Final Main
Final Main
Final Main
1.1 BACKGROUND:
Customer Satisfaction is a critical concept in the field of marketing and consumer behaviour. It refers to the
overall evaluation of a product or service by a customer based on their subjective experiences and
expectations. The concept of customer satisfaction is crucial for businesses as it directly impacts their
bottom line, including customer loyalty, repeat purchases and positive word-of-mouth recommendations.
In the field of research, Customer Satisfaction is often measured using various quantitative and qualitative
methods, including surveys, focus group, and interviews, however the construct of customer satisfaction is
not a straight forward one, and it is often conceptual as a multi-dimensional construct that incorporates
various aspects of the customer’s experience, including product quality, service quality, price, convenience
and other factors.
To better understand Customer Satisfaction, researchers have developed various theoretical frameworks.
One of the key theoretical frameworks used in Customer Satisfaction Research is the Expectancy-
Disconfirmation Theory (EDT), which posits that customer satisfaction is determined by the difference
between the customer’s expectations and their perceived performance of the product or service. According to
EDT, if the customer perceives that the product or services has exceeded their expectations, they will be
satisfied. Conversely if the customer perceives that the product or service has not met their expectations,
they will be dissatisfied.
Another theoretical framework that has gained prominence in Customer Satisfaction Research is the Service
Quality (SERVQUAL) Model. This model focuses on the gap between customers’ perceptions of service
quality and their expectations. The SERVQUAL Model proposes that the customers’ expectations of service
quality are shaped by factors such as past experiences, word-of-mouth recommendations, and, advertising,
and that their perceptions of service quality are based on the actual service delivery.
The SERVQUAL model measures service quality on five dimensions: tangibles (physical facilities,
equipment and appearance of personnel), reliability (ability to perform the promised service dependably and
accurately), responsiveness (willingness to help customers and provide prompt service), assurance
(knowledge and courtesy of employees and their ability to convey trust and confidence), and empathy
(caring, individualized attention provided to customers).
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In recent years, Customer Satisfaction Research has expanded to include the role of emotions in shaping
customer satisfaction. Emotion is the critical aspect of the customer experience, and researchers have found
that positive emotions such as joy, satisfaction, and happiness can increase customer loyalty, while negative
emotions such as anger, frustration, and disappointment can decrease customer loyalty.
Another important aspect of Customer Satisfaction Research is the role of trust in shaping customer
satisfaction. Trust is a critical factor in customer relationships, and it is influenced by factors such as
perceived reliability, competence, honesty, and benevolence. Studies have shown that customers who trust a
company are more likely to be satisfied with their products and services, and are more likely to be loyal
customers.
In addition to theoretical frameworks, customer satisfaction research also employs various methods to
measure customer satisfaction. Surveys are one of the most commonly used methods to measure customer
satisfaction, and they can be conducted through various channels such as phone, email, and online. Focus
groups and interviews are also used to gather qualitative data on customer satisfaction, and observational
studies can be used to measure customer behaviour and interactions with a company.
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Overall, customer satisfaction is a critical area of study for businesses and researchers alike, as it provides
insights into customer preferences, needs, and expectations, which can help businesses improve their
products and services and create better customer experiences. Theoretical frameworks such as the EDT and
SERVQUAL model provide a framework for understanding customer satisfaction, while methods such as
surveys and focus groups can be used to measure and analyse customer satisfaction data.
The theoretical construct of customer satisfaction research has been a topic of debate and discussion in the
marketing literature. Customer satisfaction is a complex construct that has been defined and measured in
various ways. One of the most widely accepted definitions is the disconfirmation model (Oliver, 1980). This
model suggests that customer satisfaction is the result of a comparison between customers' expectations and
their perceived performance. The disconfirmation model assumes that customers have preconceived
expectations of a product or service, and their satisfaction is based on whether their expectations are met,
exceeded, or not met.
Other researchers have proposed alternative models of customer satisfaction. For example, Parasuraman,
Zeithaml, and Berry (1988) proposed the SERVQUAL model, which is based on the premise that customer
satisfaction is influenced by five dimensions of service quality: reliability, responsiveness, assurance,
empathy, and tangibles. The value-based model of customer satisfaction (Anderson, Fornell, & Lehmann,
1994) posits that customer satisfaction is a function of the perceived value of a product or service.
