1. Copyright  2007 McGraw-Hill Australia Pty Ltd PPTs t/a Consumer Behaviour 5e by Quester, Neal, Pettigrew, Grimmer, Davis & Hawkins Slides prepared by Dr Wayne Binney 7-1 Chapter 7: Postpurchase processes, customer satisfaction and consumer loyalty

2. Copyright  2007 McGraw-Hill Australia Pty Ltd PPTs t/a Consumer Behaviour 5e by Quester, Neal, Pettigrew, Grimmer, Davis & Hawkins Slides prepared by Dr Wayne Binney 7-2 Postpurchase processes, customer satisfaction and consumer loyalty Final consideration in the consumer decision making process

3. Copyright  2007 McGraw-Hill Australia Pty Ltd PPTs t/a Consumer Behaviour 5e by Quester, Neal, Pettigrew, Grimmer, Davis & Hawkins Slides prepared by Dr Wayne Binney 7-3 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

4. Copyright  2007 McGraw-Hill Australia Pty Ltd PPTs t/a Consumer Behaviour 5e by Quester, Neal, Pettigrew, Grimmer, Davis & Hawkins Slides prepared by Dr Wayne Binney 7-4 Postpurchase processes Postpurchase dissonance Product use and non-use Disposal Purchase evaluation Customer satisfaction, repeat purchase behaviour and consumer loyalty

5. Copyright  2007 McGraw-Hill Australia Pty Ltd PPTs t/a Consumer Behaviour 5e by Quester, Neal, Pettigrew, Grimmer, Davis & Hawkins Slides prepared by Dr Wayne Binney 7-5 Postpurchase consumer behaviour

6. Copyright  2007 McGraw-Hill Australia Pty Ltd PPTs t/a Consumer Behaviour 5e by Quester, Neal, Pettigrew, Grimmer, Davis & Hawkins Slides prepared by Dr Wayne Binney 7-6 Postpurchase dissonance Some purchases are followed by postpurchase dissonance Probability of postpurchase 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

7. Copyright  2007 McGraw-Hill Australia Pty Ltd PPTs t/a Consumer Behaviour 5e by Quester, Neal, Pettigrew, Grimmer, Davis & Hawkins Slides prepared by Dr Wayne Binney 7-7 Product use and non-use Product use – use innovativeness – regional variations – multiple vs single use Packaging Defective products – product recalls

8. Copyright  2007 McGraw-Hill Australia Pty Ltd PPTs t/a Consumer Behaviour 5e by Quester, Neal, Pettigrew, Grimmer, Davis & Hawkins Slides prepared by Dr Wayne Binney 7-8 Product-usage index for VCR, microwave and PC

9. Copyright  2007 McGraw-Hill Australia Pty Ltd PPTs t/a Consumer Behaviour 5e by Quester, Neal, Pettigrew, Grimmer, Davis & Hawkins Slides prepared by Dr Wayne Binney 7-9 Unique packaging for competitive advantage

10. Copyright  2007 McGraw-Hill Australia Pty Ltd PPTs t/a Consumer Behaviour 5e by Quester, Neal, Pettigrew, Grimmer, Davis & Hawkins Slides prepared by Dr Wayne Binney 7-10 Incidence of product recalls in Australia YearConsumer goods FoodTherapeuticMotor vehicles 2005-618769325156 2004-516062381155 2003-416580436128 2002-317981448 99 2001-220973265 95 2000-111136172115 1999-2000 9555141 89 Ref: www.recalls.gov.au/stats_recall.php

11. Copyright  2007 McGraw-Hill Australia Pty Ltd PPTs t/a Consumer Behaviour 5e by Quester, Neal, Pettigrew, Grimmer, Davis & Hawkins Slides prepared by Dr Wayne Binney 7-11 Product disposal and marketing strategy Recycling – product – package Trade-ins – to motivate replacement Second-hand markets – E.g. textbooks, clothes – ‘Cash converters’

12. Copyright  2007 McGraw-Hill Australia Pty Ltd PPTs t/a Consumer Behaviour 5e by Quester, Neal, Pettigrew, Grimmer, Davis & Hawkins Slides prepared by Dr Wayne Binney 7-12 Product-disposal alternatives

13. Copyright  2007 McGraw-Hill Australia Pty Ltd PPTs t/a Consumer Behaviour 5e by Quester, Neal, Pettigrew, Grimmer, Davis & Hawkins Slides prepared by Dr Wayne Binney 7-13 Purchase evaluation Evaluation of a purchase is influenced by: – Expectations – Perceived performance

14. Copyright  2007 McGraw-Hill Australia Pty Ltd PPTs t/a Consumer Behaviour 5e by Quester, Neal, Pettigrew, Grimmer, Davis & Hawkins Slides prepared by Dr Wayne Binney 7-14 Expectations, performance and satisfaction

15. Copyright  2007 McGraw-Hill Australia Pty Ltd PPTs t/a Consumer Behaviour 5e by Quester, Neal, Pettigrew, Grimmer, Davis & Hawkins Slides prepared by Dr Wayne Binney 7-15 Dissatisfaction responses Possible outcomes of a negative purchase evaluation: – Taking no action – Switching brands, products or stores – Warning friends and colleagues

16. Copyright  2007 McGraw-Hill Australia Pty Ltd PPTs t/a Consumer Behaviour 5e by Quester, Neal, Pettigrew, Grimmer, Davis & Hawkins Slides prepared by Dr Wayne Binney 7-16 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%)

