lecture 4 plus class notes: post decision processes

Question 1

Whu is customer satisfaction important?

Answer 1

Leads to repeat purchases and more profitable for firms than one time purchases
can benefit from positive word of mouth, referrals
want repeat business

Question 2

how to ensure repeat business

Answer 2

Make sure teh customer is happy and other reasons like lack competition
could cut prices

Question 3

Managers are interested in getting repeat business through customer satisfaction and not through cutting prices

Answer 3

bc cutting prices can lead to lower prices anf firms dont have control on competition so firms dont want to rely on lack of competition for repeat purchasing

Question 4

what is satisfaction

Answer 4

Attitudes based on actual experience with the brand
Lets say you have driven a car before, then you have experience with the brand, then your attitude toward the car will be your satisfaction
May form attitudes on products that you have never used before bc of second information.
Attitudes can be based on advertising (not experience )
Today we are focusing on attitudes formed when you use the brand

Question 5

How do firms measure customer satisfaction?

Answer 5

They normally use surveys. Survey customers who have used their products. Ex: staying at the hyatt hotel and filling out a survey. Asks satisfaction questions like asking about satisfaction of customer service

Question 6

two models of satisfaction

Answer 6

Disconfirmation model
Attribution model

Question 7

if managers know what drives satisfaction they can

Answer 7

take action to customize satisfaction

Question 8

what factors does the disconfirmation model drive

Answer 8

performance, expectations and disconfirmation

Question 9

performance

Answer 9

Performance means the performance of the brand on attributes
the better the brand performs these attributes = the greater customer satisfaction will be= happier

Question 10

expectations

Answer 10

expectations that customers sometimes have about attributes.

Question 11

what does the disconfirmation model say about expectations

Answer 11

What the disconfirmation model says is that high expectations are good, as long as performance is close to expectations → reason for this is the confirmation bias. The mind has a tendency to confirm expectations. The mind is looking to confirm these high expectations. As long as performance is in the ballpark of these expectations, the mind will think that performance is consistent with expectations.

Question 12

disconfirmation model

Answer 12

has the biggest effect on satisfaction
If performance is far below expectations = negative disconfirmation → reduces satisfaction
If performance far exceeds expectations- positive disconfirmation→ increases satisfaction
If a firm wants really higher satisfaction rates, they have to aim for positive disconfirmation, have to make sure that customers are pleasantly surprised

Question 13

How can managers use the disconfirmation model to maximize satisfaction?

Answer 13

Managers should do two things to maximize satisfaction : hook and surprise

Question 14

what is hook

Answer 14

Hook: setting high expectations on one attribute, through advertising. Also meet these expectations
Ex: showing an ad for airplanes about having internet
Hook gives customers a reason to buy, its a reason for satisfaction

Question 15

what is surprise

Answer 15

spuroise the customer when they are using the product. Firms should have certain attributes in reserve . have low expectations on an attribute and when the customer uses the product, their expectations will be exceeded
Ex: airlines could have unexpected legroom, upgrades, welcome drink, leather seats, quality of food
Surprise gives customers a reason to be highly satisfied
really maximizes satisfaction

Question 16

challenging thing about surprise

Answer 16

difficult to sustain, only applies for a first or second time
It becomes unsurprising over time

Question 17

to summarize hook and surprise

Answer 17

1) Don’t use only hooks, keep some surprise
2) Surprise can become unsurprising → less effect of that attribute on satisfaction
3) Need to be creative to develop new attributes → could be new versions of existing attributes. Ex: new food items on the menu
4) Minor surprise better than no surprise
5) Customers can react negatively if attribute is withdrawn→ losses loom larger than gains. Customers are sensitive to losses

Question 18

attribution model

Answer 18

Applies when there is negative disconfirmation → performance is much below expectations

Question 19

what are the three thoughts in the attribution model

Answer 19

focus, stability and control
firms should provide info about these attributes to minimize dissatisgcatio.

Question 20

focus

Answer 20

if theres been poor performance, customers think about who is responsible for this event
For negative events, there are many possible causes like for the plane being delayed could be due to weather, air traffic
Availability heuristic comes into play → people hold the airline responsible . airline is the most vivid
Firms should be proactively informing customers on who is responsible or to blame , assuming its not the airlines fault

Question 21

stability

Answer 21

how often does this event happen
Airlines should proactively inform customers that this is a rare event , assuming it is a rare event

Question 22

control

Answer 22

what is being done about this poor performance
Firms should provide updates to customers about what action is going to be taken to solve this problem

Question 23

results of dissatisfaction

Answer 23

Disatisfaction hurts the firm a lot in the long run→ its been found that people are much more likely to tell others about bad things that happen to them than good things that happen to them
Now customers can post their comments online so they can tell many more people when something bad has happened to them
Dissatisfaction can hurt the firm a lot more than satisfaction can help the firm
Word of mouth has become much more expansive bc of social media
Negative word of mouth can hurt the firm in many ways –. We share bad things more than good, losses loom larger than gains, greater memory for bad than good
Complaints can also be an opportunity that the firm can exploit to help the firm in the long run→ if an airline gives compensation way above consumers expectations , this is positive disconfirmation, has a strong influence of satisfaction that can lead to positive word of mouth which can help the firm

Question 24

using surprise effectively

Answer 24

1) stream of surpises
2) Creativity required
surprises require creativity
3) smaller surprise are okay
4) Cheaper surprises better
5) Easier to program surprises in digital products

Question 25

zone of delight

Answer 25

Have to shoot for the zone of delight
need customer loyalty

This is where your customer HOPES for something, ASKS for it, but really does not expect you to provide it.

Question 26

why is dissaftoscaton common for services

Answer 26

Mst physical goods are first produced in a factory and then delivered to customers
Most services are not produced in a factory but produced at the point of sale by employees
Because services are produced at a point of sale:
1) Factory level quality control not possible
2) Employees are human and may not deliver consistent quality
3) Service quality might depend on the behaviour of customers
4) The behaviour of other customers might influence service quality

Question 27

dissatisfaction can lead to negative word of mouth

Answer 27

Before the internet, dissatisfied customer were up to 9 people now its up to 16
Negative info reaches a lot more people now
Negative info has greater impact than positive info → losses loom larger tyhan gains (negative attitudes), greater memory for bad then good (long memory), we share bad things more than good things (negative social influence and repetition of bad news about the brand)

Question 28

when can negative publicity help firms

Answer 28

creates brand awareness

Question 29

surprise benefits for short and long term

Answer 29

Short Term Benefits => Repeat Purchase
* Long Term Benefits => Positive Reviews, Confirmation Bias
Short Term vs. Long Term

Question 30

stream of surprises

Answer 30

Definition: The stream of surprises refers to a consistent flow of unexpected, delightful experiences that keep consumers engaged and interested. It can take the form of product features, marketing strategies, or customer service interactions.
Importance: Regularly introducing surprises can enhance customer loyalty, as consumers look forward to the next unexpected benefit or experience. It helps maintain a dynamic relationship with the brand

Question 31

How Can Firms Respond to
Dissatisfied Customers &
Negative Word of Mouth?

Answer 31

firms can reply to complaints
Firms Can Use Complaints as an
Opportunity to Increase Satisfaction
Negative Publicity/Controversy
Can Sometimes Help Firms
Build Brand Awareness

Question 32

customer journey maps

Answer 32

identify pain points (eliminate negative cues) and pleasure points (harmonize impressions and oisitve cues)