The Role Of Customer Satisfaction In Achieving Business Succ

The role of customer satisfaction in achieving business excellence

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Total Quality Management Vol 12 No 78 2001 920 925the Role Of TOTAL QUALITY MANAGEMENT, VOL. 12, NO. 7&8, 2001, The role of customer satisfaction in achieving business excellence D D GEA College of Entrepreneurship, Sencna pot 10, 6320 Portoroz, Slovenia The consumer satisfaction category has the main position in marketing theory and is based on the premise that the profit is made through the process of satisfaction of consumers’ demands, i.e. achievement of their satisfaction. Researches continually confirm a significant correlation between satisfaction and repeated buying, greater brand loyalty and spreading a positive opinion of the product. The model of consumers’ buying decisions described in this paper consists of five consecutive phases of consumer behaviour through the buying process: product perceiving phase (offered product with all producer’s factors of competitiveness from the consumer’s point of view); value estimation phase (weighting benefits and sacrifices); comparing the values of different products and decision-making phase (comparing alternative options); action phase (realization of the decision); and consumer’s state of mind after buying action phase (satisfaction with the product). There are several aspects that should be taken into consideration from the producer’s (seller’s) point of view in order to implement successfully the concept of customer satisfaction. Introduction Satisfaction as the result of purchase and consumption of a certain product (service) has a great meaning for the producer (seller, supplier) as it enables the connection of an offered product with post-buying phenomena such as changes in behaviour, repeated buying and brand loyalty. Research continually confirms a significant correlation between satisfaction and repeated buying, greater brand loyalty and spreading a positive opinion of the product. Satisfaction is, therefore, the generator of repeated buying and all those advantages to a company required for its existence and development. The consumer satisfaction category lies in the core of marketing concept. Therefore, it is the main position in marketing theory and it is based on the premise that the profit is made through the process of satisfaction of consumers’ demands, i.e. achievement of his satisfaction. With the product purchased customer expectations (in the framework of confirmation paradigm) can be: confirmed, when the product is as expected; negatively unconfirmed, when the product is worse than expected; positively unconfirmed, when the product is better than expected. Correspondence : D. Dubrovski, GEA College of Entrepreneurship, Sencna pot 10, 6320 Portoroz, Slovenia. Tel: (; Fax: ; E-mail: [email protected] ISSN print/ISSN online/00/ © 2001 Taylor & Francis Ltd DOI: 10.1080/ CUSTOMER SATISFACTION 921 Dissatisfaction is the result of negatively unconfirmed expectations. In the case of confirmed expectations there can be two levels. At the first level, expectations are low, the product is totally adequate. At the second, higher level, expectations are more demanding where some other, more complex product is adequate. In spite of the results in both cases being a satisfied customer, the products required are different. From this it can be inferred that where lower expectations are preserved, satisfaction is easier with a simple product and a similar result can be achieved as with a product of extraordinary high quality with higher expectations. However, some past studies (e.g. Anderson et al., 1993; Fornell, 1992; Joiner, 1994, pp. 68-69; Kano, 1995, p. 67; Lowenstein, 1995, p. 8; Olshavsky & Miller, 1972; Rust et al., 1994, pp. 41-49) used different levels of expectation and the formula of customer satisfaction (e.g. Howard & Sheth, in Churchill, 1979); when it was necessary to use the ponder factor, these speculations were dismissed. The highest level of satisfying customer expectations is reached in the event that the customer gets more from a product than expected. This means his /her expectations are transcended in a positive direction. With this the innovativeness of the product is highly emphasized. The model of customer decision-making In the literature there are many different models of buying behaviour which can be divided from the buying decision-maker’s point of view into individual and organizational. From the complexity point of view they can be divided into monadic (simple cause-consequence connections) and multivariable (more complex, mutual intermixed connections). The model of consumer’s buying decision described in the paper (Fig. 1) consists of five consecutive phases of consumer behaviour through the buying process: product perceiving phase (offered product with all producer’s factors of competitiveness from the consumer’s point of view); value estimation phase (weighting benefits and sacrifices); comparing the values of different products and decision-making phase (comparing alternative options); action phase (realization of the decision); consumer’s state of mind after buying action phase (satisfaction with the product). The buying decision process therefore generally consists of pre-buying, buying and post- buying phases. The product position in the international market usually depends on joint effect of the factors of competitiveness on three levels. On the level of country of origin these can be: the political and economical reputation of the country, the established financing, crediting and insurance system in international business, consistency of the national, international and branch standards, widespread information network, etc. On the company level these can be: well-known brands, the power of partnerships (strategic alliances), the size of assortment, reputation of the company, etc. On the product level these are: quality, price, deliverability and marketing activities intended for a certain product. By these factors of competitiveness the producer tries to convince the consumer that his product, within the wide range of the same, similar or totally different products, offers the best satisfaction of his needs and demands. In order to determine the reasons of success or failure of a particular product in the market we need to put ourselves in the position of the person who chooses the product. Studying these factors of competitiveness from the consumer’s point of view, i.e. from the point of view of his inner perception and experiencing the products, is therefore the issue. 