Session 7

Question 1

Relationships can create value for individual consumers through factors such as:

Answer 1

1. Inspiring confidence: established relationships, less risk of something going wrong, trust the provider and often receive the firm’s highest level of service. “I know what I’m getting – I know that if I pick a restaurant that I regularly go to, rather than taking a chance on new restaurants, the food will be good”
2. Offering social benefits: offering mutual recognition such as knowing customers name, using the customer’s name thus creating a social aspect of the service. “I like him (hair stylist), he’s funny and always has lots of good jokes. He is kind of like a friend now”
3. Providing special treatment: providing better discounts, higher priority, free gifts, and faster service. “I will be receiving price breaks, better service or free products”

Question 2

3 main zones of customer satisfaction:

Answer 2

1. Zone of customer defection occurs at lower satisfaction levels. Customers will switch unless switching costs are high or if there are no other viable alternatives.
2. Zone of indifference is for intermediate satisfaction levels. Customers are willing to switch if a better alternative is found.
3. Zone of affection (apostles) shows very high satisfaction levels, are fiercely loyal, praise the firm in public, refer others to the firm and are the most loyal.

Question 3

Strategies for developing loyalty bonds with customers:

Answer 3

1. Deepen the relationship
2. Create loyalty awards
3. Build higher level bonds such as social, customised and structural bonds