Customer satisfaction Literature review

LETRETURE REVIEW

Customer satisfaction is an important aspect for the success and continued existence when it comes to building any business. Customers are regarded as the end users of every product that a company generates; therefore, their satisfaction is very important in order to increase the profit margin as well as the customer loyalty. If this is considered, a number of customers will be more likely to return and they will in turn bring more friends. Satisfaction as a process is the most broadly implemented description of customer satisfaction and several of research efforts have been directed at understanding the process approach of satisfaction evaluations, which is according to Parker and Matthews (2001).

Customer satisfaction is a general measurement reliant on the total consumption experience of the expected product or service performance compared with repurchases expectations sooner or later (Fornell 1992). Oliver (1997, 1999) reviewed satisfaction as pleasurable fulfillment which is perceived by the customers in the consumption He further explains that the costumers’ perceptions that the consumption meets some needs, desires, goals or any, this is considered pleasurable.

Eric Jacques (2010) suggests customer satisfaction is to do something enough to be up to the standard of the customers and it is basically fulfilling their basic expectations. Customer satisfaction is described as the amount of satisfaction to the products and services rendered by the company and which is typically measured by the number of customers making repeat purchases. Customer satisfaction is a key for the company to keep details on high sales profits. Moreover, customer satisfaction is an evaluation of how customers are pleased with the particular products or services and to make repeat purchases and usually refer others. Customer satisfaction is, simply set a measure of the satisfaction of the consumers, and how the purchased items fulfilled their expectations. Additionally, customer satisfaction as a process is defined as an evaluation between what was received and what was expected, emphasizing the perceptual, evaluative and psychological processes that contribute to customer satisfaction (Oliver, 1977, 1981; Olson and Dover, 1979; Tse and Wilton, 1988 and Vavra, 1997, p. 4).

-447675205105Figure 1.Customer Satisfaction 1

According to the figure above, customer expectations, perceived value and overall perceived quality will indicate the rate of customer satisfaction and the way that an organization handles customers` complaint and the satisfaction of customers can also result to their loyalty to the company. Swan and Combs of (1976) also provided their definition about customers’ satisfaction as a post-purchase attitude. This pertains to the feeling of the customers whether this is happiness or displeasure after they have received the products or services. A satisfied customer will continue to purchase products, rarely purchase to others, they also refer other customers and generally be a superstar promoter for the business. Rust and Oliver (1994) suggested that the satisfaction or dissatisfaction of the customers appears to be a response to only one or extended services they encountered.

Westbrook (1980) adds that customer satisfaction includes cognitive and affective aspects in pre-purchase, purchase, and post-purchase of purchasing products or receiving services. Customer satisfaction includes three primary components which are the type of response, the center of interest and the subject on which the response if focused at the moment in time at which the evaluation is made (Giese and Cote, 2000).

Also, customer satisfaction refers to the costumer’s judgment regarding a firm’s success or failure in meeting expectations, with met expectations resulting in satisfaction and unmet expectations resulting in dissatisfaction (Oliver, 1999). This definition suggests that satisfaction is post consumption experience which compares perceived quality expected quality (Anderson and Fornell, 1994; Parasuman et.al., 1985). On top, satisfaction is a judgment wherein the customers make following service encounters and that this evaluation has variations. It varies from every customer, every encounter and in every organization to support the need for new ideas in customer satisfaction among different organizations. After all, the customer satisfaction is called the process of spanning the consumption period and that research of the post-purchase stage is critical to the development of new insights. On the other hand, financial status of the organizations relies on the ability of the companies to retain existing customers at a quicker pace than acquiring new ones. Thus, based on the statement of Keiningham et.al (2008) good managers must realize that the path to growth lies heavily on their customers and is not only attracting new customers, but also holding on existing customers, motivating them to spend more and getting them to recommend products and services to the other people.

Customer satisfaction is a feeling with a product or service obtained from a business and the consumer’s fulfillment response. It is a judgment that product or service features, or the goods or services themselves, presented or is presenting a pleasurable level of consumption-related fulfillment including under or over fulfillment levels (Oliver, 1997, p.13). Customer satisfaction is important as this can have an impact on the business and paying no attention to it is equivalent to losing a significant opportunity to make the customers happy.

The statement of Oliver (1997) entails that fulfillment provides pleasure or removes pain, in the same way as when problems in life are relieved. Therefore, you can satisfy the customers simply to return to normalcy, it is like the act of taking away of an aversive situation like pain relief. Furthermore, fulfillment is not automatically put some limits to the case of fulfilled needs. Over-fulfillment can be satisfying if it gives extra unexpected pleasure and under-fulfillment can be satisfying if it provides greater pleasure than the customers anticipate in a certain situation.

