Chapter Seven:

Post-purchase processes,
customer satisfaction and
consumer loyalty

7-1
Post-purchase processes, customer satisfaction
and consumer loyalty
Final consideration in the consumer decision
making process

7-2
 Postpurchase processes, customer
satisfaction and consumer loyalty
• Postpurchase process
• Postpurchase dissonance
• Why product use is important to
marketers
• Why product disposal is important to
consumers
• Concept of customer satisfaction
• Concept of consumer loyalty
7-3
 Postpurchase processes
• Postpurchase dissonance
• Product use and non-use
• Disposal
• Purchase evaluation
• Customer satisfaction, repeat purchase
behaviour and consumer loyalty

7-4
 Post purchase dissonance
• Some purchases are followed by post
purchase dissonance
• Probability of post purchase dissonance
and the magnitude of dissonance is a
function of the:
– degree of commitment and/or whether the
decision can be revoked
– importance of the decision to the consumer
– difficulty of choosing among the alternatives
– individual’s tendency to experience anxiety

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Post-purchase consumer behavior

7-6
Postpurchase Dissonance

After the purchase is made, the consumer may utilize one

or more of the following to reduce dissonance:

Increase the desirability of the brand purchased

Decrease the desirability of rejected alternatives

Decrease the importance of the purchase decision

Reverse the purchase decision (return before use)

7-7
Postpurchase Dissonance

Consumption guilt - when

guilt feelings are aroused by
the product/service use.
Marketers need to focus on
validating the consumption
for “high guilt” products.

Indulging in chocolate for some can cause

consumption guilt

7-8
Postpurchase Dissonance

What If?
Marketers often encourage counterfactual and prefactual
thinking (e.g., in state lottery ads).
Counterfactual thinking Prefactual thinking is the
refers to imaging the same as counterfactual
outcome if a different except it occurs before a
decision had been made in decision is made.
the past.

What ethical issues, if any are there with state lotteries

encouraging counterfactual and prefactual thinking about
winning the lottery?
7-9
 Product use and non-use
• Product use
– use innovativeness
– regional variations
– multiple vs single use
• Packaging
• Defective products
– product recalls

7-10
Product-usage index for VCR,
microwave and PC

7-11
Product Use and Nonuse
Product Use
Marketers need to understand how consumers use their
products.

Use innovativeness refers to a

consumer using a product in a new
way.

Marketers who discover new uses

for their products can greatly
expand sales.
Classic example of how use
innovativeness helped A&M
increase sales!
7-12
Applications in Consumer Behavior

The Arm & Hammer

web site provides
another avenue for
marketers to
communicate new
uses!

Courtesy Church & Dwight Co., Inc.

7-13
Unique packaging for competitive advantage

7-14
Product Use and Nonuse
Product Use
Many firms attempt to obtain relevant information on
product usage via surveys using standard questionnaires.

Surveys can provide useful information, but often deeper

insights can be produced via

• observation

• depth interviews, and

• case studies

7-15
Product Use and Nonuse
Product Use
Retailers can frequently take advantage of the fact that
the use of one product may require or suggest the use
of other products, e.g., dresses and shoes.

Retailers can promote such items

• jointly
• display them together, or
• train sales personnel to make
relevant complementary sales Displaying complementary products
together

7-16
Product Use and Nonuse
Product Use
Stringent product liability laws have made firms
responsible for harm caused by products not only

when the product is used as specified by the

manufacturer, but

in any reasonably foreseeable use of the

products.

When marketers discover confusion about proper use,

they should engage in communications to increase the
chances of proper use.
7-17
Product Use and Nonuse
Product Nonuse
Product nonuse occurs when a consumer actively
acquires a product that is not used or used only sparingly
relative to its potential use.

The division between the initial purchase decision and the

decision to consume is particularly strong with catalog and
online purchases.

