Literature Review-Advanced Applied Business Research

Muhammad Shumail 06682

Project name: Customer Care Evaluation of Wi-Tribe

Article 1:
Why Do Customer Relationship Management Applications Affect Customer
Satisfaction?
Author(s): Sunil Mithas, M. S. Krishnan and Claes Fornell
Source: Journal of Marketing, Vol. 69, No. 4 (Oct., 2005), pp. 201-209
Published by: American Marketing Association
Stable URL: http://www.jstor.org/stable/30166562 .
Impact factor: 3.819

Why Do Customer
Relationship Management Applications Affect Customer Satisfaction?.pdf

Literature Review-Advanced Applied Business Research

Muhammad Shumail 06682

This article focuses on the correlation of customer relationship management

on customer knowledge and customer satisfaction. Keeping in mind the US
firms and how these firms focus on relationship management applications
with customer to reap maximum customer satisfaction and retention.
Indirectly how firms evaluate whether they should invest in customer
relationship programs to enhance customer satisfaction and retention which
is highly relevant with our project on customer care centers and whether
they are adequate or not.
It is done through evaluating qualitative research and focusing on various
other empirical studies and research models. They examine and investigate
on customer knowledge and customer awareness initially. Marketing is all
about customer centered focus therefore research methodology and model is
evaluated to reap the maximum understanding of the customer. This is an
integral part of an ongoing process to sustain competitive advantage.
A primary motivation for a firm to implement CRM applications is to track
customer behavior to gain insight into customer tastes and evolving needs.
By organizing and using this information, firms can design and develop
better products and services. A lot of companies invest in IT infrastructures
to cater to customers evolving needs and respond in time.
There have proven studies which show that customer satisfaction has
significant implications for the economic performance of firms. For example,
customer satisfaction has been found to have a negative impact on customer
complaints and a positive impact on customer loyalty and usage behavior.
Increased customer loyalty may increase usage levels, secure future
revenues, and minimize the likelihood of customer defection. Customer
satisfaction may also reduce costs related to warranties, complaints,
defective goods, and field service costs (Fornell 1992). Finally, in a recent
study, Anderson, Fornell, and Mazvancheryl (2004) find a strong relationship

Literature Review-Advanced Applied Business Research

Muhammad Shumail 06682

between customer satisfaction and Tobin's q (as a measure of shareholder

value) after controlling for fixed, random, and unobservable factors.
The variable considered for customer satisfaction is the perceived quality.
Further hypothesis are set below to understand in detail.
H1: The use of CRM applications is associated with an improvement in the
customer knowledge that firms gain.
H2: Firms with greater supply chain integration are more likely to benefit from
their CRM applications and achieve improved customer knowledge.
H3: The use of CRM applications is associated with greater customer
satisfaction.
H4: Customer knowledge mediates the effect of CRM applications on
customer satisfaction.
Detail of Independent and Dependent variables:

Research

design

and

Methodology

is

derived

from

customer

satisfaction data gathered from American Consumer Satisfaction Index

(ACSI), which is considered to be a reliable indicator.

CUSTKNOW is another variable is a binary variable for which 1
indicates that the firm has gained significant knowledge about its

customer from its customer related IT systems.

CRM applications (CRMAPLC). This variable encompasses both the
legacy IT applications (i.e., the applications that firms developed
before modern CRM applications were introduced) and newer IT
applications (i.e., the integrated suite of marketing and sales
applications developed by CRM and enterprise resource-planning

vendors
Supply chain integration (SCMINTGR). This variable refers to the extent
to which a firm's suppliers and partners are included in its electronic

Literature Review-Advanced Applied Business Research

Muhammad Shumail 06682

supply chain and how much access they have to the firm's customer

related data or application.

IT intensity (ITINVPC). This variable refers to the level of IT investment

as a percentage of the firm's sales revenue.

Industry sector (MFG). This indicator variable represents whether the

firm's offering is primarily a good or a service (1 = good, 0 = service).

Firm size (SIZE). This variable is the natural log of the firm's sales

revenue.
Model 1
Probit model with the specification (1) Probability(CUSTKNOW = 1) = ( 10 +
11CRMAPLC+

12ITINVPC

13MFG

14SIZE

(15SCMINTGR

16CRMAPLC x SCMINTGR + )
Model 2
Linear model ACSI = (20 + 21CRMAPLC+ 22ITINVPC + 23MFG + 24SIZE +
(25SCMINTGR + 26CUSTKNOW + ).
The sample size for Model 1 is 360, and the sample size for Model 2 is 40.
Table 1 shows the results of empirical estimation of the models 1 and 2.
Consistent with H1, we find that CRM applications are positively correlated
and significant with an improvement in customer knowledge (Column 1 of
Table 1; 11 = .280, p < .001). Because the probit model is inherently
nonlinear, we interpret the effect of each individual variable, holding all other
variables at their mean values. In H 2, we posit a moderating effect of supply
chain integration on the relationship between CRM applications and
customer knowledge. We find support for this hypothesis because the joint
hypothesis test for the terms involving CRM applications and the interaction
of CRM applications with supply chain integration is statistically significant.
This result suggests that CRM applications are likely to have a greater
association

with

customer

knowledge

when

firms

are

electronically

integrated in their supply chain and share customer-related data with their
supply chain partners. We also find support for H 3, which posits a positive