922 D. DUBROVSKI Product perception phase Forming product value phase Value comparison and decision making phase Action phase Post-buying status phase time component place component monetary price non-monetary price number of characteristics significance of characteristics place component time component factors of competitiveness of a country-of-origin factors of competitiveness of a company deliverability perceived quality marketing activities perceived price VALUE of product A VALUE of product non-A DECISION MAKING STOP NOT BUYING A BUYING A DISSATISFACTION SATISFACTION EXPERIENCE Figure 1. The model of customer decision-making. Neither the quality nor the price for themselves determine the buying decision. The value relation between those two actually does. The product value is the guiding line for a consumer’s buying decision, which appears in the choice of a particular product among a variety of other products. Subjective perception of quality is where the customer appraises, through the product perception process, or interprets, the quality. While objective quality can be correctly measured with the assistance of different instruments, as the technical level of the product is described and applies only to the measuring or finding of product characteristics, meaning that it is adequate to describe a product in its generic level or a production phase, the perception of quality is the result of subjective experiencing of a product. The objective quality is, therefore, only a part of the perception, an eventual positive starting point or one among its determinants. In accordance to such a foundation, a definition of quality was also formed that says that product quality represents those characteristics of a product that meet customer requirements and which most satisfy the aims of the consumers’ needs. Quality in the same product can have different significance and weight for different customers. This is largely dependent on which characteristics of the product will be given more weight by the customer and how he will perceive adequacy with respect to his needs. Also in pricing, we distinguish between the objective and the perceived (subjective) price in which the difference to quality is that the price in the process of customer perception is negatively composed. The objective price of a product is a price expressed in monetary units, clearly defined and decisive. The nominal (absolute) price remains always the same, irrespective of who the customer is and what price he will accept. If we take two customers with different intensive requirements, different standards of living, way of life, coming from different socio-economic environments, then the nominal price for the two customers will not have the same significance and the price will be different, depending on how the customer perceives it. In this case we can speak of a different perceived price. The price for a customer is a sacrifice in which he obtains some benefit. This sacrifice is not only the monetary price but also something else, the accompanying elements that form the so-called non-monetary price. In order for the customer to gain some benefit, he must use a certain time, invest a certain amount of psychical and physical effort (in searching for the purchase itself or preparing for consumption) or even overcome difficulties and unpleasantness that appear in the process of buying. The perceived price is, therefore, comprised of the perceived monetary price and the perceived non-monetary price. From the customer’s point of view, we speak in model phases of product perception of its perceived quality, perceived price, perceived deliverability and perceived marketing aimed at a specific product, as well as the perceived factors of competitiveness of the company and country of origin, all of which combine to form the final form of the product in the customer’s consciousness. The product value is dependent on the difference between perceived quality and perceived price. The higher the perceived quality is from the perceived price, the higher the value of the product. If we allow for the number and different types of composition affecting the perceived quality and perceived price, then there is a great possibility of improving the value of the product. It is necessary to note that elements in the value equation cannot be changed by mere mathematical algorithms; rather, marketing character must be added. Therefore, decision-making on value-forming strategy must be supported by adequate research of market participants and the environment, allowing for one’s own advantages and disadvantages. The consumer’s buying decision is the result of weighting the possible benefit and required sacrifice. The relation between these two dimensions is the value of the product. For the consumer, a gained benefit is the product that solves his problem, i.e., that adjusts to his demands. Instead of the product (in general), the quality of the product — perceived by the consumer — and the required sacrice (monetary or non-monetary) are critical. The value of the product is therefore the relation between perceived quality and perceived price and involves comparison among all available products that can solve the consumer’s problem or satisfy his needs. In the action phase, the consumer decides to buy a product from available options or not to buy at all. Making a decision is based on subjective estimations and ranking of product values. If no product meets the consumer’s requirements, the purchase is skipped. According to the confirmation paradigm, customer satisfaction or dissatisfaction influences future perceptions of quality and value, affecting the likelihood of repeated purchases and brand loyalty. The last phase is directly connected to the initial perception phase, forming an inseparable spiral. Customer satisfaction is a key driver for long-term success, as satisfied customers tend to become repeat buyers and suggest products to others, fueling positive word-of-mouth. Conversely, dissatisfied customers can rapidly damage a company’s reputation through negative word-of-mouth, emphasizing the importance of customer retention. The paper highlights that understanding and actively managing customer satisfaction is critical for achieving business excellence, especially in highly competitive markets. Companies often focus on acquiring new customers, neglecting existing ones, which is short-sighted given that maintaining current clients is less costly and more profitable in the long run. Effective strategies involve measuring customer satisfaction, listening to feedback, and continuously aligning products and services to meet or exceed customer expectations to sustain loyalty and enhance market position.

