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TOTAL QUALITY MANAGEMENT, VOL. 12, NO. 7&8, 2001, 920 - 925
The role of customer satisfaction in achieving
business excellence
D D GEA College of Entrepreneurship, Sencna pot 10, 6320 Portoroz, Slovenia
The consumer satisfaction category has the main position in marketing theory and is
based on the premise that the pro® t is made through the process of satisfaction of consumers’ demands,
i.e. achievement of their satisfaction. Researches continually con® rm a signi® cant correlation between
satisfaction and repeated buying, greater brand loyalty and spreading a positive opinion of the
product. The model of consumers’ buying decisions described in this paper consists of ® ve consecutive
phases of consumer behaviour through the buying process: product perceiving phase (oVered product
with all producer’s factors of competitiveness from the consumer’s point of view); value estimation
phase (weighting bene® ts and sacri® ces); comparing the values of diVerent products and decision-
making phase (comparing alternative options); action phase (realization of the decision); and
consumer’s state of mind after buying action phase (satisfaction with the product). There are several
aspects that should be taken into consideration from the producer’s (seller’s) point of view in order to
implement successfully the concept of customer satisfaction.
Introduction
Satisfaction as the result of purchase and consumption of a certain product (service) has a great meaning for the producer (seller, supplier) as it enables the connection of an oVered product with post-buying phenomena such as changes in behaviour, repeated buying and brand loyalty. Research continually con® rms a signi® cant correlation between satisfaction and repeated buying, greater brand loyalty and spreading a positive opinion of the product. Satisfaction is, therefore, the generator of repeated buying and all those advantages to a company required for its existence and development. The consumer satisfaction category lies in the core of marketing concept. Therefore, it is the main position in marketing theory and it is based on the premise that the pro® t is made through the process of satisfaction of consumers’ demands, i.e. achievement of his satisfaction.
With the product purchased customer expectations (in the framework of i.e. con® rmation paradigm) can be:
con® rmed, when the product is as expected; negatively uncon® rmed, when the product is worse than expected; positively uncon® rmed, when the product is better than expected.
Correspondence : D. Dubrovski, GEA College of Entrepreneurship, Sencna pot 10, 6320 Portoroz, Slovenia. Tel: (386) 2 228 1211; Fax: 2 252 3439; E-mail: [email protected]
ISSN 0954-4127 print/ISSN 1360-0613 online/00/070920-06 © 2001 Taylor & Francis Ltd DOI: 10.1080/09544120120096052
CUSTOMER SATISFACTION 921
Dissatisfaction is the result of negatively uncon® rmed expectations. In the case of con® rmed expectations there can be two levels. At the ® rst level, expectations are low, the product is totally adequate. At the second, higher level, expectations are more demanding where some other, more complex product is adequate. In spite of the results in both cases being a satis® ed customer, the products required are diVerent. From this it can be inferred that where lower expectations are preserved, satisfaction is easier with a simple product and a similar result can be achieved as with a product of extraordinary high quality with higher expectations. However, some past studies (e.g. Anderson et al., 1993; Fornell, 1992; Joiner, 1994, pp. 68- 69; Kano, 1995, p. 67; Lowenstein, 1995, p. 8; Olshavsky & Miller, 1972; Rust et al., 1994, pp. 41- 49) used diVerent levels of expectation and the formula of customer satisfaction (e.g. Howard & Sheth, in Churchill, 1979); when it was necessary to use the ponder factor, these speculations were dismissed. The highest level of satisfying customer expectations is reached in the event that the customer gets more from a product than expected. This means his /her expectations are transcended in a positive direction. With this the innovativeness of the product is highly emphasized.
The model of customer decision-making
In the literature there are many diVerent models of buying behaviour which can be dividedÐ from the buying decision-maker’s point of viewÐ into individual and organizational. From the complexity point of view they can be divided into monadic (simple cause- consequence connections) and multivariable (more complex, mutual intermixed connections).
The model of consumer’s buying decision described in the paper (Fig. 1) consists of ® ve consecutive phases of consumer behaviour through the buying process:
product perceiving phase (oVered product with all producer’s factors of competitiveness from the consumer’s point of view); value estimation phase (weighting bene® ts and sacri® ces); comparing the values of diVerent products and decision-making phase (comparing alternative options); action phase (realization of the decision); consumer’s state of mind after buying action phase (satisfaction with the product).