Literature Review-Advanced Applied Business Research

Muhammad Shumail 06682

association between CRM applications and customer satisfaction (Column 2

of Table 1; 21 = 1.266, p < .069). In H4, we suggest that the association
between CRM applications and customer satisfaction is mediated by the
effect of CRM applications on customer knowledge. We used the Sobel test to
assess this mediation effect (Baron and Kenny 1986). We find evidence for
the indirect effect of CRM applications on customer satisfaction mediated
through customer knowledge (26 = 4.307, p < .028). This result implies that,
holding other factors constant, firms that report an improvement in customer
knowledge due to their customer-related IT systems have ACSI scores 4.307
points greater than firms that report no gains in customer knowledge
following investments in CRM applications. Because the coefficient of the
CRM applications variable is statistically significant in Column 2 of Table 1,
our results suggest partial mediation and imply that CRM applications may
also have a direct effect on customer satisfaction. The results showing the
effect of control variables on customer satisfaction also provide useful
insights. Note that when we control for the presence of CRM applications, the
effect of IT investments on customer satisfaction is negative and statistically
significant (Column 2 of Table 1; 22 = -.437, p < .011). This result is
consistent with the observation that specific IT applications, such as CRM,
that are directly involved in business processes affecting the customer
experience may be much more effective in improving customer satisfaction
than are aggregate IT investments (Mithas, Krishnan, and Fornell 2002).
Focusing on CRM applications also avoids aggregation across several IT
applications, in which applications may be relevant for customer satisfaction
and others may have a negative or zero impact (Banker et al. 2005;
Kauffman and Weill 1989; Mukhopad- hyay, Kekre, and Kalathur 1995).
Column 2 of Table 1 also shows that, on average, manufacturing firms have
greater customer satisfaction than services firms, a finding that is consistent
with previous research (Fornell et al. 1996).

Literature Review-Advanced Applied Business Research

Muhammad Shumail 06682

Literature Review-Advanced Applied Business Research

Muhammad Shumail 06682

Conclusion:
First, it builds on previous research that links IT systems and customer
satisfaction to contribute to the cumulative knowledge in this stream of
literature. Second, the study points to the importance of customer
knowledge as one of the mediating mechanisms that explains the
association between CRM applications and customer satisfaction. Third, the
results of this study suggest that it is important to account for the effect of
factors such as supply chain integration in the evaluation of returns from
CRM applications. This concludes that CRM applications provides an
intangible results in increase in the customer satisfaction and customer
knowledge.
However this model is well described but it our case it would be limited to
the sense if the customer relationship management is done on a micro level
and not done on a macro level example being just focusing on customer care
center ambiance and training of personell.

Literature Review-Advanced Applied Business Research

Muhammad Shumail 06682

Article 2:

Consumer Satisfaction for Internet Service Providers: An Analysis of

Underlying Processes
Author(s): SUNIL EREVELLES
The Belk College of Business, University of North Carolina, Charlotte, NC
28223, USA
SHUBA SRINIVASAN and STEVEN RANGEL
The Anderson School of Management, University of California, Riverside, CA
92521,
Source: INFORMATION TECHNOLOGY & MANAGEMENT
Quarterly ISSN: 1385-951X
Impact factor : 0.897
URL:
http://www.researchgate.net/publication/226527931_Consumer_Satisfaction_
for_Internet_Service_Providers_An_Analysis_of_Underlying_Processes

Consumer
Satisfaction for Internet Service Providers.pdf

Literature Review-Advanced Applied Business Research

Muhammad Shumail 06682

In this paper, we examine the underlying processes involving consumer

satisfaction and switching patterns among ISPs using different satisfaction
models, including the expectations-disconfirmation model, the attribution
model, and an affective model. Our results indicate that the satisfaction
levels of ISP consumers are generally relatively low, despite the fact that
consumer expectations of ISPs are also low, reflecting mediocrity in the
marketplace.
Consumer Satisfaction is the ultimate goal of any firm and special emphasis
is laid on service providers. We study this aspect to improve the switching
pattern through price incentives

or free minutes. In this study suggests

that there are three strategic dimensions that are determinants in

influencing customer choice of ISP are customer service, ease of use and
pricing.
There are certain models listed to evaluate the decision making method of
the ISP selection. the models are listed below:
1. The expectation disconfirmation model:
It is based on a paradigm where consumers are believed to form expectation
prior to purchasing the service. The expectations are derived from the
expectation theory based on the consumers belief that the service would
have certain attributes.
2. The Attribution model
Based on attribution theory, consumers are viewed as processors of
information, actively looking for reasons to explain why a purchase outcome
turned out the way it was supposed to.
3. Affective Model
More based on consumers beliefs and emotions post purchase and the sense
of satisfaction is derived by the realization of the adequacy of the service.
4. Competitive positioning model

Literature Review-Advanced Applied Business Research

Muhammad Shumail 06682

Positioning acts as a conformance to the image of the firms offering so the

consumer appreciate what the product is and what it offers. It is to target a
certain perception in the mindset of the consumers.
Consumers listed the following parameters influencing the choice of ISP
during the qualitative research
Response time
Techinical support
Price
Payment method
Responsiveness of the service
Banner Ads
Ease of software installation
User friendliness of software
Conclusion and Limitations:
It is much more scientific method of evaluating the satisfaction level derived
from existing and discontinued ISPs. The expectations-disconfirmation model
is a basic framework for determining if the basic expectations of a
consumer, based on his/her past experiences as well as marketplace
conditions and communications, are met. Affective models go beyond basic
expectations,

and

provides

the

manager

with

an

understanding

of

determinant and differentiating factors, that in a crowded marketplace, may

be a competitive advantage of the ISP. Attribution theory helps the
manager understand consumer processing in case of dissatisfaction, and
consequently provides a framework to correct for it.
The study is focused not on actual behavior rather than the actual behavior.
The results are based from one geographical location where the consumer
awareness is much high and can lead to higher switching behavior due to
availability of more substitutes.

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