Customer satisfaction is a crucial aspect of marketing research, and it has become increasingly important for
companies to understand what drives their customers' satisfaction levels. The following literature review will
examine the theoretical constructs related to customer satisfaction research, including the factors that
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contribute to customer satisfaction, the measurement of customer satisfaction, and the relationship between
customer satisfaction and loyalty.
Customer satisfaction is influenced by various factors, such as product quality, price, service quality, and the
overall customer experience. According to the Expectancy Disconfirmation Theory, customer satisfaction is
determined by the gap between a customer's expectations and their perceived performance of a product or
service (Oliver, 1980). In other words, if a product or service meets or exceeds a customer's expectations,
they are more likely to be satisfied. Moreover, research suggests that perceived value, trust, and perceived
risk are also significant factors that influence customer satisfaction (Zeithaml et al., 1996).
Several methods are available for measuring customer satisfaction, including surveys, interviews, and focus
groups. The most common method is survey-based research, where customers are asked to rate their
satisfaction levels on a scale. The use of multiple-item scales is preferred over single-item measures, as it
can capture different aspects of customer satisfaction (Churchill & Surprenant, 1982). Moreover, researchers
also use performance-only or performance-expectation discrepancy models to measure customer satisfaction
(Oliver, 1997).
Research has shown that customer satisfaction is a significant predictor of customer loyalty. According to
the Customer Value-Chain Model, customer satisfaction leads to customer loyalty, which results in increased
customer retention and repeat purchases (Gronroos, 1997). In contrast, when customers are dissatisfied, they
are more likely to switch to a competitor, which can lead to negative word-of-mouth and reduced brand
loyalty (Reichheld, 1996). However, the relationship between customer satisfaction and loyalty is not always
straightforward, as factors such as switching costs, situational factors, and brand image can also influence
customer behavior (Fornell et al., 1996).
In conclusion, customer satisfaction research is an essential aspect of marketing research, and it is critical for
companies to understand the factors that contribute to customer satisfaction, the measurement of customer
satisfaction, and the relationship between customer satisfaction and loyalty. By understanding these
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constructs, companies can develop effective marketing strategies that promote customer satisfaction and
loyalty, leading to long-term business success.
There are several methods used to conduct customer satisfaction research, including surveys, focus
groups, and customer feedback. Surveys are the most commonly used method and involve asking
customers to rate their satisfaction with various aspects of the product or service on a scale. Focus
groups involve a small group of customers who discuss their experiences with the product or service in
depth. Customer feedback can be obtained through various channels, such as social media, email, or
phone calls.
Customer satisfaction research has several applications for companies, including identifying customer
needs and preferences, developing more targeted marketing strategies, improving product design, enhancing
customer service, and measuring the effectiveness of customer satisfaction initiatives. Additionally,
customer satisfaction research can be used to benchmark a company's performance against competitors and
industry standards.
✓ Product and service improvement: One of the primary applications of customer satisfaction research
is to improve products and services. By gathering feedback from customers, companies can identify
areas where their products or services may be falling short of customer expectations. This
information can be used to make improvements, which can lead to increased customer satisfaction
and loyalty.
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✓ Competitive analysis: Customer satisfaction research can also be used to gain insights into how a
company's products or services compare to those of its competitors. By comparing customer
satisfaction levels across different brands, companies can identify areas where they may be lagging
behind and make improvements to gain a competitive advantage.
✓ Customer experience optimization: Customer satisfaction research can help companies optimize the
customer experience. By identifying the factors that drive customer satisfaction and dissatisfaction,
companies can create a more seamless and enjoyable experience for their customers.
✓ Marketing and messaging: Customer satisfaction research can also be used to inform marketing and
messaging strategies. By understanding what customers value most about a brand and its products or
services, companies can tailor their messaging to resonate more strongly with their target audience.
✓ Customer retention and loyalty: Customer satisfaction research can help companies improve
customer retention and loyalty. By identifying the factors that drive satisfaction and loyalty,
companies can develop strategies to retain customers and create a more loyal customer base.
✓ New product development: Customer satisfaction research can also be used to inform new product
development. By understanding what customers want and need, companies can create new products
and services that meet those needs and drive customer satisfaction.
✓ Employee training and development: Finally, customer satisfaction research can be used to train and
develop employees. By understanding the factors that drive customer satisfaction and dissatisfaction,
companies can train their employees to provide better service and create a more positive customer
experience.
✓ Customer segmentation: Customer satisfaction research can be used to segment customers based on
their satisfaction levels. By identifying which customers are the most satisfied and which are the
least satisfied, companies can create targeted marketing campaigns and tailor their products and
services to specific customer segments.
