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Chapter 15 Beyond Consumer Relationships End of Chapter Material Review Questions (*) Indicates material on prep cards. 1. *What are the cognitive and affective components that help shape postconsumption behavior? Answer: Cognitive components include expectations, performance perceptions, disconfirmation (which results from comparing the latter two), attributions, and equity perceptions. Affective components include consumer satisfaction and dissatisfaction, but also include other emotions such as joy, sadness, disgust, anger, skepticism, excitement, love, attachment, frustration, and commitment. 2. Define the term critical incident in a consumer behavior context. How might an equity cognition involving procedural justice contribute to a critical incident for some business? Answer: The term critical incident refers to exchanges between consumers and business that the consumer views as unusually negative. The students should think of an example from their own experiences. For instance, a hotel may overbook and a customer with a reservation could end up not having a room at that hotel. The customer may not be happy with the way the hotel deals with that situation. The processes could make the customer very upset and cause them to complain and spread negative word of mouth. However, customers who believe a firm has adequately responded to some negative critical incident are likely to become more loyal, and loyalty is the positive outcome relationship-oriented firms seek. 3. List and define the behavioral outcomes of consumption. Answer: The behavioral outcomes of consumption include complaining behavior occurs when a consumer actively seeks out someone with whom to share an opinion regarding a negative consumption event. In the extreme, complaining can take the form of revenge. Negative word-of-mouth takes place when consumers relay negative information about a company from one person to another. Positive word-of- mouth takes place when consumers relay positive information or recommendations about a company to other consumers. Switching in a consumer behavior context refers to those occasions when a consumer chooses a competing choice rather than the previously purchased choice on the next purchase occasion. The behavioral component of customer loyalty is customer share, which is the portion of resources allocated to one brand from among the set of competing brands. 4. Describe an instance when you complained about poor service. Using Exhibit 15.1, explain how you complained to the establishment. Was your complaint acted upon by the service-providing firm? Answer: This activity is an opportunity for students to elaborate on the extended disconfirmation model shown in Exhibit 15.1. Students should focus on the specific emotion they experienced and how that emotion contributed to the behavior they subsequently exhibited. I had made a reservation for a special occasion, but upon arriving, we were kept waiting for nearly 30 minutes past our reservation time without any explanation or acknowledgment from the staff. When we were finally seated, the service was slow, and the quality of the food did not meet our expectations. Using Exhibit 15.1 as a guide, here's how I complained to the establishment: 1. Direct Verbal Complaint: I politely approached the server and expressed my disappointment with the wait time and the quality of service. I emphasized that we had made a reservation and expected a more efficient and attentive experience. 2. Suggestion/Comment Card: After the meal, I filled out a comment card provided by the restaurant, detailing my concerns about the wait time, service, and food quality. I made specific suggestions for improvement, such as better communication with customers about wait times and more attentive service from the staff. 3. Social Media Complaint: I also took to social media to share my experience with the restaurant, posting a review on platforms like Yelp or Google Reviews. In my review, I recounted the issues we encountered and expressed my disappointment with the overall dining experience. Following my complaints, the service-providing firm did take action to address the situation: 1. Apology and Acknowledgment: The restaurant manager promptly apologized for the inconvenience and acknowledged the shortcomings in their service. They thanked me for bringing the issues to their attention and assured me that they would investigate the matter further. 2. Compensation Offer: To make amends for the poor experience, the restaurant offered a complimentary dessert or drink on our next visit as a gesture of goodwill. They also promised to address the service and operational issues internally to prevent similar incidents in the future. 3. Follow-up Communication: A few days later, I received a follow-up email from the restaurant management, thanking me again for my feedback and providing updates on the steps they were taking to improve their service. They expressed their commitment to customer satisfaction and invited me to revisit the restaurant to experience the improvements firsthand. Overall, while my initial complaint about poor service was disappointing, I was pleased with the responsiveness of the service-providing firm in addressing my concerns. Their willingness to listen to feedback, apologize for the inconvenience, and take corrective action demonstrated their commitment to customer satisfaction and continuous improvement. 