Chapter 5 - Post Purchase Processes

Consumer Behaviour (704003)
Chapter 5:
POST-PURCHASE PROCESSES,
CUSTOMER SATISFACTION and
CONSUMER COMMITMENT
01 DESCRIBE THE VARIOUS POSTPURCHASE PROCESSES
ENGAGED IN BY CONSUMERS.
LEARNING OBJECTIVES
02 DEFINE and DISCUSS

POSTPURCHASE DISSONANCE
03 DISCUSS THE ISSUES SURROUNDING PRODUCT USE AND

NONUSE and THEIR IMPORTANCE TO MARKETERS
04 SUMMARIZE DISPOSITION OPTIONS and

THEIR RELEVANCE TO MARKETERS
05 EXPLAIN THE DETERMINANTS and OUTCOMES OF

SATISFACTION and DISSATISFACTION
06 DESCRIBE THE RELATIONSHIP BETWEEN SATISFACTION,

REPEAT PURCHASE, and CUSTOMER COMMITMENT
Overview
Consumer Decision-Making Process
Problem or Post-
Information Evaluation of Purchase
Need purchase
Search Alternatives Decision
Recognition Behavior
704003 - Post purchase processes, customer satisfaction and consumer loyalty (Mai Nguyen) 3
Postpurchase Consumer Behavior Processes Fig 18-1
Purchase
Postpurchase
dissonance Nonuse
Usage
Product Complaint
disposal
Evaluation
behavior
Satisfaction
Committed Repeat Increased Brand Discontinued

customers purchases use switching use
4
Ch ap te r 05
Po st- pu rc ha se
5.1 Post-purchase Dissonance
Pr oc esses
5.2 Product Use and Nonuse
C ust omer
Sat isfac ti on
5.3 Disposition
C on su m e r
C omm it men t Purchase Evaluation and Customer
5.4
Satisfaction
5.5 Dissatisfaction Responses
Customer Satisfaction, Repeat Purchases
5.6
and Customer Commitment
Ch ap te r 05
Po st- pu rc ha se
Pr oc esses
C ust omer
Sat isfac ti on
5.3 Disposition
C on su m e r
5.4
Satisfaction
5.6
DEFINITION
A common consumer reaction
characterized by doubt or anxiety
after making a significant, relatively
permanent purchase decision.
5.1 Post-purchase Dissonance (cont.)
a) Factors influencing the possibility and intensity

of post-purchase dissonance
b) Consumers’ approaches to reduce

post-purchase dissonance
c) Consumption guilt
d) Marketing strategies that help reduce post-

purchase dissonance
a) Factors influencing the possibility and

intensity of post-purchase dissonance
 The degree of commitment or irrevocability of the

decision
 The importance of the decision to the consumer
 The difficulty of choosing among the alternatives
 The individual’s tendency to experience anxiety
b) Consumers’ approaches to reduce

post-purchase 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
c) Consumption Guilt
Negative emotions or guilt feelings aroused by the

use of a product or a service
d) Marketing Strategies
 Confirm wisdom of purchase to reduce post-

purchase dissonance
(via advertising and follow-up sales communication)
 Validate the use of product to address

consumption guilt
SUM UP
 Post-purchase dissonance and consumption guilt are common
consumer reactions
 Post-purchase dissonance can be more likely to happen if the

purchase decision was difficult, expensive, important, or
permanent.
 Consumers may use various strategies to reduce this feeling
 Marketers can address post-purchase dissonance through effective

communication and support mechanisms.
Ch ap te r 05
Po st- pu rc ha se
Pr oc esses
C ust omer
Sat isfac ti on
5.3 Disposition
C on su m e r
5.4
Satisfaction
5.6
5.2.1 Product Use & Product Nonuse
Product Use
the way that consumers interact
with a product after they have
purchased it.
Functional product use Symbolic product use
Consumer using the product Consumer using the product

for its intended purpose to express oneself or to
achieve a certain social
status
Importance & Benefits of Understanding Product Use
a) Design more effective product designs

that meet the needs of consumers
b) Develop more effective marketing

campaigns that resonate with consumers
Importance & Benefits of Understanding Product Use
c) Identify new product opportunities that

help expand market and boost sales
 Use Innovativeness
 Complementary Products
d) Reduce product liability risks that can

result in legal consequences and negative
publicity
Product Use & 5.2.2 Product Nonuse
Product Nonuse occurs when a consumer

actively acquires a product that is not used or
used only sparingly relative to potential use
o Why Product Nonuse Occurs

o How Product Nonuse Affects Marketers
o How to Reduce Product Nonuse
Product Use & 5.2.2 Product Nonuse (cont.)
Purchase Decision & Usage Decision
• Simultaneous Purchase and Usage Decision