✓ Performance measurement: Customer satisfaction research can be used to measure the performance
of individual employees or teams. By tracking customer satisfaction levels before and after
interactions with specific employees or teams, companies can identify areas where performance
could be improved and provide targeted training and support.
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✓ Brand positioning: Customer satisfaction research can be used to inform brand positioning and
messaging strategies. By understanding what customers value most about a brand and its products or
services, companies can position themselves in the market in a way that resonates with their target
audience.
✓ Pricing strategy: Customer satisfaction research can also be used to inform pricing strategies. By
understanding what customers are willing to pay for products or services and what factors drive their
purchasing decisions, companies can set prices that are both competitive and profitable.
✓ Vendor and supplier management: Customer satisfaction research can be used to manage vendors
and suppliers. By gathering feedback from customers on the performance of vendors and suppliers,
companies can identify areas where improvements could be made and work with vendors and
suppliers to make those improvements.
✓ Customer advocacy: Customer satisfaction research can also be used to drive customer advocacy. By
identifying the factors that drive customer satisfaction and loyalty, companies can create programs
and incentives to encourage customers to recommend their products or services to others, which can
drive growth and increase brand awareness.
✓ Risk management: Customer satisfaction research can be used to mitigate risk. This can help
companies to maintain their reputation, reduce the likelihood of legal or regulatory issues, and
minimize financial risk. By monitoring customer satisfaction levels, companies can identify potential
issues or problems before they escalate, and take corrective action to mitigate risk and avoid negative
consequences.
sIn summary, customer satisfaction research has numerous applications across different areas of business,
including customer segmentation, crisis management, performance measurement, brand positioning, pricing
strategy, and vendor and supplier management. By utilizing customer satisfaction research effectively,
companies can improve their operations, enhance customer satisfaction and loyalty, and ultimately achieve
greater business success.
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1.1 OBJECTIVE OF THE STUDY:
➢ Identify the key variables that are associated with customer satisfaction, including product quality,
service quality, price, and brand image, and examine their direct and indirect effects on customer
satisfaction.
➢ Review and synthesize the existing theories that explain customer satisfaction, such as the
expectancy-disconfirmation theory, the attribution theory, and the equity theory, in order to develop a
comprehensive theoretical framework for understanding customer satisfaction.
➢ Evaluate the different measures that are used to operationalize customer satisfaction, including direct
and indirect measures, and assess their strengths and limitations in terms of validity, reliability, and
sensitivity.
➢ Develop research hypotheses that test the relationship between the key variables and customer
satisfaction, and test these hypotheses using various research methods, such as surveys, experiments,
and field studies.
➢ Draw conclusions from the findings of this study and make recommendations for future research on
customer satisfaction as a theoretical construct, including ways to refine the theoretical framework
and improve the measures used to operationalize it.
➢ Investigate the moderating factors that influence the relationship between the key variables and
customer satisfaction, such as customer demographics, cultural differences, and situational factors,
and examine how these factors may impact the theoretical construct of customer satisfaction.
➢ Compare and contrast the different models and theories of customer satisfaction and evaluate their
applicability to different contexts and industries, such as e-commerce, healthcare, and hospitality.
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➢ Examine the role of customer expectations in the theoretical construct of customer satisfaction,
including how expectations are formed, how they vary across customers and industries, and how they
influence customer satisfaction.
➢ Explore the dynamic nature of customer satisfaction and investigate how it evolves over time, across
different touchpoints, and in response to changes in the marketplace.
➢ This study aims to contribute to the development of effective strategies for managing customer
satisfaction, based on the insights gained from the theoretical framework, research hypotheses, and
empirical findings. These strategies may include improving product and service quality, enhancing
customer experience, developing effective pricing and promotion strategies, and building strong
brand equity.
➢ Investigate the relationship between customer satisfaction and other important outcomes, such as
customer loyalty, repurchase intentions, word-of-mouth recommendations, and brand advocacy. This
will involve examining the mediating and moderating factors that influence these relationships, such
as trust, commitment, perceived value, and switching costs.
➢ Explore the cross-cultural differences in customer satisfaction and examine how cultural factors may
impact the theoretical construct of customer satisfaction. This may involve comparing and
contrasting the customer satisfaction levels and drivers across different cultural groups, such as
Western and Eastern cultures, individualistic and collectivistic cultures, and high-context and low-
context cultures.