5. *What are the different ways in which a firm can react to negative public publicity? Which way is almost always a bad response? Answer: The different ways in which a firm can react include: Do nothing and the news will eventually go away Deny responsibility for any negative event Take responsibility for any negative events, and be visible in the public eye Release information, thereby allowing the public to draw its own conclusion Denying any responsibility is almost always a bad option 6. What are two types of revenge that customers may undertake to try to harm a business? What is your opinion on the ethics of such action? Answer: Rancorous revenge is when a consumer yells, insults and makes a public scene in an effort to harm the business. A vengeful consumer may make derogatory posts on social networks as a way of taking out frustrations. Retaliatory revenge is a term that captures extreme types of behavior including abuse of employees, defacing property or accosting other customers. Revenge often occurs out of feelings of inequity, in particular violations of procedural or interactional justice can lead to revenge. Have students discuss ethics of revenge. It’s hard to imagine a situation when revenge might be ethical. Students may discuss revenge as a get even tactic, but if the revenge is malicious or if it involves harming others, it certainly is not ethical. 7. List types of WOM and/or Publicity that are not necessarily negative. Answer: Positive WOM comes in the form of recommendations from other consumers and is often posted online in some form. 3rd party endorsements are one form of publicity in which an ostensibly objective outsider (neither the customer nor business) provides publicly available purchase recommendations or evaluations. Businesses are very happy to receive good reviews from such ostensibly objective 3rd parties. 8. What are the different types of switching costs that a consumer faces? Provide examples of each from your own consumer experiences. Answer: The three types of switching costs are procedural, financial, and relational. Changing mobile phones involves procedural switching costs because new ways of doing the same old things must be learned. Financial switching costs could be encountered when a consumer wishes to change apartments before the lease is expired and thus risks forfeiting the deposit. Relational switching costs could come in the form of changing hair stylists or dentists. 9. *Explain which types of firms are most vulnerable and least vulnerable to customer defections. Answer: The most vulnerable firms have dissatisfied customers combined with a highly competitive industry and low switching costs. The least vulnerable firms have satisfied customers combined with a relatively uncompetitive industry and high switching costs. An interesting discussion point is whether or not the latter situation is rare. 10. Define each component of true customer loyalty. Answer: One important component is customer share, which is the portion of resources allocated to one brand from among the set of competing brands. A second component is customer commitment, which is a strong feeling of attachment, dedication, and sense of identification with a brand. 11. What is relationship quality, and how does a relationship create value? Answer: Relationship quality represents the degree of connectedness between a consumer and a retailer. When relationship quality is high, the prospects for a continued series of mutually valuable exchanges exist. A healthy relationship between a consumer and a marketer enhances value for both parties. For the consumer, decision making becomes simpler, thereby enhancing utilitarian value. Relational exchanges often involve pleasant relational and experiential elements, thereby enhancing hedonic value. 12. Consider two retailers: Walgreens Drug Store and Nordstrom’s Department Store. Both stores have succeeded by providing shopping value to consumers. How does the value each creates contribute to a lasting relationship between the firm and its loyal consumers? Answer: The student can use the points in Exhibit 15.9 to form an answer. One point that students should make is that Walgreens is positioned to do things that lead to high utilitarian value from a relationship, while Nordstrom’s probably does things that create more hedonic value from the relationship. Walgreens Drug Store and Nordstrom's Department Store are both successful retailers that have built lasting relationships with their loyal consumers by providing distinct forms of shopping value tailored to their target markets. 1. Walgreens Drug Store: • Convenience Value: Walgreens emphasizes convenience by offering a wide range of pharmaceuticals, health products, and everyday essentials in easily accessible locations. Their extensive network of stores and 24/7 availability cater to consumers' needs for quick and convenient shopping. • Affordable Value: Walgreens offers competitive prices and frequent promotions, including discounts, loyalty rewards, and sales events. By providing affordability, they attract budget-conscious consumers who seek value for their money. • Healthcare Value: As a trusted provider of pharmacy services, Walgreens builds lasting relationships with consumers by offering personalized health consultations, prescription services, immunizations, and wellness programs. Their focus on healthcare value fosters trust and loyalty among consumers who prioritize their health and well-being. 