Consumer satisfaction and quality

1. Consumer satisfaction and quality Week 7 Consumer Behaviourand Food Marketing

2. Daniel Pennac, The Scapegoat, The Harvill Press Benjamin Malaussene is a scapegoat. Under the official title of Quality Controller, he works for the complaints department of a large Parisian department store where he bears the brunt of customer complaints. When a bomb goes off in the toy department, he finds himself the prime suspect.

3. The post-purchase phase of consumption Customer satisfaction and dissatisfaction (CSD) Quality of goods (services) Actual or perceived? High quality product: more profits Better margins Easy sale and brand extension Higher loyalty Customer complaining behaviour

4. Research on quality and satisfaction High quality leads to higher profits (Buzzel and Gale, 1987) It costs less to retain existing customers than to gain new ones Satisfied consumers do not look for alternatives Total quality management (ISO 9000) Product improvement driven by customer comments

5. Is it only the good? Service components Service environment Store layout, etc. Service product How many tills (at the exit)? Service delivery Is the cashier smiling, kind, etc.? Service happens in real time

6. Two models of consumer satisfaction Confirmation model (CM) Familiarity/habit with unsatisfactory product Confirmed negative expectation Low arousal Disconfirmation model (DM) High arousal Disconfirmed expectation Exceeding expectation (satisfaction) Not fulfilling expectation (dissatisfaction) Simple confirmation

7. The confirmation model

8. What is consumer (dis)satisfaction? The buyer’s cognitive state of being adequately or inadequately rewarded for the sacrifice he has undergone (1969) Oliver (1981) definition (disconfirmation) Summary psychological state Disconfirmed expectations (prior feelings) Short duration of surprise/excitement Change of attitudes

9. Consumer satisfaction It is a post-consumption evaluation that a chosen alternative at least meets or exceeds expectations Engel et al., 1995

10. Expectations Equitable performance Normative judgement reflecting the performance that should be provided by the product, given costs and efforts devoted to purchase and use Ideal performance Expected performance What the performance probably will be

11. Factors affecting (dis)satisfaction in the DM Size of discrepancy between expectation and experience Importance or value of the product Perception of the product performance (CM satisfaction effect) High performance when HP is expected is better than low performance when LP is expected

12. Disconfirmation model (unsatisfactory case)

13. Satisfaction It is also strongly influenced by disconfirmation Satisfaction is additive (retail satisfaction) Measuring satisfaction and dissatisfaction in questionnaires: Negative emotion Positive satisfaction Surprise Interest

14. Satisfaction and loyalty

15. Satisfaction, perceived quality and attitudes Disconfirmation is based on episodes Over time, satisfaction is reflected by attitudes By measuring attitude, we can measure perceived quality

16. Response to consumer satisfaction and dissatisfaction About 15-25% of products are unsatisfactory Response to perceived product failure Exit (switching, boycotting…) Voice (complaining) Negative word of mouth Complain to supplier (e.g. substitution) Legal complaints Vandalism?

17. Prospect Theory The utility of a potential choice is structured into two stages Framing and editing Choices are restructured into outcomes w.r.t. a reference point Complex choices are simplified Evaluation stage Each choice is given a value based upon framed utility and subjective probability

18. Endowment effect The Disutility of giving up a valued good is much higher than the utility gain associated with receiving the same good. This is called endowment effect (e.g. WTA>WTP difference) The good here is “satisfaction” (quality)

19. Attribution of performance to supplier and dissatisfaction Availability of explanations Ease of recall Distinctiveness of a product failure Worse-than-expected outcomes have a larger impact than Better-than-expected ones (endowment effect, prospect theory) Causal inferences Stability (is the problem clearly due to someone/something and not exceptional?) Locus of causality (who is to blame? Me or the supplier?) Controllability (can the agent intervene and solve the problem?)

20. Complaining

21. Test results (a) 1 points (b) 3 points (c) –1 points (a) 0 points (b) 2 points (c) –1 points (a) –1 (b) -2 (c) 0 (d) 2 (a) 0 (b) 2 (c) -1 (d) 1

22. Scores 9 points: Perfect complaints handler 6-8 points: Acceptable management 3-5 points: You need a training course Less than 3: You are fired

23. Factors affecting complaining behaviour Reluctance to complain Word of mouth is often enough Low relation between the degree of dissatisfaction and the likelihood to complain Theory of Planned Behaviour Expected outcomes Normative influence Control factors

24. Expected outcomes Expected returns vs opportunity costs Replacement, apology, better goods/service in the future Wasted time, embarrassment, lost opportunities Importance of the product

25. Normative influence What other think I should do? Not necessary that someone else should be actually aware of decision

26. Control factors Knowledge Ease of access to key personnel Understanding of causes Skills Ability to express complaint Time

27. Is it good to receive complaints? Reduce negative comments to other potential customers After complaining (if it is satisfactory) it is more likely to repeat purchase (?) Good complain-handling raise loyalty

28. The typical complainer Young Higher-than-average education Higher-than-average income Other typical characteristics Positive about consumerist activities Prefer a lifestyle that demonstrates difference and individuality Little hesitancy in letting their problem known

29. UK Complaining Behaviour “National Complaints Culture Survey”, TMI (2003) UK customers at the “peak” of complaining behaviour (+8% w.r.t. 2000) The retail sector was voted as the “best” in terms of service delivery Marks&Spencer was voted has the best organisation in handling complaint

30. Sectors in order of performance Retail Leisure and Hospitality Finance Services Utilities Communication and IT Government Transport

31. Retailers ranking M&S Tesco Sainsbury’s John Lewis Asda

32. Strategies to handle dissatisfaction Refining the product Belief management Damage limitation

33. Refining the product Feedback from consumer “Technical” improvement Customer preference Monitor competitors practices Research Conjoint analysis Preference Mapping

34. Belief management Influence relevant expectation Forewarning customers about problems (price increase) Reveal hidden benefits Focus on certain characteristics (GM free, organic produce) Cue negative beliefs about competitors Competitive advertising Don’t draw attention to the unnoticed Do not apologise for minor shortfall…

35. Damage limitation Handling complaints politely Recognising the deficiency Apologising and responsibility to assist customers (not necessarily for causing the problem) Explain what’s gone wrong: it is an exception (?) Compensating customers where appropriate Improve the product to answer to complaints

36. Customer retention Individualised marketing Total quality control policy Early warning satisfaction feedback system (questionnaires on expectations) Build realistic expectations Provide guarantees Provide information on product use Solicit customer feedback Reinforce customer loyalty