Quality, Satisfaction, Loyalty Flashcards
The original importance of ______ was superseded by a focus on _______. This is now giving way to _______.
quality; satisfaction; loyalty
What are 4 questionable dimensions of quality?
- Reliability/Durability (Cray; crystal)
- Performance? (light bulbs)
- Features? (bloatware; consumer electronics*)
- Aesthetics?
Firms need to know how _______ define quality. Ex. phones
consumers
Physical realities may require the firm to _______ one dimension for another, with the upside being that different firms could be uniquely differentiated. Ex. pianos, cars
trade-off
The dimension of quality on which a firm competes may _______ _______ _______. Ex. Japanese cars use to rust
change over time
Why has quality not been as prominent in corporate America?
Returns are no longer there as evidenced by managerial behavior and empirical returns (superior returns for mktg orientation vs. quality orientation)
Problems arise when engineers and consumers define quality along _______ ________.
different dimensions
managerial implications to the possibility that customer perceptions can _________ engineering measures of the same dimension
mismatch
What is the first managerial implication of perceived quality?
Overinvestment in Engineering: Quality improvements that are salient to the engineer (and costly to the firm) may be invisible to the consumer. Research also indicates that there can be a long lag between a change in true quality and consumer perceptions of the change. Ex. code refractoring
What is the second managerial implication of perceived quality?
Underinestment in Marketing: Small investments in marketing may produce large changes in perceptions of quality, especially when quality is ambiguous. When ambiguity about quality exists, a firm may attempt to “manage” the consumer’s perceptions by manipulating the peripheral cues (price, warranty, advertising, etc.) that signal quality to the consumer. Ex. beer; doctors/lawyers; pilots
Satisfaction incorporates both perceived _____ and ______.
quality; price
Customer satisfaction improves retention, market share, wallet share, and shareholder value because satisfaction:
- increases loyalty
- reduces price-elasticity/increases WTP
- facilitates cross-selling
- lowers customer acquisition costs via positive WoM
What are the 4 satisfaction caveats?
- Dynamics of Satisfaction: Consumers adapt.(“hedonic adaption” & “the hedonic treadmill”)
- Return on Investment
- Segmentation
- Satisfaction doesn’t = Preference
Loyalty is an ________ of financial performance
Antecedent
Loyalty is the defining characteristic of a ________ _________.
defensive approach
Loyalty lead to _________ if the firm misunderstands the basis for its customers’ loyalty
catastrophe
What are 6 drivers of loyalty?
- Consumption Utility
- Search or Switching Costs Ex. cellphones
- Risk Aversion Ex. OTC drugs
- Inertia Ex. Tide
- Overconfidence Ex. beer
- Personal Attachment Ex. Harley-Davidson; NASCAR
What are the two nonlinear relationships between satisfaction and loyalty?
- High Loyalty, But Low Satisfaction: they may be highly dissatisfied and will defect if the constraint on switching is loosened
- Low Loyalty, But High Satisfaction: Customers may be satisfied but switch with little hesitation. Ex. Those who score 5 vs. those who score 4
It makes economic sense to encourage _________.
complaining
Non-complainers defect ______ quickly than dissatisfied complainers.
more
_______ from customers are an attempt to change the firm’s policies. _______ is an escape from those policies.
Complaints; Defection
The net promoter score asks customers to do what?
Asks customers if they would recommend the firm to another customer.
What are the three ways that a firm avoids commodification? All are designed to push the date of commodification as far into the future as possible.
- Strategic Approach: Done through differentiation combined with tradeoffs across elements and fit among elements. Also by developing assets that are inimitable due to physical uniqueness, path dependence, causal ambiguity, and economic deterrence
- Product Development: prioritizing continuous innovation in order to reduce objective similarity across brands.
- Tactics to cause consumers to perceive differentiation: effective when quality is ambiguous and consumers lack the knowledge or motivation to understand the true level of differentiation
What addresses the objective differentiation force that drives commodification?
Innovation
What address the subjective differentiation force that drives commodification?
Marketing tactics
What two forces drive commodficiation?
Objective and Subjective differentiation