➢ Assess the impact of technology on the theoretical construct of customer satisfaction, particularly in
the context of e-commerce, social media, and mobile devices. This may involve examining the ways
in which technology affects customer expectations, perceptions, and behaviors, and how firms can
leverage technology to enhance customer satisfaction and loyalty.
➢ Investigate the role of emotions in the theoretical construct of customer satisfaction, including the
impact of positive and negative emotions on customer satisfaction, and the strategies that firms can
use to manage customer emotions and enhance customer satisfaction.
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➢ Finally, this study aims to contribute to the development of a more comprehensive and unified
theoretical framework for customer satisfaction, by integrating the different theories, models, and
empirical findings in the field. This framework should provide a more sophisticated and nuanced
understanding of customer satisfaction as a dynamic and multidimensional construct, and guide
future research and practice in the field.
Overall, the objective of this study is to advance our understanding of customer satisfaction as a
theoretical construct, by examining the key variables, theories, measures, and research methods that
are used to study it, and by exploring the moderating, mediating, and contextual factors that
influence it. This study aims to provide practical and theoretical insights that can inform the
development of effective marketing strategies, enhance customer experience, and improve overall
business performance.
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CHAPTER 2: A CONCEPTUAL FRAMEWORK
2.1 INTRODUCTION:
Customer satisfaction is a critical concept in business and marketing that refers to the extent to which
customers are satisfied with a company's products, services, and overall experience. It is a key performance
indicator that reflects the level of customer loyalty, retention, and advocacy, and is widely used by firms to
measure and manage customer relationships.
Studying customer satisfaction is important for several reasons. Firstly, it helps firms understand the needs,
preferences, and expectations of their customers, and identify areas where they can improve their products
and services. Secondly, it provides a basis for evaluating the effectiveness of marketing strategies and
tactics, and helps firms allocate their resources more effectively. Thirdly, it is a critical driver of customer
loyalty and retention, and can have a significant impact on a company's bottom line.
Furthermore, customer satisfaction is a complex and multifaceted construct that is influenced by a wide
range of factors, including product quality, service quality, price, and brand image. As such, studying
customer satisfaction requires a nuanced and interdisciplinary approach, drawing on insights from
psychology, sociology, economics, and marketing.
Overall, studying customer satisfaction is essential for firms that seek to build long-term relationships with
their customers, and to stay competitive in today's dynamic and ever-changing marketplace. By
understanding the drivers, moderators, and consequences of customer satisfaction, firms can develop
effective strategies for enhancing customer experience, building brand loyalty, and achieving sustainable
growth.
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2.1.2 DEFINITIONS OF THE KEY TERMS:
• CUSTOMER SATISFACTION: Refers to the degree to which a customer perceives that their
expectations have been met or exceeded by a product, service, or experience. It is a subjective
assessment of the overall experience and can be influenced by a range of factors, such as quality,
value, customer service, and brand reputation.
• CUSTOMER EXPECTATIONS: This refers to the pre-conceived notions that customers have
about a product or service before they make a purchase or receive a service. These expectations
can be shaped by factors such as marketing, advertising, word-of-mouth, and personal
experience.
• CUSTOMER LOYALTY: This refers to the likelihood that a customer will return to purchase the
same product or service from the same provider, as well as the likelihood that they will
recommend the product or service to others. Customer loyalty can be influenced by factors such
as the level of satisfaction, the perceived value, and the perceived quality of the product or
service.
• PERCEIVED QUALITY: This refers to the customers' perception of the quality of the product or
service they receive. This can be influenced by factors such as the features, design, reliability,
and durability of the product, as well as the responsiveness, reliability, and competence of the
service provider.
• PERCEIVED VALUE: This refers to the customers' perception of the overall worth of the
product or service, relative to its price. Customers may consider factors such as the quality,
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features, and benefits of the product or service, as well as the cost, convenience, and accessibility of the
service.
• CUSTOMER RETENTION: Customer retention refers to the ability of a company to retain its
existing customers. It is typically measured through metrics such as customer churn rate, which
measures the percentage of customers who leave the company over a given period of time.
In the context of customer satisfaction research, a theoretical construct may refer to an abstract concept or
variable that is used to explain or predict customer satisfaction, such as perceived quality, perceived value,
and customer loyalty. Research in this area may involve the systematic and scientific investigation of these
constructs using empirical methods and data collection techniques, such as surveys, interviews, and
observation, to better understand the drivers and consequences of customer satisfaction.