Customer satisfaction is the significant objective in selling process wherein it is several studies have shown that it is calculated that it is like five times to attract new customers as compared to retain an existing one and this results into more interest in customer relationships (Nauman, 1995). Therefore, many companies are adopting customer satisfaction as their operational goal with a carefully designed structure wherein they put big investment in database marketing, relationship management and customer planning to move close to their customers (Hill and Alexader, 2000). That’s also why as Jones and Sasser (1995) has said the “achieving customer satisfaction is the primary goal for majority of service firms nowadays”.

Customer satisfaction relates to customer loyalty which is considered a generally significant goal of executing relationship marketing activities. Oliver (1997, p.392) described customer loyalty as a “deeply held commitment to rebury or to support again desired products or services continuously in the future, thereby causing repetitive same-brand or same brand-set purchasing, despite situational influences and marketing efforts having the potential to cause switching behavior”. Hayes (2008) mentioned that customers are the motivation for valuable growth while customer loyalty can result to profitability. For the customers, loyalty is a positive attitude and behavior relating to the level of the commitment of the repeat customers to a particular product or service in the future (Chu, 2009). Loyal customers are a bit expected to go to a competitor only because of price, and they even purchase more than non-loyal customers (Bowen and Shoemaker, 2003). Blackton (1995) added that loyal customers are also considered to be the most important assets of a company.

Customer satisfaction has become the center of attention in most of theoretical literatures and practical researches. It is an expected outcome of implementing marketing activities, catering satisfaction of products or services to customers relates to success achieved on today’s tensely competitive world of business. Customer satisfaction is specified as pleasurable fulfillment, for itself, the costumers perceives consumption as satisfying some needs, desires, goals and other by which that fulfillment is pleasurable (Oliver, 1997).

Customer satisfaction is seen as an important tool to supervise the business outcomes, make sound decision on limited resource allocation and give rewards to management (Anderson, 1994). Most of the organizations, the interest of customer satisfaction is demonstrated in their communications involving advertisement, public relation release and mission statement (Peterson and Wilson, 1992). Parker and Mathew (2001) stated that there are two primary styles of the concept of customer satisfaction. The first one defines satisfaction as a process while the second defines satisfaction as a result of a consumption experience. These two approaches are paired, as usually each depends to each other.

The interest in customer satisfaction had made a very big increase over 500 studies were published, which was according to the 1970’s report of Hunt (1982). This trend had continued and by year 1992, Peterson and Wilson estimated the amount of academic and trade articles on customer satisfaction to be over 15,000. Increasing customer satisfaction has been shown to directly affect companies’ market share, which is leading to improved profits, positive recommendation lower marketing expenditures (Reichheld, 1996) and impact to the extent the corporate image and survival (Pizam & Ellis, 1999).

In order to achieve long-term sustainability companies should try to search to establish ties of loyalty with costumers that are strong enough to protect against the advances of competitors. Creating loyalty among customers helps the companies to make increase purchases of their existing products, charge of premium prices for appreciation of your added-value services, and create positive word-of-mouth promotion for your company, which is the basis of the marketing objective for many companies (Ryan Nelson, 2012).

Nelson (2012) further explained that customer loyalty is much harder to achieve than satisfaction, although customers are satisfied with the company there are several factors that could cause the customer to defect to the competition, such as finding a better value or the competitor is more convenient. Based on that statement, having high levels of customer satisfaction does not mean will head to customer loyalty, but a company cannot achieve customer loyalty without having customer satisfaction (Ryan Nelson, 2012).

Therefore, business owners, managers, or sales representatives are important to keep loyal customers who will contribute long-term profit to the business organizations (Tseng, 2007). The goal to make existing customers increase their purchases is another approach to boost the financial growth of the companies (Hayes, 2008). This means that customer satisfaction cannot ensure the repurchase from a company but it does not play a very important role in achieving customer loyalty. Conducting customer satisfaction research will provide your company with the necessary insight it needs to make informed decisions in order to retain and increase your customer base and improve customer relationships (Ryan Nelson, 2012).

Customer service is important because it caters purchasers with assistance and friendly advice. Customer service provides product support and happier customers and can develop what customers feel as they have a connection with a company. When the companies have commitment to customer service, its corporate culture changes to adopt its new dimension and become the motivation making amazing results to take place. Gronroos (1984) and Parasuman et.al (1998) had emphasized an important factor that contributes to customer satisfaction which is service quality. They defined service quality as the difference between customer expectations and perceptions of service rendered by the company or satisfaction or dissatisfaction formed by customers’ experience of purchase and use of the service.