2. Nordstrom's Department Store: • Quality Value: Nordstrom's distinguishes itself by offering high-quality merchandise, including luxury fashion brands, designer collections, and exclusive products. Their commitment to quality ensures that consumers receive superior products and shopping experiences, leading to long-term loyalty. • Personalized Service Value: Nordstrom's prides itself on providing exceptional customer service, including personalized styling consultations, alterations, and concierge services. By offering individualized attention and assistance, they create meaningful connections with consumers and exceed their expectations. • Luxury Experience Value: Nordstrom's elevates the shopping experience with luxurious amenities such as upscale ambiance, attentive staff, complimentary services, and exclusive events. Their focus on creating a premium environment enhances the overall shopping value and encourages repeat visits from discerning consumers. In both cases, the value created by Walgreens and Nordstrom's contributes to lasting relationships with loyal consumers in several ways: 1. Trust and Reliability: By consistently delivering on their promises of convenience, affordability, quality, and service excellence, both retailers build trust and reliability with their customers. Consumers feel confident in their shopping experiences and develop a sense of loyalty towards the brands. 2. Emotional Connection: Walgreens and Nordstrom's understand the emotional needs of their consumers and strive to connect with them on a deeper level. Whether it's providing healthcare support or offering personalized attention and luxury experiences, both retailers create emotional bonds that go beyond transactional interactions. 3. Brand Advocacy: Satisfied customers are more likely to become advocates for the brands they love. Through positive word-of-mouth recommendations, social media engagement, and loyalty program participation, loyal consumers of Walgreens and Nordstrom's help amplify the brands' reach and influence, further strengthening the relationship between the firms and their customers. Overall, the value created by Walgreens and Nordstrom's plays a pivotal role in fostering lasting relationships with loyal consumers, driving repeat business, and ensuring long-term success in the competitive retail landscape. Group Activity *For each of the following product areas, list your favorite brand and estimate the customer share you allocate to that brand: Gasoline Supermarkets Phone service Hair stylists Consumer electronics Soft drinks Then, in groups of three or four, discuss results and try to determine which group member is the most likely to be a “loyal” consumer. Answer: This activity is designed to prompt students to elaborate on customer share and commitment (loyalty). Instructors can expect a full range of responses. But, the customer with the highest average customer share for the leading business shows behavioral loyalty. The one that discusses the options in each category the most fondly is showing commitment. If the same group member shows both (behavior and fondness), he or she is truly loyal. Pair up with another student for this exercise. Each student should choose a famous national brand (retailer, restaurant, bank, etc.) and search Twitter and Facebook for evidence of WOM or publicity. Discuss results with your teammate and as a group, decide which brand has more problems with these postconsumption behaviors. Discuss results with the class. Answer: There is no one answer for this. But the students should scan these social media outlets for negative WOM, releases of information from the company or news from other parties. Finding complaints should not be difficult and the students should find it interesting trying to decide which brand has more difficulty from unwanted posts. Assignments 13. Search for websites where consumers can place complaints about a product. Print a list of complaints, and analyze the complaints for patterns. Do these patterns identify a problem for the company that might be addressed based on complaints? Answer: This is a hands-on exercise that should provide students with some experience in identifying the sources of complaining yet, at the same time, allow them to analyze things that could end up terminating the relationship between a customer and the business. Exhibit 15.9 should be helpful. I can't browse the internet or access specific websites to find complaints about products. However, I can provide guidance on how you can conduct such a search and analyze the complaints for patterns. 1. Identify Complaint Websites: Start by searching for websites or forums where consumers commonly share complaints about products. Websites like ConsumerAffairs, ComplaintsBoard, Pissed Consumer, and Ripoff Report are examples of platforms where consumers often post product complaints. 2. Compile a List of Complaints: Once you've identified relevant websites, visit them and search for complaints related to the product or company you're interested in. Take note of the complaints you find, including details such as the nature of the complaint, the product or service involved, and any specific issues mentioned by consumers. 3. Analyze Complaint Patterns: After compiling a list of complaints, analyze them for patterns or common themes. Look for recurring issues, concerns, or problems mentioned by multiple consumers. Pay attention to factors such as product defects, poor customer service, shipping delays, billing errors, or misleading advertising. 4. Identify Problem Areas for the Company: Based on your analysis of the complaints, identify problem areas or areas of concern for the company. Consider whether the patterns of complaints highlight systemic issues or recurring problems that may need to be addressed by the company. 5. Recommend Solutions: Once you've identified problem areas, consider potential solutions or actions that the company could take to address the issues raised by consumers. This might include improving product quality, enhancing customer service processes, updating marketing materials, or revising company policies to better meet customer needs. By following these steps, you can gather and analyze complaints about products from consumer websites, identify patterns or problem areas, and recommend potential solutions for the company to address the issues raised by consumers. 