The construct of customer satisfaction research combines these key concepts to provide a comprehensive
understanding of customer satisfaction and its impact on business success. By measuring and improving
customer satisfaction levels, companies can build long-term relationships with customers, improve customer
retention rates, and foster customer loyalty, leading to increased revenue and profitability over time.
➢ Understanding customer needs and expectations: Customer satisfaction research helps firms to
understand the needs, preferences, and expectations of their customers, which is essential for
developing products and services that meet customer needs.
➢ Improving customer experience: By identifying the factors that drive customer satisfaction, firms can
improve their products, services, and overall customer experience, leading to higher levels of
customer loyalty and retention.
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➢ Evaluating marketing strategies: Customer satisfaction is a key performance indicator that reflects
the effectiveness of marketing strategies and tactics. By measuring customer satisfaction, firms can
evaluate the impact of their marketing efforts and make data-driven decisions about resource
allocation.
➢ Enhancing customer loyalty and retention: Customer satisfaction is a critical driver of customer
loyalty and retention. By keeping customers satisfied, firms can increase customer loyalty and reduce
churn, leading to long-term business growth.
➢ Building brand equity: A satisfied customer is more likely to become a loyal advocate for a brand,
spreading positive word-of-mouth and enhancing brand equity. By understanding the factors that
drive customer satisfaction, firms can develop effective brand-building strategies.
➢ Identifying opportunities for innovation: Studying customer satisfaction can reveal opportunities for
innovation and new product development. By understanding customer needs and pain points, firms
can develop new products and services that meet unmet customer needs and create new sources of
value for customers.
➢ Managing customer complaints and feedback: Customer satisfaction research can help firms identify
areas where customers are dissatisfied or experiencing issues with products or services. By
responding to customer complaints and feedback, firms can improve customer satisfaction and
prevent negative word-of-mouth.
➢ Increasing customer lifetime value: Customer satisfaction is a key driver of customer lifetime value,
which refers to the total value of a customer over the entire customer lifecycle. By keeping
customers satisfied, firms can increase customer lifetime value and maximize the revenue potential
of each customer.
➢ Adapting to changing customer preferences: Customer satisfaction research can help firms stay
attuned to changing customer preferences and adapt their products and services accordingly. By
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➢ monitoring changes in customer satisfaction over time, firms can identify trends and patterns that
signal changes in customer needs and adjust their offerings accordingly.
➢ Creating a customer-centric culture: Studying customer satisfaction can help firms create a customer-
centric culture that prioritizes customer needs and preferences. By making customer satisfaction a
top priority, firms can create a culture that values customer feedback, encourages innovation, and
fosters a strong customer focus.
➢ Enhancing customer trust: Customer satisfaction is a key driver of customer trust, which is essential
for building long-term customer relationships. By measuring and improving customer satisfaction,
firms can build customer trust, which can lead to increased customer loyalty, positive word-of-
mouth, and a stronger brand reputation.
➢ Increasing market share: Customer satisfaction is a key driver of market share, which refers to the
percentage of total market sales that a firm capture. By keeping customers satisfied, firms can
increase their market share, which can lead to increased revenue, profits, and business growth.
➢ Supporting customer segmentation and targeting: Customer satisfaction research can help firms
segment and target their customer base more effectively. By identifying the factors that drive
customer satisfaction among different customer segments, firms can develop targeted marketing
campaigns and product offerings that meet the specific needs and preferences of each segment.
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➢ Increased profitability: Satisfied customers are more likely to make repeat purchases and to spend
more money on products and services. This can lead to increased revenue and profitability for the
company.
Overall, studying customer satisfaction is essential for firms that seek to build strong customer
relationships, enhance customer experience, and achieve sustainable business growth. By
understanding the factors that drive customer satisfaction and responding to customer feedback,
firms can develop effective strategies for improving customer loyalty, enhancing brand equity, and
achieving long-term success in a competitive marketplace.
Customer Satisfaction Research is a systematic and scientific investigation of the degree to which a
customer perceives that their expectations have been met or exceeded by a product, service, or experience. It
aims to understand the factors that drive customer satisfaction and identify ways to improve customer
experience and build stronger customer relationships. This research may involve the measurement of various
constructs such as perceived quality, perceived value, and customer loyalty, using empirical methods and
rigorous data collection and analysis techniques. The results of this research can help firms develop effective
strategies for enhancing customer satisfaction, loyalty, and retention, and ultimately achieve sustainable
business growth.
