Consumer satisfaction~

Loyalty at Retail
Session 4a
Multichannel Retail Strategy

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Consumer Satisfaction ~ Customer Loyalty

Consumer
Satisfaction

What is consumer satisfaction?

Why it is significant in retail business?
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Consumer Satisfaction ~ Customer Loyalty

Consumer
Customer Loyalty
Satisfaction

What is customer loyalty?

How to measure loyalty?
How to maintain loyalty?
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 Consumer Satisfaction ~ Customer Loyalty
What happens if you have loyal customers?
Antecedents

? Consumer
Satisfaction
Customer
Loyalty
?
What leads to consumer satisfaction?

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 Consumer Satisfaction ~ Customer Loyalty
Antecedents
Competition
related
factors

Consumer Customer Store

Store
related Satisfaction Loyalty Profitability
factors

What happens if consumers are not convinced?

What if they are threatened by your offer?
Customer
Relationship
What if they find your competitor’s offer more convincing than your?

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What business Are you in?

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 The Determination of self Pentacle
Identify your store: Sq.ft Area, Turnover, Location etc.

Categories of
Why they buy
merchandise
from your store?
offered

Why they buy Who are the

the items? customers?
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 The Determination of self Pentacle ~ Customers!
Identify your store: Sq.ft Area, Turnover, Location etc.

Why they do Categories of

not / would not Why they buy
merchandise
buy from your from your store?
offered
store?

How is / are the product/s? Does it work satisfactorily?

Is the purchase value of money?
How long does it take to buy?
Is the selection and purchase process convenient?
What do you think of your choice?
What others would think of your choice?
How is the shopping experience? How does it feel? Why they buy Who are the
the items? customers?
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Factors influencing Consumer Decision
making
• Degree of involvement of the consumer
• Importance of the purchase decision to the consumer
• Amount of risk involved (perceived risk)
• uncertainty that consumers face when they can not foresee the
consequences of their purchase decisions

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Types of perceived risk
• Functional risk
• Risk that the product will not perform as expected
• Risk that the store would not keep its promise
• Physical risk
• Risk to self and others that the product may pose
• Physical exhaustion during / after a purchase
• Reference of the model on the next slide
“The importance of consumers’ perceived risk in retail strategy”, V.W. Mitchell & G.
Harris, European Journal of Marketing, 2005 (39)

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Types of perceived risk
• Financial risk
• Risk that the product will not be worth its cost
• Risk that the expenses will not be worth the experience (merchandise +
service)

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Types of perceived risk
• Social risk
• risk that a poor product / store choice may result in social embarrassment
• Psychological risk
• risk that a poor product / store choice will hurt the ego of the consumer

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Types of perceived risk
• Time risk
• risk that the time spent on the product / brand / store search would be
wasted if the product does not perform as per expectation / store does not
fulfill its promise
• outcome of all the previous types of risks
• If all the previous types of risks are avoided, then automatically time risk is
avoided

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Why perception of risk ?
• Categorization of product
• high risk perceivers (specialty stores)
• categorization of product narrow
• narrow choice set for satisfaction
• low risk perceivers (discounters / department stores)
• categorization of product broad
• large choice set for satisfaction

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Why perception of risk ?
• Product type
• some product types are traditionally associated with high risk where as some
others are not
• electronic goods - high risk
• groceries / mattresses - low risk
• Shopping situation
• some shopping methods are inherently risky
• telephonic or mail based, travelling salesmen

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 Model of mitigation of perceived risk

Seek Information

Be Brand loyal

Go for Brand Image

Rely on store Image

Expensive
Brand

Reassurance

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Implication
• The perceived risks are used in a structured manner
• when level 1 is not applicable due to some reason (lack of
information), the consumers go to level 2 and try to reduce their
perceived risk
• This process can continue till the 6th level if the situation demands so

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Implication
• If the retailer can identify the characteristics of the target consumer,
recognize the type of risk associated with the product category and
the way by which the consumers handle the perceived risk,
appropriate positioning strategies can be developed for specific
brands
• Type of risk perceived and the means to handle it can constitute a
effective base for segmentation

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Implication
• Different segments of consumers for different categories of products
undergo different types of decision processes
• Hence, their information requirements become different
• Retailers need to identify these requirements and prepare strategies
to easily supply them with that information

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 Consumer Satisfaction ~ Customer Loyalty
Antecedents
Competition
related
factors
Perceived Risk

Consumer Customer Store

Perceived Value
Satisfaction Loyalty Profitability

Store
related Customer
factors Relationship

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