CHAPTER-1

INTRODUCTION
1.1INTRODUCTION OF TOPIC

Customer satisfaction (often abbreviated as CSAT, more correctly CSat) is a

term frequently used in marketing. It is a measure of how products and services
supplied by a company meet or surpass customer expectation. Customer
satisfaction is defined as "the number of customers, or percentage of total
customers, whose reported experience with a firm, its products, or its services
(ratings) exceeds specified satisfaction goals.
The Marketing Accountability Standards Board (MASB) endorses the definitions,
purposes, and constructs of classes of measures that appear in Marketing Metrics
as part of its ongoing Common Language in Marketing Project.In a survey of
nearly 200 senior marketing managers, 71 percent responded that they found a
customer satisfaction metric very useful in managing and monitoring their
businesses. .
It is seen as a key performance indicator within business and is often part of a
Balanced Scorecard. In a competitive marketplace where businesses compete for
customers, customer satisfaction is seen as a key differentiator and increasingly
has become a key element of business strategy.

Purpose

A business ideally is continually seeking feedback to improve customer

satisfaction.
"Customer satisfaction provides a leading indicator of consumer purchase
intentions and loyalty." "Customer satisfaction data are among the most frequently
collected indicators of market perceptions. Their principal use is twofold:"
 1. "Within organizations, the collection, analysis and dissemination of these data
send a message about the importance of tending to customers and ensuring that
they have a positive experience with the company's goods and services."

2. "Although sales or market share can indicate how well a firm is performing
currently, satisfaction is perhaps the best indicator of how likely it is that the
firm’s customers will make further purchases in the future. Much research has
focused on the relationship between customer satisfaction and retention. Studies
indicate that the ramifications of satisfaction are most strongly realized at the
extremes."
On a five-point scale, "individuals who rate their satisfaction level as '5' are
likely to become return customers and might even evangelize for the firm. (A
second important metric related to satisfaction is willingness to recommend. This
metric is defined as "The percentage of surveyed customers who indicate that they
would recommend a brand to friends." When a customer is satisfied with a
product, he or she might recommend it to friends, relatives and colleagues. This
can be a powerful marketing advantage.) "Individuals who rate their satisfaction
level as '1,' by contrast, are unlikely to return. Further, they can hurt the firm by
making negative comments about it to prospective customers. Willingness to
recommend is a key metric relating to customer satisfaction."

Theoretical Ground

In literature antecedents of satisfaction are studied from different aspects. The

considerations extend from psychological to physical and from normative to
positive aspects. However, in most of the cases the consideration is focused on
two basic constructs as customers expectations prior to purchase or use of a
product and his relative perception of the performance of that product after using
it.
 A customer's expectations about a product tell us how he or she anticipates
how that product will perform. As it is suggested in the literature, consumers may
have various "types" of expectations when forming opinions about a product's
anticipated performance. For example, four types of expectations are identified by
Miller (1977): ideal, expected, minimum tolerable, and desirable. While, Day
(1977) indicated among expectations, the ones that are about the costs, the product
nature, the efforts in obtaining benefits and lastly expectations of social values.
Perceived product 13 performance is considered as an important construct due to
its ability to allow making comparisons with the expectations.
It is considered that customers judge products on a limited set of norms and
attributes. Olshavsky and Miller (1972) and Olson and Dover (1976) designed
their researches as to manipulate actual product performance, and their aim was to
find out how perceived performance ratings were influenced by expectations.
These studies took out the discussions about explaining the differences between
expectations and perceived performance."
In some research studies, scholars have been able to establish that customer
satisfaction has a strong emotional, i.e., affective, component. Still others show
that the cognitive and affective components of customer satisfaction reciprocally
influence each other over time to determine overall satisfaction.
Especially for durable goods that are consumed over time, there is value to
taking a dynamic perspective on customer satisfaction. Within a dynamic
perspective, customer satisfaction can evolve over time as customers repeatedly
use a product or interact with a service. The satisfaction experienced with each
interaction (transactional satisfaction) can influence the overall, cumulative
satisfaction. Scholars showed that it is not just overall customer satisfaction, but
also customer loyalty that evolves over time.