The buying decision process therefore generally consists of pre-buying, buying and post- buying phases.
The product position in the international market usually depends on joint eVect of the factors of competitiveness on three levels. On the level of country of origin these can be: the political and economical reputation of the country, the established ® nancing, crediting and insurance system in international business, consistency of the national, international and branch standards, widespread information network, etc. On the company level these can be: well-known brands, the power of partnerships (strategic alliances), the size of assortment, reputation of the company, etc. On the product level these are: quality, price, deliverability and marketing activities intended for a certain product.
By these factors of competitiveness the producer tries to convince the consumer that his product, within the wide range of the same, similar or totally diVerent products, oVers the best satisfaction of his needs and demands. In order to determine the reasons of success or failure of a particular product in the market we need to put ourselves in the position of the person who chooses the product. Studying these factors of competitiveness from the con- sumer’s point of view, i.e. from the point of view of his inner perception and experiencing the products, is therefore the issue.
922 D. DUBROVSKI
Product perception
phase
Forming
product value phase
Value comparison and decision making phase
Action phase
Post-buying status phase
time component
place component
monetary price
non-monetary price
number of characteristics
significance of characteristic s
place component
time component
Factors of competitiveness of a
country-of-origin
Factors of competitiveness of a
company
Deliverability Perceived
quality Marketing activities
Perceived price
VALUE
of product A
VALUE
of product non-A
DECISION MAKING
STOP NOT BUYING A BUYING A
DISSATISFACTION SATISFACTION
EXPERIENCE
Figure 1. The model of customer decision-making.
Neither the quality nor the price for themselves determine the buying decision. The value relation between those two actually does. The product value is the guiding line for a consumer’s buying decision, which appears in the choice of a particular product among a variety of other products.
Subjective perception of quality is where the customer appraises, through the product perception process, or interprets, the quality. While objective quality can be correctly measured with the assistance of diVerent instruments, as the technical level of the product is
CUSTOMER SATISFACTION 923
described and applies only to the measuring or ® nding of product characteristics, meaning that it is adequate to describe a product in its generic level or a production phase, the perception of quality is the result of subjective experiencing of a product. The objective quality is, therefore, only a part of the perception, an eventual positive starting point or one among its determinants. In accordance to such a foundation, a de® nition of quality was also formed that says that product quality represents those characteristics of a product that meet customer requirements and which most satisfy the aims of the consumers’ needs. Quality in the same product can have diVerent signi® cance and weight for diVerent customers. This is largely dependent on which characteristics of the product will be given more weight by the customer and how he will perceive adequacy with respect to his needs.
Also in pricing, we distinguish between the objective and the perceived (subjective) price in which the diVerence to quality is that the price in the process of customer perception is negatively composed. The objective price of a product is a price expressed in monetary units, clearly de® ned and decisive. The nominal (absolute) price remains always the same, irrespective of who the customer is and what price he will accept. If we take two customers with diVerent intensive requirements, diVerent standards of living, way of life, coming from diVerent social-economic environments, then the nominal price for the two customers will not have the same signi® cance. The price will be diVerent, depending on how the customer perceives it. In this case we can speak of a diVerent perceived price. The price for a customer is a sacri® ce in which he obtains some bene® t. This sacri® ce is not only the monetary price but also something else, the accompanying elements that form the so-called non-monetary price. In order for the customer to gain some bene® t, he must use a certain time, invest a certain amount of psychical and physical eVort (in searching for the purchase itself or preparing for consumption) or even overcome diý culties and unpleasantness that appear in the process of buying. The perceived price is, therefore, comprised of the perceived monetary price and the perceived non-monetary price.
From the customer’s point of view, we speak in model phases of product perception of its perceived quality, perceived price, perceived deliverability and perceived marketing aimed at a speci® c product, as well as the perceived factors of competitiveness of the company and country of origin, all of which combine to form the ® nal form of the product in the customer’s consciousness.
