Literature review And Theoretical Framework
6) Consumer perception
3.2 THEORETICAL FRAMEWORK
Consumer
An individual who buys products or services for personal use and not for manufacture or resale is termed as a consumer. A consumer is someone who can make the decision whether or not to purchase an item at the store, and someone who can be influenced by marketing and advertisements
Customer
A customer is a person, company, or other entity which buys goods and services produced by another person, company, or other entity.
Customer service
According to Turban et al “customer service is a series of activities designed to enhance the level of customer satisfaction that is, the feeling that a product or service has met the customer expectation the needs, wants and pre-conceived ideas of a customer about a product or
service. Customer expectation will be influenced by a customer’s perception of the product or service and can be created by previous experience, advertising, hearsay, awareness of
competitors and brand image. The level of customer service is also a factor and a customer might expect to encounter efficiency, helpfulness, reliability, confidence in the staff and a personal interest in his / her patronage.
The main objectives of customer services are : -
• Learn to identify and analyze customer needs and problems
• Recognize the most common reasons for customer complaints
• Discover techniques to cultivate and maintain special customer relationships
• Assess your communication style and use two – way communication skills to level with people, to accept feedback from them, and to discuss problems
• Identify specific problems in your customer service program and apply treatment.
Customer satisfaction
Customer satisfaction is a measure of how products and services supplied by the company meet or surpass customer expectation. Satisfaction is a person’s feelings of pleasure or disappointment resulting from comparing a product’s perceived performance in relation to his or her expectation.
• Encourage face to face dealing
• Be friendly and approachable
• Respond to messages promptly and keep your client informed
• Have a clear defined customer service policy
• Attention to detail
• Anticipate your client’s needs and go out of your way to help them out
• Honor your promises
Kano's model of customer satisfaction distinguishes six categories of quality attributes, from
1. Basic Factor s - The minimum requirements which will cause dissatisfaction if they are not fulfilled, but do not cause customer satisfaction if they are fulfilled (or are exceeded). The customer regards these as prerequisites and takes these for granted.
Basic factors establish a market entry 'threshold'.
2. Excitement Factors - The factors that increase customer satisfaction if delivered but do not cause dissatisfaction if they are not delivered. These factors surprise the customer and generate 'delight'. Using these factors, a company can really distinguish itself from its competitors in a positive way.
3. Performance Factors . The factors that cause satisfaction if the performance is high, and they cause dissatisfaction if the performance is low. Here, the attribute performance-overall satisfaction is linear and symmetric. Typically these factors are directly connected to customers' explicit needs and desires and a company should try to be competitive here.
4. Indifferent attributes. The customer does not care about this feature.
5. Questionable attributes. It is unclear whether this attribute is expected by the customer.
6. Reverse attributes. The reverse of this product feature was expected by the customer.
Five facts for improving productivity
• As senior managers, only know about the tip of the iceberg, a small fraction of all the problems your customers encounter.
• Service can be a major marketing tool
• Customer problems can cost not only an immediate lost sale, but also future purchases by that customer and by other customers as a result of negative word-of-mouth behavior.
• We can and must quantify the expected payback from service and/or quality improvements.
• The market transaction (sale) often is not the key point of customer pain and lost revenue.
DOING THE JOB RIGHT THE FIRST TIME + EFFECTIVE CUSTOMER SERVICE = MAXIMUM CUSTOMER SATISFACTION/LOYALTY
Customer oriented organization chart
In this pyramid shows customers will be the top most priority and next in importance are front line people who meet, serve and satisfy customers; under them are the middle managers, whose job is to support the front – line people so they can serve customers well and at the base is top management, whose job is to hire and support good middle managers.
Customer behavior is to know about the customer’s way to obtain, use and dispose products.
It's important for marketing to know the customer behavior by using different strategies.
There are so many different ways to influence customers like new products, promotions, advertisement, good quality and price etc.
Customer behavior analysis is based on consumer buying behavior, with the customer playing the three distinct roles of user, payer and buyer. Relationship marketing is an influential asset for customer behavior analysis as it has a keen interest in the re-discovery of the true meaning of marketing through the re-affirmation of the importance of the customer or buyer.Customer behavior analysis aims to ultimately improve business performance through an understanding of past and present customers so as to determine and identify future customers and their behavior.