7-18
 Incidence of product recalls in Australia
Year Consumer Food Therapeutic Motor
goods vehicles
2005-6 187 69 325 156

2004-5 160 62 381 155

2003-4 165 80 436 128

2002-3 179 81 448 99

2001-2 209 73 265 95

2000-1 111 36 172 115

1999-2000 95 55 141 89

Ref: www.recalls.gov.au/stats_recall.php

7-19
Disposition

Disposition of product or product container may occur

before, during, or after use. Or, for products that are
completely consumed, no disposition may be involved.
A physical product often continues to
exist even though it may no longer
meet a consumer’s needs.
Exploding demand and short product
spans for high-tech items is creating a
growing concern over e-waste.
Refrigerator dump site in the United Kingdom

7-20
Product-disposal alternatives

7-21
 Product disposal and
marketing strategy
• Recycling
– product
– package

• Trade-ins
– to motivate replacement

• Second-hand markets
– E.g. textbooks, clothes
– ‘Cash converters’

7-22
Disposition
Product Disposition and Marketing Strategy
Five major ways disposition decisions that can affect a
firm’s marketing strategy:

1. Reluctance to purchase a new item until they have

“gotten their money’s worth” from the old one.
2. Requiring disposition to occur before acquiring a
replacement due to space or financial limitations.

7-23
Disposition

Product Disposition and Marketing Strategy

3. Consumer selling, trading, or giving away used
products may result in a large used-product market.
4. Many consumers are concerned with waste and how
their purchase decisions affect waste.
5. Environmentally sound disposition decisions benefit
society as a whole, including the firms that are part of
that society.

7-24
 Purchase evaluation

• Evaluation of a purchase is
influenced by:

– Expectations
– Perceived performance

7-25
Purchase Evaluation and Customer
Satisfaction
The Evaluation Process

Expectations, Performance, and Satisfaction

7-26
Expectations, performance and satisfaction

7-27
Purchase Evaluation and Customer
Satisfaction
The Evaluation Process
Determinants of Satisfaction and Dissatisfaction

Instrumental performance relates to the physical functioning of

the product.

Symbolic performance relates to aesthetic or image-

enhancement performance.

Affective performance is the emotional response that owning or

using the product or outlet provides

7-28
 Dissatisfaction responses
• Possible outcomes of a negative purchase
evaluation:

1. Taking no action
2. Switching brands, products or stores
3. Warning friends and colleagues

7-29
Dissatisfaction Responses

7-30
 Actions taken by consumers in
response to product dissatisfaction

7-31
 Dimensions of performance
• Customers switch ‘away’ from service
providers rather than ‘to’ providers.
• In one study the reasons were:
– Core service failure (44%)
– Service encounter failures (34%)
– Inconvenience (21%)
– Response to service failures (17%)
– Attraction to competitors (10%)
– Ethical problems (7%)
– Involuntary switching (6%)

7-32
Four types of response styles associated
with dissatisfaction have been identified:
• Passives (14%)
– Seldom take action, younger group, don’t see a benefit from
complaining

• Voices (37%)
– Seldom take private or public action, usually complain directly to
the firm, older group, believe they are providing a social benefit

• Irates (21%)
– Take above average levels of private response and average
levels of direct action, but low levels of public action

• Activists (28%)
– Likely to get involved in private, direct and public action, believe
they are providing social benefits by complaining

7-33
 Marketing strategy and dissatisfied
consumers
• Marketers need to satisfy consumer
expectations by:
1. creating reasonable expectations
through promotional efforts
2. maintaining consistent quality so
that these reasonable
expectations are fulfilled

7-34
Dissatisfaction Responses

Marketing Strategy and Dissatisfied Consumers

When a consumer is dissatisfied, the most favorable

consequence is for the person to communicate this
dissatisfaction to the firm but to no one else.

Unfortunately, many individuals do not communicate their

dissatisfaction to the firm involved.

Companies often make it difficult to complain or are

unresponsive to complaints.

7-35
Dissatisfaction Responses

Marketing Strategy and Dissatisfied Consumers

Toll free call centers and hotlines are one approach used by
many companies.

Consumers increasingly expect to be able to express

complaints via email - firms that respond quickly to such
complaints can great increase customer satisfaction.