14. What switching costs are built into doing business with mobile phone providers, healthcare providers, Internet music services, and health clubs? Are all switching costs ethical? Answer: They should be able to reasonably discuss how these industries involve relative amounts of procedural, financial, and relational switching costs. Perhaps students can relate a story from their own experiences as consumers when they believed a switching cost was unethical. An apartment lease may come to mind as something they might discuss or transferring credits when switching from one school to another. Courses that were paid for may not count after a transfer. If a service product is intentionally designed with a feature whose purpose is to make it difficult to switch from one brand to another, the study may have a good case for a lack of justice. 15. Take a stance on this statement: Walmart’s success is based on true customer loyalty, and therefore Walmart is relatively invulnerable to competition. Answer: Walmart’s success may be based more heavily on consumer inertia and their ability to make the marketplace less competitive. Overall, Walmart customers do indicate behavioral loyalty in the form of high customer share toward the retailer. The fact that Walmart success lies in utilitarian shopping value may also contribute to high behavioral loyalty (customer share), even though there is not high hedonic shopping value. If the customer turns away from Walmart, they may have to make several stops to buy the things they could have bought with one stop at Walmart Supercenter. Thus, a strong case can be made that switching costs play a role. 16. *Describe complaining behavior and discuss places where a marketer should be on the watch for evidence of problems with their service or value propositions based on complaining. Answer: Complaining behavior occurs when a consumer actively seeks out someone to share an opinion with regarding a negative consumption event. Customers may complain to an employee, to customer surveys, to 3rd parties like the BBB, on Twitter or Facebook. All of these sources may give insight to some potential problem with the way in which the business deals with customers. Chapter Video Summary To view the video case Harley-Davidson, go to the CB companion website login.cengage.com to select this video. Harley-Davidson Come August, Sturgis, a small town in South Dakota, is set abuzz with motorcycle riders who gather there for the biggest motorcycle rally in the world. That the event is dominated by Harley-Davidson motorcycles is hardly a surprise. Participating in events helps Harley not only to pursue new customers, but also to interact with current owners of its motorcycles. Harley emphasizes on providing a unique experience to its riders and fostering a sense of community. Besides facilitating the customization of its motorcycles, it also offers shipping service, and programs such as the Harley Owners’ Group. By building strong relations, the company has been successful in turning its customers into its best salespeople. Ask your students: 1. How does Harley-Davidson benefit from frequent face-to-face interactions with customers? Answer: Through its face-to-face interactions with customers, the company hopes to create and sustain brand loyalty. It organizes more than 300 events and 30,000 demo rides every year. At the heart of its vision is the customer. The message from the CEO inspires every employee to reach out to customers and make them feel valued. 2. How did Harley-Davidson build the phenomenal brand loyalty it currently enjoys? Answer: A customer-driven approach is the marketing strategy adopted by Harley-Davidson. All of the company’s activities are designed to enable this approach. They have activities through the year to encourage an interface between the customers and the company. Members of the service department and even the warranty department meet customers and answer queries and resolve problems. 3. Discuss the marketing strategies of Harley-Davidson. Answer: The marketing strategy of Harley-Davidson is customer-centered. They believe that they are selling more than just motorcycles and accessories. They are selling the Harley experience encouraging people to customize their bikes and to fashion their identities by their choices. Another successful strategy adopted by them is creating the Harley’s Owners Group, an attempt to create a community of bikers promoting a lifestyle. CB Scenario Video A woman stands in her kitchen, using a smartphone to place an order online. She later shops online, from the privacy of her home, using her laptop. The products she ordered online are then delivered to her doorstep Ask your students: 1. How has online shopping redefined the shopping experience? Answer: They say that it saves time; it is convenient and easy. It allows you to multi-task. One doesn’t have to deal with traffic or find parking. With the help of online shopping, one can book airline tickets or movie tickets from the comfort of one’s home. 2. What complaints might you have with your service provider when you are shopping online? Answer: Not receiving the product you ordered, receiving a damaged product (especially if one is ordering fresh fruit), and not receiving a refund when an order is cancelled- these are some of the most common complaints associated with online shopping. Solution Manual for CB Consumer Behaviour Barry J. Babin, Eric G. Harris 9781305403222, 9781305577244