The measurement of customer satisfaction is exceptionally significant for both product developments as improving your company’s support. Customer satisfaction rates are compiled by surveys or interviews. Companies strive for good customer satisfaction status wherein they will look at the status of their customer surveys and strategize on how they can either improve the quality of their product or the quality of their customer relationships. Good customer service stats will increase the likelihood the customer will return to make repeat purchases or recommend the company to others.

In managing the customer relationship, customer satisfaction is a gauge of the level to which the products or services fulfill the expectation of the customers (Margarette Rouse, 2008). Furthermore, customer satisfaction has been measured as well depending on the phases of customer relationship life cycle, which illustrates different stages of a customer relationship and requires focus on particular target and customer expectations of various stages (Spath and Fähnrich, 2007). Generally, customer satisfaction augments the quality of relationship between a customer and a service provider, and boosts the repeat purchase behavior.

To build a stronger customer satisfaction is very much related to the understanding customers’ needs and expectations (William and Bersch, 1992). The Kano Model (2001) states that needs of every customer are categorized into different needs such as basic, expected and excitement. Basic needs are the obvious needs of customers and if not met, he is dissatisfied, however meeting these needs may not be sufficient for customer satisfaction and this satisfaction results “must be quality”. Expected needs are significant that a customer is completely aware and satisfied in every purchase made and this satisfaction will create expected quality while the excitement needs refer to the unconscious and unspoken needs of customers. By determining these needs, company will have increased great value to their customers and can gain their loyalty and this satisfaction creates “attractive quality”.

Previous research studies recommended that there are four features which are the key drivers of satisfaction of the customers of cellular services namely network quality, price, customer care and personal benefits (Booz, Allen and Hamilton, 1995). The network quality refers to the excellent indoor and outdoor coverage, voice clarity, and without connection failure. Price refers to what is paid to obtain access to use the network. Customer care refers to the quality of the information exchanged between customers and suppliers or network providers in response to the questions, request and concerns with regards to the other activities initiated by the network provider, such as the presentation of invoices. Personal benefits refer to the level of perception of the benefits of mobile communications services by individual customers.

Furthermore, the report of Bryan et.al (1996) demonstrated that there is significant relationship and consistent differences in the levels of satisfaction among demographic groups: sex, age, occupation, income, location. Sex positively relates to satisfaction and based on the observation female customers are more satisfied than male customers. Female of all ages are more satisfied than male because women are more involved with the process of purchase and possibly use the mobile more for relational purposes like social network device while men use it for functional purposes such as businesses, sales, etc. Age positively relates to satisfaction however the relationship is not in a consistent manner. Satisfaction increases when it comes to age and the major increase in satisfaction is seen within the age 55 and above. Income relates to satisfaction as well which shows the higher the income, the lower the satisfaction level. Location positively relates to satisfaction that customers living in central cities and uptown areas are less satisfied than the customers living in rural areas.

Conclusion

In this review, it suggested that costumers vary in attitudes and one of the factors responsible for this difference is demographics. It is thus necessary to investigate the influence of demographic factors such as age, gender, occupation and location on customer satisfaction. Demographic factors are important in the society and significantly influence the attitudes, lifestyle, standard of living and others. Understanding such factors help the organization to investigate the different market segments so as to better understand the needs of different customers. Those factors are related to each other and all have an impact to the customer satisfaction.

Gale and Fornell (1992) illustrated that higher customer satisfaction converts into higher than normal market share growth, the ability to charge a higher price, lower transaction costs and strong connection to improve profitability. Nelson et.al (1992) added that customer satisfaction related to higher profitability and proved his findings statistically. There is significant relationship between customer satisfaction and accounting return on assets (Anderson et.al 1994). It is discovered that stockholder value is highly flexible with respect to customer satisfaction (Ittner and Larkner, 1996) and also customer satisfaction greatly relates to organization financial growth (Fornell et.al, 1996). The amount of business conducted within the organization relates to customer satisfaction which leads to profitability (Ittner and Larkner, 1996). Moreover, several researched showed that customer satisfaction has significant impact on repurchase intentions and profits for service companies (Edvardddon et.al, 2000), affects share of wallet (SOW) positively (Braun and Scope, 2003 and Keiningham et.al, 2003), leads to increased profit margins (Fecikoca, 2004) and associates with improved share of spending (Keiningham, 2005).