7-36
 Importance of customer satisfaction

• The business of business is getting and

keeping customers.
(Drucker, 1979)

• Delivering high-quality service and high

customer satisfaction is closely linked to
profits, cost savings, and market share.
(PIMS, Profit Impact of Market Share, 1970s)

7-37
Customers Satisfaction, Repeat Purchases,
and Customer Commitment
Customer Satisfaction Outcomes

7-38
Customers Satisfaction, Repeat Purchases,
and Customer Commitment
Creating Committed Customers
Is Increasingly the Focus of Marketing Strategy

7-39
Customers Satisfaction, Repeat Purchases,
and Customer Commitment
Repeat purchasers continue to buy the same
brand though they do not have an emotional
attachment to it.

Switching costs are the costs of finding,

evaluating, and adopting another solution.

Brand loyalty involves commitment to the brand –

it is a biased behavioral response expressed over
time.

7-40
Customers Satisfaction, Repeat Purchases,
and Customer Commitment
Repeat Purchasers, Committed Customers, and Profits

A churn is a turnover in a firm’s customer base.

Reducing churn is a major objective of many firms today.

It typically costs more to obtain a new customer than

to retain an existing one, and new customers generally
are not as profitable as longer-term customers!

7-41
Customers Satisfaction, Repeat Purchases,
and Customer Commitment
Sources of Increased Customer Profitability over Time

7-42
 Customers Satisfaction, Repeat Purchases,
and Customer Commitment
Repeat Purchasers, Committed Customers, and Marketing
Strategy
Developing a marketing strategy for a particular segment includes
identifying specific objectives to be pursued, such as

1. Attracting new users to the product category

2. Capturing competitors’ current customers
3. Encouraging current customers to use more
4. Encouraging current customers to become repeat
purchasers
5. Encouraging current customers to become committed
customers

7-43
 Repeat purchase behaviour
Note the difference between:

• Brand loyalty
– Implies a psychological commitment to the brand

and

• Repeat purchase behaviour

– simply involves the frequent repurchase of the
brand

7-44
 Brand loyalty is
• Biased
• A behavioural response
• Expressed over time
• A consumer selects a brand over
alternative brands
• A function of psychological processes

7-45
 Value of customer loyalty
1. Increased purchases of the existing product
2. Cross-purchases of your other products
3. Price premium due to their appreciation of
your added-value services
4. Reduced operating cost because of
familiarity with your service system
5. Positive word-of-mouth that refers other
customers to your firm

7-46
“Loyal customers expect a good price,
but they crave value most of all.”
(Palmer, 1996)

7-47
• Rule No. 1
The customer is always right.

• Rule No.2
If the customer is not right, then refer to
Rule No. 1!

7-48
Customers Satisfaction, Repeat Purchases,
and Customer Commitment
Relationship Marketing
Relationship marketing is an attempt to develop an ongoing,
expanding exchange relationship with a firm’s customers.
Relationship marketing involves:
• databases
• customized mass communications, and
• advanced employee training and motivation

7-49
Customers Satisfaction, Repeat Purchases,
and Customer Commitment
Relationship Marketing

Customer loyalty programs, such as frequent-flier

programs, are designed to generate repeat purchases.
However, they do not necessarily create committed
customers.

Generating committed
customers requires a
customer-focused attitude
in the firm.

7-50
 Relationship marketing
Five key elements:
1. Developing a core product/service on which
to build
2. Customising the relationship to the
individual customer
3. Augmenting the core product/service with
extra benefits
4. Pricing in a manner that encourages loyalty
5. Marketing to employees so that they
perform well for customers

7-51
 Using technology
• Modern information technology makes
possible these close, ‘customised’
relationships that add customer perceived-
value to the product/service
– E.g. preferred seats on a airline,
– Type of hotel suite
– Car servicing details

7-52
 Measuring customer satisfaction
1. Qualitative measurement techniques

2. Focus groups

3. Monitoring surveys

7-53
 Summary of key topics in the
chapter:
We have discussed:
• The post purchase process
• The post purchase dissonance
• Why product use is important to marketers
• Why product disposal is important to
consumers
• Concept of customer satisfaction
• Concept of consumer loyalty

7-54