Consumer Behavior Consumer Satisfaction

Consumer Satisfaction

Consumer Behavior Consumer Satisfaction

Outline
The concept of consumer satisfaction/ dissatisfaction Theoretical frameworks:
Expectancy-disconfirmation theory Attribution theory

Measurement and management of consumer satisfaction Consequences of satisfaction/dissatisfaction

Consumer Behavior Consumer Satisfaction

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

Consumer Behavior Consumer Satisfaction

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;

Consumer Behavior Consumer Satisfaction

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);

Consumer Behavior Consumer Satisfaction

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?

Consumer Behavior Consumer Satisfaction

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)

Consumer Behavior Consumer Satisfaction

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);

Consumer Behavior Consumer Satisfaction

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?

Consumer Behavior Consumer Satisfaction

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 satisfaction customer loyalty customer complaints

perceived value perceived quality

Consumer Behavior Consumer Satisfaction

The GAPS model

C O N S U M E R

Expected Service
GAP 5

WOM Personal Needs Past Experience

Perceived Service

M A R K E T E R

GAP 1 GAP 3

Service Delivery
GAP 4

External Communication to Consumers

Translation of Mgmt. Perceptions into SQ specs

GAP 2

Management Perceptions of Consumer Expectations

Consumer Behavior Consumer Satisfaction

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;

Consumer Behavior Consumer Satisfaction

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;

Consumer Behavior Consumer Satisfaction

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.;

Consumer Behavior Consumer Satisfaction

Satisfaction and loyalty (Heskett et al.)

Loyalty 100% (retention) apostle zone of affection

80% 60% 40% 20%

terrorist

zone of indifference zone of defection

0% 1
extremely dissatisfied

satisfaction

2
somewhat dissatisfied

3
slightly dissatisfied

4
satisfied

5
very satisfied

Consumer Behavior Consumer Satisfaction

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;

Consumer Behavior Consumer Satisfaction

How much profit a credit card customer generates over time (Reichheld and Sasser)
80 55

profit per customer

60 40 20 0 -20 -40 -60 -51 0 1 30

42

44

49

year

Consumer Behavior Consumer Satisfaction

A credit card companys defection curve (Reichheld and Sasser)

$1,000

customer value

$800 $600 $400 $200 $20 $0 50% $134 $38 40% $70 30% 20% 10% 0% $525 $300

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