marketing

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Consumer Satisfaction
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Outline

• The concept of consumer satisfaction/
  dissatisfaction
• Theoretical frameworks
• Expectancy-disconfirmation theory
• Attribution theory
• Measurement and management of consumer
  satisfaction
• Consequences of satisfaction/dissatisfaction

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Consumer satisfaction/dissatisfaction

• satisfaction refers to a consumers judgment that
  a product (or its features) provided a
  pleasurable level of consumption-related
  fulfillment (Oliver 1997)
• distinguish
• transactions-specific satisfaction
• cumulative satisfaction

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Expectancy-disconfirmation theory

• According to ED-theory, satisfaction is a
  function of three variables
• expectations regarding product performance formed
  prior to purchase
• perceptions of product performance resulting from
  experience with the product
• comparison of perceived performance with prior
  expectations, leading to positive or negative
  disconfirmation or confirmation

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Attribution theory

• success and failure experiences with products
  lead to positive or negative overall emotional
  reactions, but may also elicit causal inferences
  along three dimensions
• locus
• stability
• controllability
• (dis) satisfaction appears to be primarily
  related to locus of causality in addition,
  particular attributions seem to be linked to
  specific emotions (e.g., failures controllable by
  the marketer lead to anger) and may influence the
  type of redress sought (e.g., consumers prefer a
  refund to an exchange in the case of stable
  attributions for product failure)

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In-class exercise Satisfaction measurement

• How satisfied are customers with the company's
  product?
• What are the company's strengths and weaknesses?
• What recommendations would you make to the
  management of this company?
• What other data would you collect to assess how
  well the company satisfies its customers?

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Measurement and management of customer
satisfaction

• qualitative methods
• ghost shopping
• complaint and suggestion systems
• critical incident method (Bitner et al.)
• quantitative methods
• direct ratings of overall satisfaction
• derived measures of satisfaction
• importance-performance measures
• disconfirmation measures (GAPS, ACSI)

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Critical incident technique (Bitner et al.)

• critical incidents are specific interactions
  between customers and service firm employees that
  are especially satisfying or especially
  dissatisfying
• incident classification
• employee response to service delivery failure
  (e.g., unavailable or slow service)
• employee response to customer needs and requests
  (e.g., special needs, customer preferences,
  customer errors)
• unprompted and unsolicited employee actions
  (e.g., level of attention, unusual employee
  behavior)

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In-class exercise ACSI

• Read the description of the ACSI model and be
  prepared to discuss the constructs included in
  the model. Think about the 9 paths (arrows) in
  the model and try to figure out the sign of the
  relationships. Once you are familiar with the
  model, study the National Quarterly Scores (use
  the link on the home page). Pick an industry
  that youre interested in and study the
  historical performance of the major players in
  this industry. What are the implications of
  these scores for the future performance of these
  companies?

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American Customer Satisfaction Index(Fornell et
al.)

• market-based performance measure for firms,
  industries, economic sectors, and national
  economies assessment of overall customer
  satisfaction as well as its antecedents and
  consequences can be used for benchmarking over
  time and cross-sectionally

customer expectations
customer complaints
customer satisfaction
perceived value
customer loyalty
perceived quality
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The GAPS model
C O N S U M E R
WOM Personal Needs Past Experience
Expected Service
GAP 5
Perceived Service
External Communication to Consumers
M A R K E T E R
GAP 1
Service Delivery
GAP 4
GAP 3
Translation of Mgmt. Perceptions into SQ specs
GAP 2
Management Perceptions of Consumer Expectations
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Dimensions of perceived service
quality(Parasuraman, Zeithaml, and Berry)

• reliability ability to perform the promised
  service dependably, accurately, and on time
• assurance knowledge and courtesy of employees
  and their ability to inspire trust and
  confidence
• tangibles appearance of physical facilities,
  equipment, and contact personnel
• empathy caring, individualized attention the
  firm provides its customers
• responsiveness willingness to help customers and
  provide the requested service promptly

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Consequences of dissatisfaction

• responses to dissatisfaction
• do nothing
• avoid seller/brand in the future (exit)
• negative word of mouth to friends
• complain to seller or a third party (voice)
• action taken depends on such factors as the level
  of dissatisfaction, the importance of the
  product, the costs and benefits of actions,
  attribution of blame, and personal
  characteristics

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Loyalty

• a deeply held commitment to rebuy or repatronize
  a preferred product or service in the future,
  despite situational influences and marketing
  efforts having the potential to cause switching
  behavior (Oliver)
• often measured by share of purchases, intent to
  repurchase, RFM, retention and longevity,
  positive WOM, etc.

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Satisfaction and loyalty (Heskett et al.)
apostle
Loyalty (retention)
zone of affection
zone of indifference
zone of defection
terrorist
satisfaction
extremely dissatisfied
somewhat dissatisfied
slightly dissatisfied
satisfied
very satisfied
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Extending the duration of customer relationships

• the notion of exchange has shifted from a
  transaction paradigm to a relationship paradigm
• however, the economics of defections are often
  not well understood (e.g., can a reduction of
  defections by 5 really boost profits by 25 to
  85 ?)
• customers become more profitable over time
  because operating costs decline, purchases tend
  to increase, price premiums can be charged, and
  loyal customers provide free WOM

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How much profit a credit card customer generates
over time (Reichheld and Sasser)
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A credit card companys defection curve
(Reichheld and Sasser)

• Note Customer value refers to the net present
  value of the profit streams a customer generates
  over the average customer life.