The product value is dependent on the diVerence between perceived quality and perceived price. The higher the perceived quality is from the perceived price, the higher the value of the product. If we allow for the number and diVerent types of composition aVecting the perceived quality and perceived price, then there is a great possibility of improving the value of the product. It is necessary to note that elements in the value equation cannot be changed by mere mathematical algorithms, it is necessary to add marketing character. Therefore, decision-making on value-forming strategy must be supported by an adequate research of market participants and a wider or narrower environment allowing for one’s own advantages and disadvantages.
The consumer’s buying decision is the result of weighting between possible bene® t and required sacri® ce. The relation between these two dimensions of the buying decision is therefore the value of the product. For the consumer a gained bene® t is the product, but only the one that solves his problem, i.e. represents adjustment to his demands. Therefore, instead of the product (in general) in the weighting process there appears the quality of the productÐ the quality as perceived by the consumer. The necessary sacri® ce as the counter- weight is perceived (monetary or non- monetary) price. The value of the product is therefore the relation between perceived quality and perceived price of the product.
In this phase there is a comparison among all the products that are in the chosen time
924 D. DUBROVSKI
and space available and that can a solve consumer’s problem, i.e. oVer the satisfaction of consumer’s need as well as among the products that have already been bought or used before (past comparison basis). That kind of valuation of the product is therefore accompanied with the process of comparison with evoked set of products which can present the alternative choices. So the product image basis is on a speci® c set of alternative possibilities.
In the action phase the consumer decides to buy a certain product from a range of available products or decides not to buy any of them. Making a decision is therefore based on the process of ranking the value of the products, while setting of the ranks is based on very subjective estimations. In the case where there is not a product available that meets the consumer’s requirements (low value, i.e. perceived quality), the process of buying will be missed.
According to the con® rmation paradigm the consumer can or can not be satis® ed with the product and the levels of satisfaction can vary. Satisfaction or dissatisfaction with the product has a retrograde in¯ uence on setting a new value for the same product.
Conclusion
As we can see from the customer satisfaction model described, the purchased and used product greatly aVects future more positive perception of quality and price (nominally the same price is perceived as better acceptance of the price rises to a higher level) as well as the setting of a new value. In this case the buyer becomes a regular consumer of the product. The last phase in the model described is therefore directly connected to the ® rst one (product perceiving phase) because it could lead to new, repeated purchases. So instead of a classical consecutive order of phases we can talk about the inseparable spiral connection between the consumer and the producer.
The consumer satisfaction model directs the scope of studying the success of failure of certain products and /or companies in the market to the ® eld, which is often unfairly missed in strategic marketing analyses. Relying on producer’s own views, which are subjective in the ® rst place, can cause great damage and long-term diý culties. The company would make great progress if it were aware of the possibility of diVerences between the consumer’s opinion about the product and their own. There is a permanent danger of self-satisfaction, which can in a moment destroy every former eVort in this ® eld because the perceived quality, price or value through the process of satisfaction stay in the consciousness of the consumer for a long time after the purchase has been made. This leads us back to the need for continued searching for harmony between a company and its environment. Satisfaction is therefore a generator of repeating purchases and of all those company bene® ts which are required for its existence as well as for its development.
Customer satisfaction is the most eý cient and, at the same time, least expensive source of market communication, as a satis® ed consumer will tell others of his satisfaction and recommend the product to potential customers. On the other hand, we must also take into account the constantly present danger of the spread of unfavourable appraisals of the product that occurs with dissatis® ed customers. This danger is shown in the following ® gures from diVerent researches (e.g. Collier, 1994, p. 204; Desatnick, 1989; Hopson & Scally, 1989, p. 62; Vavra, 1992, p. 13):
a satis® ed customer will explain his satisfaction to 10 people who could actually become customers for this product; 96% of dissatis® ed customers never complain about an inadequate product or service; 90% of dissatis® ed customers will no longer buy products of the same brand or return to the same seller, who will never know why;
CUSTOMER SATISFACTION 925
every dissatis® ed customer will describe his dissatisfaction with purchasing a product to at least nine other people; 13% of dissatis® ed customers will explain their dissatisfaction to more than 20 people.
The producer must, therefore, devote most attention to the category customer retention as it is much less expensive to retain a customer than to acquire a new one. Often, marketing is directed at searching for new customers alone and less attention is paid to existing consumers.
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