1. Consumer Satisfaction 18 Chapter McGraw-Hill/Irwin Copyright © 2004 by The McGraw-Hill Companies, Inc. All rights reserved.

2. Learning Objectives After completing this chapter, you should be able to: Describe consumer satisfaction. Identify basic factors that influence satisfaction. Describe the expectancy disconfirmation model and its limitations. Identify the consequences of satisfaction and dissatisfaction.

3. Defining Satisfaction Satisfaction is a judgment of a pleasurable level of consumption-related fulfillment, including levels of underfulfillment and overfulfillment. –Consumers can make satisfaction judgments with respect to any or all of the aspects or stages of product and service experience. –satisfaction focuses on fulfillment –satisfaction is an internal state accounts of satisfaction must highlight the meanings that operate in the customers’ field of awareness. Dissatisfaction is an unpleasant level of consumption- related fulfillment.

4. Satisfaction and the Bottom Line It can cost three or four times as much to acquire a new customer as to make a repeat sale to an existing one. (Economist 2001) Just a one percent increase in satisfaction can produce up to a three percent increase in market capitalization (HBR, March 2001). Year after year the American Customer Satisfaction Index shows a definite link between Market Value Added, stock price and ROI. Winners: Ralston Purina, Quaker Oats, Amazon.com, Coca-cola, Unilever Losers: K-Mart, Dole, Compaq Computers, AT&T Tom Siebel of Siebel Systems: High Tech the Old-Fashioned Way by Brian Fryer, HBR March 2001.

5. What Causes Satisfaction? Service or product quality is a frequent organizational goal, yet manufacturers and consumers don’t necessarily agree about product and service quality Research findings indicate: –(1) there is no such thing as objective quality (judgments are always based on someone’s perceptions) –(2) managers interested in customer satisfaction need to find out how customers (who buy the product or service) perceive quality. Perceived quality involves preferences, is based on comparative standards, differs among customers and situations, and resides in the use or consumption of the product or service.

6. Consumer Satisfaction and Profitability Direct Effects on Profitability of Quality, Satisfaction, and Loyalty –Quality reduces failures and operating costs and lowers the cost of recovery. –Quality leads to better consumer reputations, better marketing channel member receptivity, better awareness, and lower costs of attracting new customers. –Satisfaction has direct effects on profit through its influence on retention. –Loyal customers’ contributions to profitability are great.

7. How do Consumers Judge Satisfaction Sources of expectations include: –memories of past experiences, word-of-mouth communications, third party information, cultural milieu.

8. How to Listen to Customers Feedback, Customer comments, complaints, and questions. –Consumer hot-lines such as those set up by GE and P&G. Market Research: Customer Satisfaction Indices Front-line personnel –Retaining a dissatisfied customer by responding effectively to complaints is more economical than attracting a new one –Training the front line employees and empowering them to resolve problems as and when they arise.

9. Expectancy-disconfirmation Model Expectations: anticipation or predictions of future events.Expectations Expectancy-Disconfirmation Model of Satisfaction: –Disconfirmation of pre-consumption expectations is the key influence on consumer satisfaction. Positive disconfirmation: performances exceed expectations Negative disconfirmation: expectations are not met Ceiling floor effect: –Very high expectations (ceiling) are more likely to result in negative disconfirmation and very low expectations (floor) in positive disconfirmation.

10. A Simplified Expectancy-Disconfirmation Framework

11. The Consequences of Satisfaction and Dissatisfaction Exit : –not to purchase or use that product or service again. Voice : –compliments an organization may receive when it delivers an especially satisfying outcome; complaints to the company about performance failure, negative and positive word-of-mouth with other consumers or consuming organizations, or third-party complaints or compliments. Continued patronage: –customer loyalty is a deeply held commitment to rebuy or repatronize a preferred product or service consistently in the future, despite situational influences and marketing efforts having the potential to cause switching behavior. Twist : –positive and negative ways in which consumers restructure meanings, roles and objects in the marketplace.

12. Key Terms dissatisfaction expectancy- disconfirmation model of satisfaction expectations exit fairness procedural fairness relief response satisfaction satisfaction drivers twist voice