The Disconfirmation Model

"The Disconfirmation Model is based on the comparison of customers’ [expectations]

and their [perceived performance] ratings. Specifically, an individual’s expectations
are confirmed when a product performs as expected. It is negatively confirmed when
a product performs more poorly than expected. The disconfirmation is positive when
a product performs over the expectations(Churchill & Suprenant 1982). There are four
constructs to describe the traditional disconfirmation paradigm mentioned as
expectations, performance, disconfirmation and satisfaction." "Satisfaction is
considered as an outcome of purchase and use, resulting from the buyers’ comparison
of expected rewards and incurred costs of the purchase in relation to the anticipated
consequences. In operation, satisfaction is somehow similar to attitude as it can be
evaluated as the sum of satisfactions with some features of a product." "In the
literature, cognitive and affective models of satisfaction are also developed and
considered as alternatives(Pfaff, 1977). 14 Churchill and Suprenant in 1982, evaluated
various studies in the literature and formed an overview of Disconfirmation process in
the following figure:

Construction

Organizations need to retain existing customers while targeting non-customers

Measuring customer satisfaction provides an indication of how successful the
organization is at providing products and/or services to the marketplace.

"Customer satisfaction is measured at the individual level, but it is almost always

reported at an aggregate level. It can be, and often is, measured along various
dimensions. A hotel, for example, might ask customers to rate their experience with
its front desk and check-in service, with the room, with the amenities in the room,
with the restaurants, and so on. Additionally, in a holistic sense, the hotel might ask
about overall satisfaction 'with your stay.

As research on consumption experiences grows, evidence suggests that consumers

purchase goods and services for a combination of two types of benefits: hedonic and
utilitarian. Hedonic benefits are associated with the sensory and experiential attributes
of the product. Utilitarian benefits of a product are associated with the more
instrumental and functional attributes of the product (Batra and Athola 1990).

Customer satisfaction is an ambiguous and abstract concept and the actual

manifestation of the state of satisfaction will vary from person to person and
product/service to product/service. The state of satisfaction depends on a number of
both psychological and physical variables which correlate with satisfaction behaviors
such as return and recommend rate. The level of satisfaction can also vary depending
on other options the customer may have and other products against which the
customer can compare the organization's products.

Work done by Parasuraman, Zeithaml and Berry (Leonard L) between 1985 and 1988
provides the basis for the measurement of customer satisfaction with a service by
using the gap between the customer's expectation of performance and their perceived
experience of performance. This provides the measurer with a satisfaction "gap"
which is objective and quantitative in nature. Work done by Cronin and Taylor
propose the "confirmation/disconfirmation" theory of combining the "gap" described
by Parasuraman, Zeithaml and Berry as two different measures (perception and
expectation of performance) into a single measurement of performance according to
expectation. 15 The usual measures of customer satisfaction involve a survey using a
Likert scale. The customer is asked to evaluate each statement in terms of their
perceptions and expectations of performance of the organization being measured.

Good quality measures need to have high satisfaction loadings, good reliability, and
low error variances. In an empirical study comparing commonly used satisfaction
measures it was found that two multi-item semantic differential scales performed best
across both hedonic and utilitarian service consumption contexts. A study by Wirtz &
Lee (2003), found that a six-item 7-point semantic differential scale (for example,
Oliver and Swan 1983), which is a six-item 7-point bipolar scale, consistently
performed best across both hedonic and utilitarian services. It loaded most highly on
satisfaction, had the highest item reliability, and had by far the lowest error variance
across both studies. In the study, the six items asked respondents’ evaluation of their
most recent experience with ATM services and ice cream restaurant, along seven
points within these six items: “pleased me to displeased me”, “contented with to
disgusted with”, “very satisfied with to very dissatisfied with”, “did a good job for me
to did a poor job for me”, “wise choice to poor choice” and “happy with to unhappy
with”. A semantic differential (4 items) scale (e.g., Eroglu and Machleit 1990), which
is a four-item 7-point bipolar scale, was the second best performing measure, which
was again consistent across both contexts. In the study, respondents were asked to
evaluate their experience with both products, along seven points within these four
items: “satisfied to dissatisfied”, “favorable to unfavorable”, “pleasant to unpleasant”
and “I like it very much to I didn’t like it at all”. The third best scale was single-item
percentage measure, a one-item 7-point bipolar scale (e.g., Westbrook 1980). Again,
the respondents were asked to evaluate their experience on both ATM services and ice
cream restaurants, along seven points within “delighted to terrible”.