Customer-Focused Marketing
All marketing is done with the customer in mind. Marketing can in fact be referred to as an on-going conversation occurring between business and customer. It is therefore necessary for businesses to gain in-depth knowledge of their relative customers so that the best marketing strategies can be employed in order to attract these potential buyers. This can effectively be done by performing activities such as customer behaviors analysis to ensure customer retention. Listed below are a number of tips to aid businesses striving towards customer retention through marketing efforts:
1. Marketing as a Conversation:
Direct interaction with customers is necessary to essentially find out what it is that they are wanting. This marketing conversation involves a process running from action - reaction -
feedback - repeat. Businesses need to be willing to take the time to listen to their customers as this can ensure a business of putting something up for offer which is of great worth amongst their targeted consumers, and is relative to their particular needs and desires. It is required for businesses to constantly perform marketing promotion so that these customers will come back for more. Giving satisfaction to first-time buyers can prove effective for a business in the long-run for the reason that by giving customers what they desire the first time round, customer retention is encouraged through this form of customer loyalty.
2. Active Customer s:
Making customers feel as though they are in control is an effective strategy in customer-focused marketing. This is done by transforming consumers into active customers who are given the ability to make choices for themselves by actively engaging in promotions and, hereby, deciding on the best possible products and services their money can buy. Customer retention is encouraged through this interaction with customers which aids in customer loyalty. Businesses need to make each and every one of their customers feel good about themselves by giving them something to do. Therefore, retaining customers means keeping them happy by keeping them active.
3. Determining Future Customer Behaviour :
This is most effectively done through an analysis of the actual behaviour of past and present customers. Actual behaviour needs to be differentiated from demographic behaviours (which are implied consumer characteristics). Actual behaviour is, as such, better at predicting the future which is done by keeping a watch over the actions customers perform with regard to online purchases and the products they purchase over the Internet.
4. Allocating Resources for Marketing:
Businesses need to take their budget into consideration when allocating resources for promotions. It is well-known amongst businesses that some marketing activities will generate higher profits than others and data therefore needs to be created by interacting with customers in order to consequentially identify the most profitable promotions, which will be delivered to the right customer at the right time, without wasting time or money. Hereby, effective
marketing means avoiding unprofitable promotion which will as such mean not reaching the right customers and wasting money.
Customer buying behaviour
Process by which individual search for select, purchase, use and dispose of goods and services, in satisfaction of their needs and wants.
Types
• Minor new purchase – these purchases represent something new to a consumer but in the customer’s mind is not a very important purchase in terms of need, money or other reason.
• Minor re- purchase – these are the most routine of all purchase and often the consumer returns to purchase the same product without giving much thought to other product options.
• Major new purchase – these purchases are the most difficult of all purchase because the product being purchased is important to the consumer but the consumer has little or no previous experience making new decisions. The consumer’s lack of confidence in making this type of decision often requires the consumer to engage in an extensive decision making process
• Major repurchase – the purchase decision are also important to the consumer feels confident in making these decisions since they have previous experience purchasing the product
Stages of the Consumer Buying Process
Six Stages to the Consumer Buying Decision Process .
1. Problem Recognition (awareness of need) --difference between the desired state and the actual condition were deficient? I.E., see a commercial for a new pair of shoes, stimulates your recognition that you need a new pair of shoes.
2. Information search - -
o Internal search, memory.
o External search if you need more information. Friends and relatives (word of mouth). Marketer dominated sources; comparison shopping; public sources etc.
3. Evaluation of Alternatives - -need to establish criteria for evaluation, features the buyer wants or does not want.
4. Purchase decision - -Choose buying alternative, includes product, package, store, method of purchase etc.
6. Post-Purchase Evaluation --outcome: Satisfaction or Dissatisfaction. Cognitive Dissonance, have you made the right decision. This can be reduced by warranties, after sales communication etc.
Maslow’s hierarchy of needs
Gaining a better understanding of customers buying behaviour is based on knowing the following;
• Awareness
• Where do they gather their buying information
• Are they an exclusive customer?