• Separate Purchase and Usage Decision
Why Product Nonuse Occurs?
• The consumer changes their mind between the

purchase and the potential usage occasion.
• The consumer is not happy with product

performance, features, or value.
• The product may no longer meet the needs of the

consumer
• The consumer forgets about the product or forget

how to use it.
Why Product Nonuse Occurs? (cont.)
• The product is outdated and is no longer useful
• The consumer has trouble finding the time or

motivation to use the product.
• The product is not as useful or enjoyable as the

consumer expected.
• Using the product is too costly and there are

more economical alternatives or options
Why Product Nonuse Occurs? (cont.)
• The product is difficult to use or inconvenient.
• The consumer may have replaced the product

with a newer or better version
• Some consumers just stock up items
How Product Nonuse Affects Marketers
 Reduced repeat sales
 Customer dissatisfaction
 Negative WOM
 Lost positive referrals
How Product Nonuse affects marketers (cont.)
 Reduced brand loyalty
 Brand erosion
 Increased costs
Suggested approaches to reduce product nonuse:
 Educate consumers about product benefits

and use.
 Remind and encourage product use.
 Suggest appropriate product use

occasions.
Suggested approaches to reduce product nonuse (cont.)
 Make products easy to use and

convenient.
 Offer a liberal return policy.
 Use online tools to help consumers find

the right products.
5.2 Product Use & Product Nonuse (cont.)
RECAP
 Product use and nonuse are important to marketers

because they can impact sales, customer satisfaction, and
brand reputation.
 Marketers can learn a lot about their products and

customers by monitoring product usage.
 Product nonuse can be a costly problem for both marketers

and consumers.
 Marketers can use a variety of strategies to reduce product

nonuse and encourage product use.
27
Ch ap te r 05
Po st- pu rc ha se
Pr oc esses
C ust omer
Sat isfac ti on
5.3 Disposition
C on su m e r
5.4
Satisfaction
5.6
5.3 Disposition
Product or packaging disposition can occur

before, during, or after use
5.3.1 Disposition Alternatives

5.3.2 Product Disposition and Marketing Strategy
5.3.1 Disposition Alternatives Fig 18-2
Recycle
Throw away as
Use for garbage
original
purpose Package
Trade in
Use for new

Retain Get rid of
purpose Sell to end user,
to middleman,
via middleman
Store Product Give away

To be used
To be sold
Loan
12/12/2016
704003 - Evaluating and selecting alternatives
5.3 Disposition
Why marketers should be concerned of product disposition?
 Long-term environmental reasons
 Short-term economic reasons
5.3 Disposition
Five major ways of disposition decisions that can affect a firm's

marketing strategy
Reasons for Concerns Affect on firm's marketing strategy

1. Consumers are reluctant to  Can influence the timing and
purchase a new item until they likelihood of repurchase
have “gotten their money’s 
worth” from the old one
o Should allow old items to be
traded in
5.3 Disposition
Five major ways disposition decisions that can affect a firm's

marketing strategy (cont.)
2. Disposition sometimes must  Can impede acquisition of new

occur before acquisition of a customers
replacement because of space 
or financial limitations
o Should assist consumers in the
disposition process
5.3 Disposition

3. The consumers’ frequent  Used-product market can hurt

decisions to sell, trade, or give sales of new products
away used products generate a 
large used-product market
o Should have strategies to deal
with this competition
5.3 Disposition

4. More and more consumers are  Can appeal to more

concerned with waste and how environmentally conscious
their purchase decisions affect consumers
waste

o Should take steps to ensure that
products have minimal waste
and/or can be reused
5.3 Disposition

