boundaries vs. anchors • Related to vector attributes vs. “ideal points” • Relative role of alternative standards • Predicted expectations, normative expectations (should, deserve) desire, minimum tolerable • Dynamics of reference scales under varying conditions • e.g., prior positive or negative evaluation • e.g., changes under hi and low involvement conditions

8. Study 1: Summary of Hypotheses • Consumers differentiate among standards—i.e., standards play different roles • Standards are not equivalent to latitude boundaries. • Standards consistently associated specific latitudes. • Existence of “hyperservice”—positively rated attribute dimension is evaluated “unacceptable” • Positive and negative behavioral intentions associated with positive and negative latitudes, respectively. • No behavioral intensions associated with neutral latitude.

9. “Own Categories” Sample Statements: Friendliness • The waitperson tells you that you were wonderful customers (11). • The waitperson writes a personal note of thanks on the check (11). • The waitperson says: "Let me know when you have made up your mind" (6). • The waitperson touches you when talking to you (6). • The waitperson asks a lot of personal questions (6). • The waitperson points out the least expensive items on the menu (6). • The waitperson comments that your clothes are out of fashion (1). • The waitperson swears at you (1). Notes: Number (1-11) equals median placement in pre-test; Approximately 50 total statements. Also used serving response-time—separate instrument

10. Category Cards:Waitperson Friendliness a. Waitperson Friendliness 1 2 3 6 4 5 7 8 11 10 9 Extremely Extremely Friendly Unfriendly b. Serving Response-time 1 2 3 6 4 5 7 8 11 10 9 Extremely Extremely Slow Fast

11. “Own Categories” Procedures (1) • Respondents given scenario • Lunch with acquaintance in new, unknown family restaurant • Appearance, prices, quantity and quality of food were defined as “as expected” • Asked to sort statements about a dimension (e.g., friendliness, serving time ) according to similarity • Asked to identify: • Stack which represents most acceptable service level • All other stacks that represent acceptable service levels. • Stack that represents most undesirable service level • All other stacks that represent unacceptable service levels.

12. “Own Categories” Procedures (2) • Asked to identify • Stacks that represent the service levels they would expect, desire, deserve, find minimally tolerable • Stacks they would associate with various behavioral intentions: • Positive and negative word-of-mouth (tell friends) • Leave • Complain • Repeat patronage

13. a. Waitperson Friendliness Noncommitment Objectionability (Hyperservice) Acceptance Objectionability (-) (+) Most Acceptable Deserved Most Objectionable Minimum Tolerable Expected Desired b. Serving Response Time Noncommitment Objectionability (Hyperservice) Acceptance Objectionability (-) (+) Most Acceptable Deserved Most Objectionable Minimum Tolerable Expected Desired Average Reference Scale Organization

14. Research Findings: Placement of Standards and Behavioral Intentions • “Expected” (Expect/Deserve) and “Desired” (Desire/Most acceptable) service standards associated with LA • Do not serve as boundaries • Minimum tolerable associated with LNC • not lower bound of LA • Strong evidence of “hyperservice” • Negative behavioral intentions associated with LO • Positive behavioral intentions associated with LA

15. Study 2: Focus Group • Purpose • Elaboration and enrichment of quantitative study • Exploratory • Approach • Think about and discuss good and bad restaurant experiences • Think about and discuss meaning of standards (e.g., desired, ideal, expected, etc.) • Place standards on two “rulers”—acceptable/unacceptable & friendly/unfriendly—and discuss • Watch video employing subset of statements from card sort • List and number behaviors • Position numbers on rulers (friendliness and acceptability/unacceptability) • Discuss likely responses to behaviors

16. Study 2: Focus Group: Outcomes • Fairly consistent ordering of standards • Some tendency to equate expected/deserved & desired/ideal • Tendency to group—stack (or “would have stacked if I knew I could”)--behaviors • A lot of support (verbal & on scale) for “hyperservice” • e.g., flirting is extremely friendly, but unacceptable • Some evidence of different RS organ. Under different conditions • Importance (involvement) • Previous evaluation/relationship

17. Typical Mapping of Reference Scales a. Attribute Dimension Minimum Tolerable 16 Expected & Deserved Ideal Desired 11 17 2 12 Extremely Unfriendly 10 Extremely Friendly 9 13 6 7 4 1 15 8 14 3 5 a. Evaluative Dimension 15 14 Desired Minimum Tolerable Ideal Expected & Deserved 7 17 9 13 12 Extremely Unacceptable 10 Extremely Acceptable 4 2 6 8 1 11 5 16 3 # #15 = waitperson gave phone # #14 = waitperson sat down when friend left table = Respondent-observed restaurant behavior from video

18. Study 3: Experiment • Purpose • Investigate impact of relationship/branding on reference scales • Differences in reference scales for restaurant with prior positive brand evaluation vs. new restaurant • Hypotheses--With prior, positive brand relationship: • Decreased latitude of objectionability • Increased latitude of non-commitment • No change in latitude of acceptance • Shift of positive BI from LA only to LA and LNC • Method • “Electronic” Card sort • “Branded” scenario assigned to half the respondents • Restaurant is new but recognize brand as part of favorite chain • Outcomes • Hypotheses generally supported (significance and trends) • Both LA and LO decreased • BI associate with both LA and LNC for Branded condition

19. Study 3: Comparison of Unbranded and Branded Reference Scales

20. Study 3: Comparison of Behavioral Intentions

21. Extensions and Research Agenda • Synthesis • Simultaneous influence of multiple standards • Sorting out the “latitudes” and “zones” in marketing literature • Adds depth to Social Judgment model • Role of minimum tolerable—”adaptation level” • Explanation of Satisfiers and Dissatisfiers • Distributions of expectations, desires • “Six Sigma” • Other evaluative reference scales—price • International Issues • Cross cultural differences in reference scales • Reference scale as index of acculturation

22. Latitude Relationships Latitude of Non-Acceptability Composite Latitudes Latitude of Tolerance L of O Latitude of Objectionability (intolerance) Latitude of Non- commitment (indifference) Latitude of Acceptance L of N Primary Latitudes (-) (+) Hyperactivity Latitude Anchors

23. Latitude Profiles of Service Dimensions

24. Evaluative Distributions Distribution of Desirability Distribution of Expectations Distribution of objectionability Distribution of objectionability (-) (+) Expected Desired Most Objectionable Latitude of Noncommitment Partially based on Rust, Roland T. et al, (1999) “What You Don’t Know About Customer-Perceived Quality: The Role of Customer Expectation Distributions, Marketing Science” 18 (1), 77-92.

25. Implications of Distributions Distribution of Expectations Distribution of Desirability (+) Desire D Expect “Relationship” ↑as D ↓ or, more precisely, Ideal Relationship = Distribution of expectations within distributions of desirability Six Sigma = 99.9998 % of performance within Latitude of Acceptability

26. Other Directions • Evaluative reference scales in price research • “altitude of price acceptance” • Cultural Issues • Cultural differences in reference scales • Satisfiers and dissatisfiers as bases for local vs. global • Reference scales as indices of acculturation

27. Management Implications • Managing the service-encounter • Not sufficient to know what consumer wants • Must know what consumer finds objectionable • Too much service (hyperservice”) may be more harmful than too little • Managing the evaluation process • Competitive advantage through expectations management • Can not manage positive latitudes only • May be more important to manage LO and LNC

28. Implied Management Strategies