Finally, all measures captured both affective and cognitive aspects of satisfaction,
independent of their scale anchors. Affective measures capture a consumer’s attitude
(liking/disliking) towards a product, which can result from any product information or
experience. On the other hand, cognitive element is defined as an appraisal or
conclusion on how the product’s performance compared against expectations (or
exceeded or fell short of expectations), was useful (or not useful), fit the situation (or
did not fit), exceeded the requirements of the situation (or did not exceed).

Recent research shows that in most commercial applications, such as firms conducting
customer surveys, a single-item overall satisfaction scale performs just as well as a
multi-item 16 scale. Especially in larger scale studies where a researcher needs to
gather data from a large number of customers, a single-item scale may be preferred
because it can reduce total survey error.

Methodologies

American Customer Satisfaction Index (ACSI) is a scientific standard of customer

satisfaction. Academic research has shown that the national ACSI score is a strong
predictor of Gross Domestic Product (GDP) growth, and an even stronger predictor of
Personal Consumption Expenditure (PCE) growth.[19] On the microeconomic level,
academic studies have shown that ACSI data is related to a firm's financial
performance in terms of return on investment (ROI), sales, long-term firm value
(Tobin's q), cash flow, cash flow volatility, human capital performance, portfolio
returns, debt financing, risk, and consumer spending. Increasing ACSI scores have
been shown to predict loyalty, word-of-mouth recommendations, and purchase
behavior. The ACSI measures customer satisfaction annually for more than 200
companies in 43 industries and 10 economic sectors. In addition to quarterly reports,
the ACSI methodology can be applied to private sector companies and government
agencies in order to improve loyalty and purchase intent.

The Kano model is a theory of product development and customer satisfaction

developed in the 1980s by Professor Noriaki Kano that classifies customer
preferences into five categories: Attractive, One-Dimensional, Must-Be, Indifferent,
Reverse. The Kano model offers some insight into the product attributes which are
perceived to be important to customers.

SERVQUAL or RATER is a service-quality framework that has been incorporated

into customersatisfaction surveys (e.g., the revised Norwegian Customer Satisfaction
Barometer] ) to indicate the gap between customer expectations and experience.

J.D. Power and Associates provides another measure of customer satisfaction, known
for its topbox approach and automotive industry rankings. J.D. Power and Associates'
marketing research consists primarily of consumer surveys and is publicly known for
the value of its product awards. Other research and consulting firms have customer
satisfaction solutions as well. These include A.T. Kearney's Customer Satisfaction
Audit process, which incorporates the Stages of 17 Excellence framework and which
helps define a company’s status against eight critically identified dimensions.

For B2B customer satisfaction surveys, where there is a small customer base, a high
response rate to the survey is desirable. The American Customer Satisfaction Index
(2012) found that response rates for paper-based surveys were around 10% and the
response rates for e-surveys (web, wap and e-mail) were averaging between 5% and
15% - which can only provide a straw poll of the customers' opinions.

In the European Union member states, many methods for measuring impact and
satisfaction of egovernment services are in use, which the eGovMoNet project sought
to compare and harmonize. These customer satisfaction methodologies have not been
independently audited by the Marketing Accountability Standards Board (MASB)
according to MMAP (Marketing Metric Audit Protocol).

Recently there has been a growing interest in predicting customer satisfaction using
big data and machine learning methods (with behavioral and demographic features as
predictors) to take targeted preventive actions aimed at avoiding churn, complaints
and dissatisfaction
Selling of any product, there is needed to build relationship with customer. For
building a Relationship there is need for knowing the customer behavior and how will
be they satisfied?