17. Copyright  2007 McGraw-Hill Australia Pty Ltd PPTs t/a Consumer Behaviour 5e by Quester, Neal, Pettigrew, Grimmer, Davis & Hawkins Slides prepared by Dr Wayne Binney 7-17 Actions taken by consumers in response to product dissatisfaction

18. Copyright  2007 McGraw-Hill Australia Pty Ltd PPTs t/a Consumer Behaviour 5e by Quester, Neal, Pettigrew, Grimmer, Davis & Hawkins Slides prepared by Dr Wayne Binney 7-18 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

19. Copyright  2007 McGraw-Hill Australia Pty Ltd PPTs t/a Consumer Behaviour 5e by Quester, Neal, Pettigrew, Grimmer, Davis & Hawkins Slides prepared by Dr Wayne Binney 7-19 Marketing strategy and dissatisfied consumers Marketers need to satisfy consumer expectations by: – creating reasonable expectations through promotional efforts – maintaining consistent quality so that these reasonable expectations are fulfilled

20. Copyright  2007 McGraw-Hill Australia Pty Ltd PPTs t/a Consumer Behaviour 5e by Quester, Neal, Pettigrew, Grimmer, Davis & Hawkins Slides prepared by Dr Wayne Binney 7-20 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

21. Copyright  2007 McGraw-Hill Australia Pty Ltd PPTs t/a Consumer Behaviour 5e by Quester, Neal, Pettigrew, Grimmer, Davis & Hawkins Slides prepared by Dr Wayne Binney 7-21 Relationship marketing Five key elements: Developing a core product/service on which to build Customising the relationship to the individual customer Augmenting the core product/service with extra benefits Pricing in a manner that encourages loyalty Marketing to employees so that they perform well for customers

22. Copyright  2007 McGraw-Hill Australia Pty Ltd PPTs t/a Consumer Behaviour 5e by Quester, Neal, Pettigrew, Grimmer, Davis & Hawkins Slides prepared by Dr Wayne Binney 7-22 Brand loyalty is Biased A behavioural response Expressed over time A consumer selects a brand over alternative brands A function of psychological processes

23. Copyright  2007 McGraw-Hill Australia Pty Ltd PPTs t/a Consumer Behaviour 5e by Quester, Neal, Pettigrew, Grimmer, Davis & Hawkins Slides prepared by Dr Wayne Binney 7-23 Repeat purchase behaviour and marketing strategy (cont.) Once objectives are defined for each group it becomes possible to develop and implement marketing strategies and evaluate the results

24. Copyright  2007 McGraw-Hill Australia Pty Ltd PPTs t/a Consumer Behaviour 5e by Quester, Neal, Pettigrew, Grimmer, Davis & Hawkins Slides prepared by Dr Wayne Binney 7-24 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)

25. Copyright  2007 McGraw-Hill Australia Pty Ltd PPTs t/a Consumer Behaviour 5e by Quester, Neal, Pettigrew, Grimmer, Davis & Hawkins Slides prepared by Dr Wayne Binney 7-25 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

26. Copyright  2007 McGraw-Hill Australia Pty Ltd PPTs t/a Consumer Behaviour 5e by Quester, Neal, Pettigrew, Grimmer, Davis & Hawkins Slides prepared by Dr Wayne Binney 7-26 Value of customer loyalty Increased purchases of the existing product Cross-purchases of your other products Price premium due to their appreciation of your added-value services Reduced operating cost because of familiarity with your service system Positive word-of-mouth that refers other customers to your firm

27. Copyright  2007 McGraw-Hill Australia Pty Ltd PPTs t/a Consumer Behaviour 5e by Quester, Neal, Pettigrew, Grimmer, Davis & Hawkins Slides prepared by Dr Wayne Binney 7-27 “Loyal customers expect a good price, but they crave value most of all.” (Palmer, 1996)

28. Copyright  2007 McGraw-Hill Australia Pty Ltd PPTs t/a Consumer Behaviour 5e by Quester, Neal, Pettigrew, Grimmer, Davis & Hawkins Slides prepared by Dr Wayne Binney 7-28 Rule No. 1 The customer is always right. Rule No.2 If the customer is not right, then refer to Rule No. 1!

29. Copyright  2007 McGraw-Hill Australia Pty Ltd PPTs t/a Consumer Behaviour 5e by Quester, Neal, Pettigrew, Grimmer, Davis & Hawkins Slides prepared by Dr Wayne Binney 7-29 Measuring customer satisfaction Qualitative measurement techniques Focus groups Monitoring surveys

30. Copyright  2007 McGraw-Hill Australia Pty Ltd PPTs t/a Consumer Behaviour 5e by Quester, Neal, Pettigrew, Grimmer, Davis & Hawkins Slides prepared by Dr Wayne Binney 7-30 Summary We have discussed: The postpurchase process The postpurchase dissonance Why product use is important to marketers Why product disposal is important to consumers Concept of customer satisfaction Concept of consumer loyalty

31. Copyright  2007 McGraw-Hill Australia Pty Ltd PPTs t/a Consumer Behaviour 5e by Quester, Neal, Pettigrew, Grimmer, Davis & Hawkins Slides prepared by Dr Wayne Binney 7-31 Next lecture Chapter 8: Perception