Paper For Above instruction

In today’s fiercely competitive global markets, achieving business excellence hinges significantly on understanding and managing customer satisfaction. Total Quality Management (TQM) emphasizes the importance of delivering value that aligns with consumer expectations, leading to loyalty, repeat purchases, and positive word-of-mouth promotion. This paper explores the multifaceted role of customer satisfaction within TQM, emphasizing the consumer decision-making process, perception of product value, and the strategic importance of customer retention for sustainable growth.

Customer satisfaction, as a core element of marketing, is predicated on the theoretical premise that profit is derived from effectively satisfying customer demands. Numerous studies confirm a robust positive correlation between satisfaction levels and key business outcomes such as customer loyalty, repeat purchasing, and brand advocacy (Fornell, 1992; Anderson et al., 1993). These outcomes are integral to building a sustainable competitive advantage in both domestic and international markets.

The consumer decision-making process is a critical component of understanding how satisfaction influences purchasing behavior. A comprehensive model delineates five primary phases: product perception, value estimation, comparison and decision-making, action, and post-purchase evaluation. In the product perception phase, consumers assess offered products based on all factors of competitiveness from their perspective. The subsequent value estimation involves weighing benefits against sacrifices, leading to a comparison that culminates in a purchase decision or rejection.

An essential aspect of this process is perceived value, which depends on the subjective perception of quality relative to price. Objective quality, measurable through technical standards, may differ significantly from customer-perceived quality, which is influenced by individual expectations, prior experiences, and social factors (Kano, 1995). The perception of quality is inherently subjective and varies among consumers, emphasizing the importance of personalized marketing approaches.

Similarly, perceptions of price—both monetary and non-monetary—play a vital role. While the objective price remains constant, customers perceive it differently depending on their socio-economic background, lifestyle, and psychological factors (Olshavsky & Miller, 1972). The perceived price affects how customers evaluate the gain or sacrifice involved in the purchase decision, influencing overall customer satisfaction.

The value of a product, therefore, is a ratio of perceived quality to perceived price. When perceived quality exceeds perceived price, customer-perceived value increases, promoting satisfaction and fostering loyalty. Marketers can influence this perception by enhancing product features, improving service delivery, and emphasizing elements such as branding and psychological benefits, which are often less tangible but critical for customer perception (Rust et al., 1994).

The action phase involves the consumer's decision to purchase or abstain from buying, driven largely by subjective rankings of product value. Post-purchase, the levels of satisfaction or dissatisfaction are established, which subsequently influence future perceptions of quality and value. A satisfied customer is more likely to become a repeat buyer and advocate for the brand, creating a virtuous cycle of loyalty and positive reinforcement. Conversely, dissatisfaction can rapidly spread through negative word-of-mouth, damaging the brand reputation (Vavra, 1992).

Recognizing this, companies must prioritize customer retention strategies as a cost-effective approach compared to acquiring new customers. Consistent measurement of customer satisfaction through surveys, social media feedback, and direct communications enables organizations to adapt their offerings proactively. Continuous improvement efforts aligned with customer expectations foster an environment of trust and loyalty, which are pivotal for business excellence.

Furthermore, companies should understand that satisfaction is not static; it involves an ongoing dialogue between the consumer and the producer. The process can be viewed as an interconnected spiral, where post-purchase experiences influence initial perceptions for future transactions. This dynamic underscores the importance of post-sale services, complaint management, and relationship marketing in sustaining long-term success.

In conclusion, customer satisfaction serves as a vital driver for achieving business excellence within TQM frameworks. It directly impacts customer loyalty, advocacy, and brand reputation. Companies that rigorously monitor, evaluate, and respond to customer expectations create a competitive advantage that supports continuous improvement and sustainable growth. As the marketplace evolves, so must companies’ strategies, ensuring that customer-centricity remains at the forefront of organizational culture and operational practices.

References

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