Consumer Behaviour BHO2434 7/1/2013

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Week 10: Satisfaction and Dissatisfaction
Quester et al 2012
East, Wright & Vanhuele (2009)

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Continuing with the implications of consumer
behaviour theories
This week we consider
The implications of satisfaction and dissatisfaction
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Customer Satisfaction (CS) & Service Quality (SQ)
are the 2 constructs that are central to Customer
Retention which leads to business success

Numerically, Customer retention expressed as
Customer Lifetime Value (CLV)
CLV = time period * (Revenue Costs)
e.g., CLV of golf member: 10 yrs * ($600 - $250) =
$3500 + all the cross-selling opportunities in food
& beverages, equipment, clothing

Customer retention v costs recruiting new
customers


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Some customers leak away & we keep
replenishing with new customers refilling the
bucket

Need to weigh up costs of customer acquisition
v retention

Some customers do leak to competitors

Some customers simply stop being spending
customers

Perhaps we can plug the bucket better via
quality service & satisfying experiences for our
spectators, participants

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In addition to customer retention , positive impact of quality
service via:

Fewer complaints

Increased positive WOM

Cross-selling leads to cross-buying

Reduced remedial costs leading to reduced marketing costs;
increased volunteer base, etc
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Service Quality how close to excellent (expectations)
service would/did the service experience come?

Customer Services how pleasurable was the service
experience? How satisfied were you?

Difference = that Customer Service is experience dependent
whereas Service Quality can be perceived [most of you never
been to a corporate box at a stadium but you can imagine
(perceive) what the service might be like there]

Service Quality & Customer Services evaluations of:
- the service outlet itself [Technical Quality]
- contact personnel [process quality]
- other customers [process quality]
Consumer Behaviour BHO2434 7/1/2013
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1. Quality and satisfaction

2. Models of consumer satisfaction
1. Confirmation Model
2. Disconfirmation Model

3. Responses to customer satisfaction and
dissatisfaction

4. Complaining
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1. Quality Issues
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Customer satisfaction and dissatisfaction
(CSD) has become increasingly important in
marketing
TQM and CQI have been driven
Largely by the importance of satisfying customers
Improve quality of goods and services
increases satisfaction
Actual or perceived quality?
High quality products: more profits?

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Total quality management (TQM) and
Constant quality improvement (CQI)

Philosophy of management based on continual
improvement and responding to customer needs
and expectations
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What is it? Definition?
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The ability of the product to deliver
satisfaction to the customer?
A relative characteristic
Production versus aesthetic quality/Level versus
consistency
E.g. Toyota versus BMW
Customer defined
Assumption that it is crucial to have quality
as a competitive advantage
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Most companies assume that consumers are
willing to pay a premium for quality products
Therefore we would expect the quality
leaders to perform better than others over
the long term e.g. Stock market
Schilit (1994) points out that more than half
of quality award winners had loses after
winning the award
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2. Models of Consumer
Satisfaction
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It is a post-consumption evaluation that a
chosen alternative at least meets or exceeds
expectations.
(Engel et al., 1995)
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The buyers cognitive state of being
adequately or inadequately rewarded for the
sacrifice he/she has undergone
Oliver (1981) definition of disconfirmation
Summary psychological state
Disconfirmed expectations (prior feelings)
Short duration of surprise/excitement
Change of attituides

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5-17
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%)
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Satisfaction = Performance Expectation

Customer satisfaction depends on their:
Perception of the product performance
Expectations of the product performance beforehand

When you achieve or exceed expectations,
you have a satisfied customer
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5-19
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)

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Possible outcomes of a negative purchase
evaluation:

Taking no action
Switching brands, products or stores
Warning friends and colleagues
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Passives (14%)
Seldom take action, younger group, dont 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

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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
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Marketers need to satisfy consumer
expectations by:
creating reasonable expectations through
promotional efforts
maintaining consistent quality so that these
reasonable expectations are fulfilled
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Confirmation Model
Meeting consumer expectations

Disconfirmation Model
Disconfirmed expectation
Exceeding expectation (satisfaction)
Not fulfilling expectation (dissatisfaction)
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Consumption

Expected negative outcome

Discontent

Little complaint or product avoidance


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We often have habits that lead to
dissatisfaction but take no action
Do we fix leaking taps immediately?
Do we avoid going to Coles/Safeway when we know
there will be long queues?
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Consumption
RESPONSE
(word of mouth, complaint, switch, nothing
Expectation about
attributes
Perception of
actual attributes
Disconfirmation
Perception expectation

Dissatisfaction (modified by explanation
such as bad luck, responsibility etc.
Expectation,
attitude,
loyalty and
consumption
are affected.
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Most products perform at out about our level
of expectation
E.g. Customers of fast food restaurants are largely
satisfied
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Define in your own words what satisfaction
and dissatisfaction are
Give an example of a situation when you have been
surprised as a consumer:
Were you satisfied?
Were you dissatisfied?
What did you do?
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3. Responses to satisfaction and
dissatisfaction
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Most consumers are reluctant to complain
As many as 95% of respondents indicate they did
not complain when dissatisfied

Risk of Negative Word of Mouth (NWOM) is
not high
Not only do very few people complain, very few
people react to NWOM
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Think about the last time you actually took
the time to complain to a company
Describe the situation
Was the complaint handled well?
If so, why?
If not, what could have been done better?
Was there a successful service recovery?
Did you tell others?
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Reduces the negative comments to other
potential customers?

After a successful service recovery is the
consumer more likely to repeat purchase?

Will service recovery raise loyalty?
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Common in airlines, trains and wherever
queues form
In the past very little communication
Now more common to communicate honestly with
the customer
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Prime relevant expectation
Forewarning customers about problems (price
increases)
Reveal hidden benefits
Focus on certain characteristics
Cue negative beliefs about competitors
Competitive advertising
Dont draw attention to the unnoticed
Do not apologise for minor shortfalls
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Measuring Customer Satisfaction
and Service Quality
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Satisfaction and dissatisfaction are often
measured
Market researchers are often hired to conduct a
companys satisfaction tracking
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Qualitative measurement techniques

Focus groups

Monitoring surveys
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SERVQUAL is a service quality measurement
instrument
Measures expectations versus perception

Other measures include
Importance and performance scoring
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Indirect measures monitoring customer complaints;
monitoring customer retention rates

Direct measures by market research personal or self
completion surveys using rating scales with why (open-
ended) & how might we improve questions
- by free-to-consumer communication opportunities
web discussion sites, toll-free numbers, postage-paid
cards, phone follow-ups

Service recovery & follow-up complaint resolution
sometimes can cement greater loyalty
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Concluding thought: Note how market research is used to
inform organisation of its customers viewskeeping a
finger on the pulse

Generally one conducts Service Quality measures for facilities,
& Customer Service measures for more global issues whole
experience, vis--vis competition

Research (van Leeuwen 2001) shows product extensions
contribute more to Customer Service than contest luckily
as marketers have more control over product extensions

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Segmentation, targeting and positioning

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