5. Environmentally sound  Should develop products,

disposition decisions benefit packages, and programs that
society as a whole. encourage proper disposition
Firms and employees are also decisions
part of that society
5.3 Disposition (cont.)
Sum up
 Product or packaging disposition can

occur before, during, or after use.
 There are a variety of ways to dispose of

products and packaging, including
recycling, reuse, and disposal
 e-Waste is a growing problem in some

countries
5.3 Disposition (cont.)
Sum up (cont.)
 Companies and Consumers can play a role

in reducing product and packaging waste
o Companies: by designing their products and

packaging with sustainability in mind.
o Consumers: by understanding the different ways

that products and packaging can be disposed of
Ch ap te r 05
Po st- pu rc ha se
Pr oc esses
C ust omer
Sat isfac ti on
5.3 Disposition
C on su m e r
C omm it men t Purchase Evaluation and
5.4
Customer Satisfaction
5.6
5.4 Purchase Evaluation & Customer Satisfaction
5.4.1 The Evaluation Process
1. Expected Performance (Expectations):
Level of performance that
consumers expect from a product
Purchase
2. Perceived Performance: Usage

Consumers evaluating the
level of performance that
they actually experience from
a product against their Evaluation
expectations
 Dissatisfaction Satisfaction
 Nonsatisfaction
 Satisfaction
40
5.4.1 The Evaluation Process
1. EXPECTED PERFORMANCE
Purchase
Usage
2. PERCEIVED PERFORMANCE
Evaluation
 Dissatisfaction Satisfaction
 Nonsatisfaction
 Satisfaction
41
5.4.1 The Evaluation Process (cont.)
1. Expected Performance
 Consumer’s expectations for a product
 Based on a variety of factors
 Different levels of expectations for different

products, depending on the product
category and the situation
2. Product Perceived Performance

 Consumer's subjective judgment of how well
a product meets their expectations
4. Results
 Satisfaction & Brand Commitment: product
exceeding expectations
 Satisfaction: product meeting expectations
 Dissatisfaction: product performing below

expectations
 Nonsatisfaction: product confirming

consumers’ low expectation of that product
44
Satisfaction
Repeat Increased Brand Committed

purchases use advocacy customers
Significant Impact of Consumer Satisfaction on Future Purchase Decisions
45
5.4.2 Causes of Satisfaction and Dissatisfaction
Why people switch service providers?

(from major research results)
Critical Reasons
Performance Dimensions
 Core function failure 44%
 Service encounter failures 34%
 Pricing 30%
 Inconvenience 24%

Minor Reasons
Performance Dimensions
 Responses to service failures 17%
 Attraction by competitors 10%
 Ethical problems 7%
 Involuntary switching 6%

 Major causes are the perceived problems with their

current service provider, not because of competitor
actions!
 For many products, complete satisfaction requires

adequate performance on both Instrumental and
Expressive (Symbolic) dimensions
 Satisfaction can also come from product Affective

Performance
48
Ch ap te r 05
Po st- pu rc ha se
Pr oc esses
C ust omer
Sat isfac ti on
5.3 Disposition
C on su m e r
5.4
Satisfaction
5.6
Dissatisfaction
Take action Take no action
Less favorable
attitudes
Complain to
Complain to Stop buying Engage in
private or Initiate legal
stores or to that brand or negative
government action
manufacturers that store W.O.M.
agencies
50
5.5 Dissatisfaction Responses (cont.)
Most dissatisfied consumers are likely to:
 switch brands, engage in negative WOM, instead of

complaining to companies
 engage more in negative WOM than satisfied

consumers do in positive WOM
5.5.1 Marketing Strategy and Dissatisfied Customers
A. Satisfying consumer expectations

to avoid negative WOM
B. Handling the viral effect of negative WOM on social

media
C. Making it easy for consumers to complain
D. Proactively handling and learning from customer

complaints
A. Satisfying consumer expectations to avoid negative WOM

Strategies
 Set clear and reasonable expectations
 Maintain consistent quality
 Be transparent and honest with customers
 Empower customer service representatives to resolve
problems quickly and easily
B. Handling the viral effect of negative WOM on social media