This project is undertaken to know the customer behavior & satisfaction level for
Hero MotoCorp in JAI HERO at (Rajnandgaon). Also through this project get
awareness that which factors affect on the selling of bike mainly in the rural area.
Because the area where project was undergoing, it is almost rural area and most
population income depends on agriculture or its products.

There were some limitations while doing the project. The data was collected by
personal interviews of the respondents. It was very challenging to fill up the
questionnaire as most of the population comes from rural back ground. As it was the
rural area we were supposed to explain 18 each and every question of the
questionnaire. Also many of them did not show any interest in filling questionnaires.

This study will help Hero MotoCorp to know the most popular way by which they are
providing services and quality to the customers and to know various customers
Perceptions. From the study, we found that, the customers were highly satisfied with
the products and service of Hero MotoCorp, but there were some complaints
regarding after sales service and staff of Hero MotoCorp.

This study will help Hero MotoCorp to know the most popular way by which they are
providing services and quality to the customers and to know various customers
Perceptions. From the study, we found that, the customers were highly satisfied with
the products and service of Hero MotoCorp, but there were some complaints
regarding after sales service and staff of Hero MotoCorp.

The present is the era of customers. Customers are more knowledgeable than ever
before and because the customer is more knowledgeable, companies must be faster,
more agile and more creative than few years ago. So companies should strive to
enhance customer satisfaction through knowing their expectations regarding products.

Hero MotoCorp should improve on their after sales support, and have knowledgeable
support staff. Also Hero MotoCorp should increase the range of its targeted market.
1.2 OBJECTIVES OFSTUDY

The main objectives of the study are as follows:

i. To understand the behavior of the customers.

ii. To know the buying concerns.
iii. To critically analyze the satisfaction level of customers.
iv. To identify the probable area of improvement to attract customers.
v. To know the managerial satisfaction level as well as to know the yield
ratio
vi. To search or headhunt people whose, skill fits into the company’s values

1.3 SCOPEOF STUDY

The benefit of the study for the researcher is that it helped to gain knowledge and
experience and also provided the opportunity to study and understand the prevalent
recruitment procedures.

The key points of my research study are:

i. To Understand and analyze various aspects of customer’s behavior.

ii. To suggest any measures/recommendations for the improvement of the
satisfaction level of customers.
1.4 COMPANY PROFILE

HISTORY OF COMPANY

Hero MotoCorp is the World's single largest two-wheeler motorcycle company.

Honda Motor Company of Japan and the Hero Group entered a joint venture to setup
Hero Honda Motors Limited in 1984. The joint venture between India's Hero Group
and Honda Motor Company, Japan has not only created the world's single largest two
wheeler company but also one of the most successful joint ventures worldwide.

Hero Motocorp Ltd. formerly known as Hero Honda is world’s largest Two-Wheeler
company having its registered office in India. The company started with a joint
venture between the Japanese Two Wheeler manufacturing company Honda in 1984,
but in 2010 Honda decided to move out and Hero Cycle bought their shares and
became a new independent identity.

The new company which was renamed Hero Motocorp in August 2011 is now the
world’s largest manufacturer of two – wheelers. The company has been working
intelligently and trying to utilise every opportunity to promote its new brand identity

The Company started with a vision of empowering India by its bikes and making it a
mobile and much more empowered country by taking it to global market with its
world class bikes In the 1980’s Hero Honda introduced low cost and fuel efficient
bikes in India. The Japanese technology which came from their Japanese partner
“Honda” in the Hero motorcycles made it a huge hit in Indian market. The company
continued to use the same technology till they parted ways with Honda. The company
offers wide range of two wheelers including motorcycles and scooters.

With its three manufacturing plants located at Haridwar, Gurgaon and Dharuhera,
Hero churns out approx 3 million bikes in a year. Not only in manufacturing the
company is a real “hero” in customer service also with a huge network of about 3000
dealerships and service centers across country.
MILESTONES

1983

Joint Collaboration Agreement with Honda Motor Co. Ltd. Japan signed.