Customer loyalty
The term customer loyalty is used to describe the behavior of repeat customers, as well as those that offer good ratings, reviews, or testimonials. Some customers do a particular company a great service by offering favorable word of mouth publicity regarding a product, telling friends and family, thus adding them to the number of loyal customers.
Ten ways to build customer loyalty:
1. Communicate: - Whether it is an email newsletter, monthly flier, a reminder card for a tune up, or a holiday greeting card, reach out to the customers.
2. Customer Service : - Go the extra distance and meet customer needs. Train the staff to do the same. Customers remember being treated well.
3. Employee Loyalty : - Loyalty works from the top down. If managers are loyal to the employees, they will feel positively about their jobs and pass that loyalty along to customers.
4. Employee Training: - Train the employees and interact with customers. Empower employees to make decisions that benefit the customer.
5. Customer Incentives : - Give customers a reason to return to business.
6. Product Awareness : - Know what y steady patrons purchase and keep those items in stock.
7. Reliability: - If a purchase will arrive on Wednesday, deliver it on Wednesday. Be reliable. If something goes wrong, let customers know immediately and compensate them for their inconvenience.
8. Be Flexible : - Try to solve customer problems or complaints to the best of ability.
9. People over Technology : - The harder it is for a customer to speak to a human being when he or she has a problem, the less likely it is that you will see that customer again.
10. Know Their Names : - Remember the theme song to the television show Cheers? Get to know the names of regular customers or at least recognize their faces.
Customer loyalty model
This model is developed by Schlesinger and Heskett (1991). In this model explains that effort spent in selecting and training employees and creating a corporate culture in which they are empowered can lead to increased employee satisfaction and employee competence. This will likely result in superior service delivery and customer satisfaction. This in turn will create customer loyalty, improved sales levels and higher profit margins.
Essentials of customer care
1) Encourage employees to deliver high-quality customer care.
Make sure employees have good basic communication skills.
Train employees in job-specific skills.
Train all relevant personnel how to answer and deal with telephone calls.
Make sure employees can handle complaints effectively.
They should apologise, be sympathetic, listen, establish the facts, agree what to do and then do it
2) Think of ways to make life easier for customer s.
Try to save the customer inconvenience.
Exceed your customers’ expectations.
Keep customers informed about any problems, and make it easy for them to contact
Use your website to give customers the services and information they want.
3) Use appropriate technology.
A good database system can help you record, organise and plan your contact with customers.
Make sure information from your website can be transferred to your main database.
Contact management software may be a useful tool if you have a lot of high-value customer accounts.
Company will need to explain the advantages of the system to employees, and provide training and incentives for use.
4) Give customers a personalised service.
A common way to achieve this is by giving each customer an account manager.
Personalise all communication.
Personalise the email addresses of customer-facing employees
If use computerised telephone systems, give customers the option of talking to an operator at any time.
Customer retention
Customer Retention is the activity that a selling organization undertakes in order to reduce customer defections. Successful customer retention starts with the first contact an organization has with a customer and continues throughout the entire lifetime of a relationship. A company’s ability to attract and retain new customers, is not only related to its product or services, but strongly related to the way it services its existing customers and the reputation it creates within and across the marketplace.
Customer retention rate: -- The customer retention rate refers to the number of customers lost over a period of time. It is normally calculated by the percentage of lost customers versus existing customers over a quarterly or annual period, without tallying new customer acquisitions
Customer life time value
Customer lifetime value enable an organization to calculate the net present value of the profit an organization will realize on a customer over a given period of time. Retention Rate is the percentage of the total number of customers retained in context to the customers that approached for cancellation.
Customer perception
Perception is the process of selecting, organizing and interpreting information inputs to produce meaning. IE we chose what info we pay attention to, organize it and interpret it.
Information inputs are the sensations received through sight, taste, hearing, smell and touch.
• Selective Exposure -select inputs to be exposed to our awareness. More likely if it is linked to an event, satisfies current needs, intensity of input changes (sharp price drop).
• Selective Distortion -Changing/twisting current received information, inconsistent with beliefs.
Factors influencing perception