Strategies
 Monitor social media for negative mentions of your brand
 Be proactive in responding to negative WOM
 Use social media to share positive customer experiences
 Partner with social media influencers
 Offer incentives for positive reviews
C. Making it easy for consumers to complain

Strategies
 Provide multiple channels for complaint submission
 Make the complaint process simple and easy to follow.
 Provide timely and effective responses
 Offer solutions that resolve the consumer's problem
 Go above and beyond to resolve the consumer's problem
 Be transparent and honest with consumers
D. Proactively handling and learning from customer complaints

Strategies
 Create an internal process for handling customer
complaint
 Empower and train your customer service representatives
to be proactive
 Use technology to track customer complaints
 Use customer complaints to improve R&D and marketing
campaigns
Ch ap te r 05
Po st- pu rc ha se
Pr oc esses
C ust omer
Sat isfac ti on
5.3 Disposition
C on su m e r
5.4
Satisfaction
Customer Satisfaction, Repeat
5.6 Purchases and Customer
Commitment
5.6 Customer Satisfaction,
Repeat Purchases & Customer Commitment
Committed customers: Customers

with brand advocacy and loyalty.
Unlikely to switch brands.
Committed Repeat purchasers: purchased the

Customers brand more than once. Likely to
continue buying but still vulnerable
Repeat Purchasers to competitor actions
Satisfied Buyers
Satisfied buyers: purchased and satisfied
Total Buyers
with a product. Likely to repurchase, but
not necessarily committed or loyal
Total buyers: purchased the brand at least once. Potential market for the
company, but not necessarily loyal or satisfied
58
5.6.1 Repeat Purchasers, Committed Customers, and Profits
 Churn
 Customer Acquisition Cost (CAC)
 Customer Retention Costs (CRC)
 Customer Lifetime Value (CLTV)
59
 Churn
The turnover in a firm’s customer base
Example: year 2022
o Customer base = 100 customers
o 20 left
o Churn rate = 20% (20/100)
60
 Customer Acquisition Cost (CAC)

The total cost of acquiring a new customer
Example:
o $2,000 on Search Engine Advertising (SEA) costs
o $8,000 on Content Marketing costs
o 10,000 new customers
o CAC = $10/customer
61
 Customer Retention Costs (CRC)

The average cost of keeping one existing customer
Example:
o Customer retention activities costs:
 $5,000 on customer support

 $10,000 on loyalty programs
o 1,000 retained customers
o CRC = $15/customer ($15,000/1,000)
62
 Customer Lifetime Value (CLTV)

Predicted net profit generated over the entire future
relationship with a customer
CLTV = Average Customer Purchase Value * Average Customer Lifespan
o Average customer purchase value: The average amount of revenue

that a customer generates for a business over the course of their
relationship with the business.
o Average customer lifetime: The average number of years that a

customer is expected to remain a customer of a business.
Example:
• Company average customer lifetime: 5 years
• Company average customer value: $1,000 per year.
• Company's CLTV = $5,000 ($1,000 * 5 years)
63
Facts:
 Customer Acquisition Cost (CAC) is usually higher

than Customer Retention Cost (CRC)
 Repeat Purchasers and Committed Customers are

more profitable than new customers
 Repeat Purchasers and Committed Customers

(with CLTV increasing over time) are more
profitable than some unprofitable customers
64
5.6 Customer
Sources of Increased Customer Profitability over Time Satisfaction,
Figure 18-5
Price premium: repeat and committed customers tending to buy the brand
consistently rather than waiting for a sale or continually negotiating price
Referrals: profits generated by new customers acquired as a result of

recommendations from existing customers
Lower costs: occur because both the firm and the

customer learn how to interact more efficiently over time
Increased sales volume:

customers tending to use
a wider array of a firm’s
products and services
over time
Strategies to improve profitability:
 Reducing churn rate
 Increasing CLTV
 Retaining Repeat Purchasers and Committed