Shareholders Agreement signed.

1984

Hero Honda Motors Ltd. Incorporated.

1985

First motorcycle 'CD 100' rolled out

1987

100,000th motorcycle produced.

1989 New motorcycle model - 'Sleek' introduced.

1991 New motorcycle model - 'CD 100 SS' introduced.

500,000th motorcycle produced.

1992 Raman Munjal Vidya Mandir inaugurated -A School in the memory of founder
Managing Director, Mr. Raman Kant Munjal.

1994 New motorcycle model - 'Splendor' introduced. 1,000,000th motorcycle produced.

1997 New motorcycle model - 'Street' introduced. Hero Honda's 2nd manufacturing plant
at Gurgaon inaugurated. 1998 2,000,000th motorcycle produced. 1999 New
motorcycle model - 'CBZ' introduced. Environment Management System of Dharuhera
Plant certified with ISO-14001 by DNV Holland. Raman Munjal Memorial Hospital
inaugurated - A Hospital in the memory of founder Managing Director, Mr. Raman Kant
Munjal. 2000 4,000,000th motorcycle produced. Environment Management System of
Gurgaon Plant certified ISO-14001 by DNV Holland. Splendor declared 'World No. 1' -
largest selling single two-wheeler model. 'Hero Honda Passport Programme' - CRM
Programme launched. 2001 New motorcycle model - 'Passion' introduced. One million
production in one single year . New motorcycle model - 'Joy' introduced. 5,000,000th
motorcycle produced. 2002 Becomes the first Indian Company to cross the cumulative 7
million sales mark . Splendor has emerged as the World's largest selling model for the third
calendar year in a row(2000, 2001, 2002). 22 New motorcycle model - 'CD Dawn'
introduced, New motorcycle model - 'Splendor +'introduced, New motorcycle model -
'Passion Plus' introduced, New motorcycle model -'Karizma' introduced. 2004 New
motorcycle model - 'Ambition 135' introduced. Hero Honda became the World No. 1
Company for the third consecutive year. Crossed sales of over 2 million units in a single
year, a global record. Splendor - World's largest selling motorcycle crossed the 5 million
mark . New motorcycle model - 'CBZ' introduced. Joint Technical Agreement renewed.
Total sales crossed a record of 10 million motorcycles. 2005 Hero Honda is the World
No. 1 for the 4th year in a row. New motorcycle model - 'Super Splendor' introduced, New
motorcycle model - 'CD Deluxe' introduced New motorcycle model - 'Glamour' introduced,
New motorcycle model - 'Achiever' introduced. First Scooter model from Hero Honda -
'Pleasure' introduced. 2006 Hero Honda is the World No. 1 for the 5th year in a row. 15
million production milestone achieved. 2007 Hero Honda is the World No. 1 for the 6th
year in a row. New 'Splendor NXG' launched. New 'CD Deluxe' launched. New 'Passion
Plus' launched. New motorcycle model 'Hunk' launched. 20 million production milestone
achieved. 2008 Hero Honda Haridwar Plant inauguration. New 'Pleasure' launched.
Splendor NXG launched with power start feature. New motorcycle model 'Passion Pro'
launched. New 'CBZ Xtreme' launched. 25 million production milestone achieved. CD
Deluxe launched with power start feature. New 'Glamour' launched. New 'Glamour Fi'
launched. 2009 Hero Honda GoodLife Program launched Hunk' (Limited Edition)
launched. 23 Splendor completed 11 million production landmark . New motorcycle
model 'Karizma - ZMR' launched. Silver jubilee celebrations. 2010 New model
Splendor Pro launched. Launch of new Super Splendor and New Hunk. 2011 New
licensing arrangement signed between Hero and Honda. Launch of new refreshed versions
of Glamour, Glamour FI, CBZ Xtreme, Karizma. Crosses the landmark figure of 5 million
cumulative sales in a single year . July 29, 2011 - Hero Honda Motors changed its name to
Hero MotoCorp following the exit of its erstwhile Japanese promoter, Honda, from the
company.