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Customer Satisfaction: Achieving Competitive Advantage

Updated on July 3, 2013

Organisations that best satisfy the customers’ needs are best places to satisfy their organisation’s needs.

This paper examines the relationships involved in the reflection of customer satisfaction upon an organisation, specifically relating to the continuous hierarchy between product, customer and organisation. It details that, whilst an organisation’s needs are dependent upon the satisfaction of the consumers, the consumer satisfaction is reached by the organisation providing a valuable product.

Meet The Circle of Satisfaction

In it’s simplest form, customer satisfaction is the reflection of performance to expectation (McKaskill, 2011). It is proposed that in order for an organization to be best placed to satisfy it’s needs, it must first satisfy it’s customers’ needs; the days are gone when consumers are passive believers, brands are no longer a reflection of the organization but a reflection of the market’s needs or desires. Fanning (2013) describes a key aspect of marketing, that, for it to be effective, equal attention must be given to obtaining the satisfaction of both the customers’ and the organisation’s needs. Therefore, the goal of growth is upon the foundations of an understanding of past, present and future consumer behavior. Relationship marketing acts on the premise that the same goal of growth is available through development of a long-term relationship with a customer as opposed to attracting new ones (Sutherland & Canwell, 2004). The steps to achieving this effective relationship as well as how the organisation is able to benefit from the satisfaction of it’s consumers is examined in this essay and outlined by The Circle of Satisfaction (Fanning, 2013). The dominant items associated with the circle are found to be related to three themes; the product, the customer’s satisfaction, and the impact upon the organisation; each of these themes are explored below.

The Product: Marketing Myopia

Marketing Myopia (Levitt, 1960) refers to an organisation that is product orientated and provides little attention to the market or it’s customer’s needs or desires. A myopic organisation will find difficulty in recognizing the changing needs of the market and will run the risk of being left out of the market with declining sales, defeating the purpose of providing goods for exchange in the first place. Levitt (1960) pushes that the market should be the primary consideration and that organisations should be prepared to take measures to cater for the requirements of it’s customers. The Circle of Satisfaction (Fanning, 2013) initially outlines that to obtain satisfaction from any transaction, the customer must first experience quality and value. Quality is the beginning of the path to satisfying a customer’s desires due to it’s relationship with value. When a customer considers an exchange, he or she has an overall positive expectation about the product or service, whether it is based on price, risks or what he or she expects it to do. Providing a brand or product falls within a zone of acceptance in terms of it’s price, value or fulfillment of a requirement, it will be considered for purchase. The preferred outcome of value is where the sum of all product costs (price and risks) is lesser than the sum of the product qualities. When a customer’s expectations are met or exceeded, satisfaction results (Dictionary of Marketing, 2003). Once quality and value has been achieved, satisfaction from both the product and the transaction is evaluated and a cumulative satisfaction is achieved, leaving the consumer with a positive feeling towards the organization.

Customer Satisfaction

Despite the abundance of stimuli to inspire favorable customer behavior, personal interpretation and communication amongst other psychological influences, play the lead role when it comes to consumer opinion. When these interpretations and influences are positive, they can benefit the brand greatly. The Circle of Satisfaction (Fanning, 2013) continues the idea that a customer’s trust and loyalty are a receipt of a positive transaction and the base for competitive advantage within a market. Once a consumer is able to affirm that they have experienced a positive result regarding the exchange, a degree of trust is built upon their relationship with the organisation. Trust is a crucial card in the success of an organisation due to the opinion’s ability to be swiftly passed on amongst a population, either providing an incredibly useful advertising tool, or confirming a potential customer’s doubts about a product or service. If a consumer is able to trust a product through continued delivery of quality and value, loyalty may be resulted which influences future purchases, whether it be a larger quantity, or more often. Provided the high cost of enticing new customers towards a brand, businesses would be best suited to investing time into loyalty programs that ensure that customers do not brand switch, one long-term customer who can bring many purchases is far more useful to an organisation than multiple customers with minimal purchases. A measure of a brand’s ability to satisfy customers is customer loyalty, which is very much transferable to the overall position of the organisation within a market, and leads to the foundation of an ability to create profit (Sutherland & Canwell, 2004).

Organisational Impact

Competitive advantage is an organisation’s ability to perform at a higher level than others in the same industry or market, due to it’s attributes or it’s resources. A cumulative satisfaction with a product or service offered by a brand provides many attributes that can contribute towards a brand’s advantage; reduction in price elasticity, lowers transaction costs (due to obtaining new customers), insulates from competitors and improves reputation amongst the market (Egan, 2004). A brand’s loyal customer base is easily transferred back into a value creating strategy where the same is not available to be implemented by any current or potential competition. Any advantage that an organisation can hold above it’s competitors can and will work wonders for the overall profitability it’s products. Once a brand has a following of loyal consumers, profitability is able to increase which can open the door to a plethora of additional marketing strategies, thus, increasing the brand’s footprint within the market; premium services, online shopping, innovation and global sourcing are only a few tactics which can further increase profitability in a brilliant cycle.

If an organisation provided follow up support toward medium-high involvement purchases, would you be more-inclined to become loyal toward the brand?

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Overall...

Observation and understanding of the consumer’s needs and desires by presenting a product that provides a minimal risk-to-benefit ratio provide a valuable exchange. Mutually beneficial exchanges are the core aspect to marketing (Elliott, Rundle-Theile, & Walker, 2010). Continued presentation of a valuable product allows trust toward a brand and loyalty to ensue. An organisation with loyal customers is subject to advantages over competition within the marketplace, which results in increased profitability; Thus, an organisation’s ability to satisfy it’s own goals and needs of growth and profitability, is dependent upon the satisfaction of it’s consumers, where the consumer satisfaction is reached by providing a valuable product through a comfortable transaction.

References

Egan, J. (2004). Relationship marketing (2nd ed.). Essex, England: Pearson Education Limited.

Elliott, G., Rundle-Thiele, S., & Walker, D. (2010). Marketing. Milton, Australia: John Wiley & Sons Australia, Ltd.

Fanning, S. M. (2013). MKT1600 Marketing2013 e-text [Electronic handout]. Available from
S. M. Fanning, School of Marketing, Tourism & Leisure, Edith Cowan University, Joondalup Drive, Joondalup, 6027, Western Australia.

Levitt, T. (1960). Marketing Myopia. Harvard Business Review, 38(4) 45-56

McKaskill, T. (2011). Marketing strategies: Customer satisfaction. Retrieved from The Smart Company website: http://www.smartcompany.com.au/advertising-and-marketing/045933-20110923-marketing-strategies-customer-satisfaction-5.html

The dictionary of marketing (3rd ed.). (2003). London, England: Bloomsbury Publishing.

Sutherland, J., & Canwell, D. (2004). Key concepts in marketing. Hampshire, England: Palgrave Macmillan.

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