Customers
 Converting customers into brand loyalists

Total buyers  satisfied  repeat  committed
66
5.6.2 Repeat Purchasers, Committed Customers, and Marketing Strategy
Marketing objectives must be specific
1. Attract new users to the product category.
2. Capture competitors’ current customers.
3. Encourage current customers to use more.
4. Encourage current customers to become repeat

purchasers.
5. Encourage current customers to become committed

customers.
67
Objectives
1. Attract new users to the product category.
2. Capture competitors’ current customers.
Strategies
 Convince potential customers with superior value
 Retain customers after the initial sale
 Generate positive, or at least neutral, WOM
communications.
68
Objectives:
3. Encourage current customers to use more.
4. Encourage current customers to become repeat

purchasers.
5. Encourage current customers to become committed

customers.
Strategies
 Focus on Relationship Marketing
69
Customer Satisfaction Outcomes Fig 18-6
Our total
Increased
products
use
Repeat
purchases
Consumer Superior Perceived
decision value SALES value Customer
process expected delivered satisfaction
Brand
loyalty
Competitor
total WOM
products
Relationship Marketing:
“An attempt to develop an ongoing,

expanding exchange relationship with
customers”
71
Relationship Marketing 5 Key Elements
1. Developing a core product around which to build a

customer relationship.
2. Customizing the relationship to the individual customer.
3. Augmenting the core service or product with extra

benefits.
4. Pricing in a manner to encourage loyalty.
5. Marketing to employees so that they will perform well for

customers.
72
Ch ap te r 05
Po st- pu rc ha se
Pr oc esses
C ust omer
Sat isfac ti on
5.3 Disposition
C on su m e r
5.4
Satisfaction
5.6
Postpurchase Consumer Behavior Processes Fig 18-1
Purchase
Postpurchase
dissonance Nonuse
Usage
Product Complaint
disposal
Evaluation
behavior
Satisfaction
Committed Repeat Increased Brand Discontinued

customers purchases use switching use
74

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Consumer Behaviour (704003)

02 DEFINE and DISCUSS

03 DISCUSS THE ISSUES SURROUNDING PRODUCT USE AND

04 SUMMARIZE DISPOSITION OPTIONS and

05 EXPLAIN THE DETERMINANTS and OUTCOMES OF

06 DESCRIBE THE RELATIONSHIP BETWEEN SATISFACTION,

Consumer Decision-Making Process

Committed Repeat Increased Brand Discontinued

a) Factors influencing the possibility and intensity

b) Consumers’ approaches to reduce

d) Marketing strategies that help reduce post-

a) Factors influencing the possibility and

 The degree of commitment or irrevocability of the

 The importance of the decision to the consumer

 The difficulty of choosing among the alternatives

 The individual’s tendency to experience anxiety

b) Consumers’ approaches to reduce

 Increase the desirability of the brand purchased

 Decrease the desirability of rejected alternatives

 Decrease the importance of the purchase decision

 Reverse the purchase decision

Negative emotions or guilt feelings aroused by the

 Confirm wisdom of purchase to reduce post-

 Validate the use of product to address

 Post-purchase dissonance can be more likely to happen if the

 Consumers may use various strategies to reduce this feeling

 Marketers can address post-purchase dissonance through effective

Functional product use Symbolic product use

Consumer using the product Consumer using the product

Importance & Benefits of Understanding Product Use

a) Design more effective product designs

b) Develop more effective marketing

Importance & Benefits of Understanding Product Use

c) Identify new product opportunities that

d) Reduce product liability risks that can

Product Nonuse occurs when a consumer

o Why Product Nonuse Occurs

Purchase Decision & Usage Decision

• Simultaneous Purchase and Usage Decision

Why Product Nonuse Occurs?

• The consumer changes their mind between the

• The consumer is not happy with product

• The product may no longer meet the needs of the

• The consumer forgets about the product or forget

Why Product Nonuse Occurs? (cont.)

• The product is outdated and is no longer useful

• The consumer has trouble finding the time or

• The product is not as useful or enjoyable as the

• Using the product is too costly and there are

Why Product Nonuse Occurs? (cont.)

• The product is difficult to use or inconvenient.

• The consumer may have replaced the product

• Some consumers just stock up items

How Product Nonuse Affects Marketers

 Reduced repeat sales

How Product Nonuse affects marketers (cont.)

 Reduced brand loyalty

Suggested approaches to reduce product nonuse:

 Educate consumers about product benefits

 Remind and encourage product use.

 Suggest appropriate product use

Suggested approaches to reduce product nonuse (cont.)

 Make products easy to use and