Customer Satisfaction Research is a crucial area of study for businesses that seek to understand and meet the
needs of their customers. This research involves the collection and analysis of data on customer attitudes,
perceptions, and behaviors, and aims to uncover the drivers of customer satisfaction and dissatisfaction.
Through this research, firms can gain insights into the factors that influence customer satisfaction, such as
product quality, customer service, and price, and identify areas for improvement.
One of the key objectives of Customer Satisfaction Research is to improve customer loyalty and retention.
By understanding the factors that drive customer satisfaction and loyalty, firms can develop targeted
strategies to enhance the overall customer experience, such as improving customer service or product
quality, or by offering more personalized services. These strategies can help firms build stronger customer
relationships, increase customer retention rates, and ultimately, drive revenue growth.
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Customer Satisfaction Research also helps firms to gain a better understanding of their target market and
identify customer segments with unique needs and preferences. By segmenting customers based on their
satisfaction levels and other factors, firms can develop more effective marketing campaigns and product
offerings that cater to the specific needs of each segment. This can lead to increased customer engagement,
higher customer satisfaction levels, and improved overall business performance.
Overall, Customer Satisfaction Research is a critical tool for businesses seeking to build strong customer
relationships, enhance customer experience, and achieve sustainable growth. Through this research, firms
can gain insights into the factors that drive customer satisfaction, identify areas for improvement, and
develop effective strategies to enhance customer loyalty, retention, and ultimately, drive revenue growth.
➢ Helps to understand customer needs and expectations: Customer satisfaction research helps
businesses to gain insights into the needs and expectations of their customers. By understanding what
customers value, businesses can tailor their products and services to better meet those needs, leading
to higher customer satisfaction levels.
➢ Helps to identify areas for improvement: Customer satisfaction research can help businesses identify
areas where they are falling short in meeting customer expectations. By pinpointing areas for
improvement, businesses can make targeted changes to improve the customer experience, leading to
higher satisfaction levels and increased customer loyalty.
➢ Helps to build customer loyalty: Research has consistently shown that satisfied customers are more
likely to remain loyal to a business over time. By measuring and improving customer satisfaction
levels, businesses can create a loyal customer base that is more likely to make repeat purchases and
recommend the business to others.
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➢ Helps to drive revenue growth: Satisfied customers are more likely to make repeat purchases and
recommend a business to others. By improving customer satisfaction levels, businesses can drive
revenue growth through increased customer retention rates, increased customer referrals, and higher
sales volumes.
➢ Helps to improve customer retention rates: Acquiring new customers can be expensive and time-
consuming. Customer satisfaction research can help businesses identify areas where they can
improve the customer experience, leading to higher retention rates and lower customer churn.
➢ Helps to reduce customer complaints and negative feedback: Unhappy customers are more likely to
leave negative reviews and complain to others about their experience. By measuring and improving
customer satisfaction levels, businesses can reduce the likelihood of negative feedback and
complaints, leading to a more positive reputation and improved customer perception.
➢ Helps to improve employee engagement: Happy employees are more likely to provide excellent
customer service, leading to higher levels of customer satisfaction. By measuring and improving
customer satisfaction levels, businesses can create a positive work environment that fosters employee
engagement and satisfaction.
➢ Helps to identify opportunities for innovation: Customer satisfaction research can help businesses
identify unmet customer needs and opportunities for innovation. By listening to customer feedback
and understanding their needs, businesses can develop new products and services that meet those
needs, leading to increased customer satisfaction and revenue growth.
➢ Helps to measure the effectiveness of marketing and advertising campaigns: Customer satisfaction
research can provide valuable feedback on the effectiveness of marketing and advertising campaigns.
By measuring changes in customer satisfaction levels before and after a campaign, businesses can
assess the impact of their marketing efforts and make adjustments as needed.
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➢ Helps to reduce customer acquisition costs: Satisfied customers are more likely to recommend a
business to others, leading to lower customer acquisition costs. By measuring and improving
customer satisfaction levels, businesses can increase customer referrals and reduce the need to invest
in expensive marketing and advertising campaigns to acquire new customers.
➢ Helps to improve customer lifetime value: Customer lifetime value refers to the total amount of
revenue a customer generates for a business over their lifetime. By improving customer satisfaction
levels, businesses can increase customer retention rates and extend the lifetime value of each
customer, leading to increased revenue and profitability over the long term.
➢ Helps to prioritize business investments: Customer satisfaction research can provide valuable
insights into the areas of the business that are most important to customers. By prioritizing
investments in these areas, businesses can ensure that they are focusing their resources on the
initiatives that will have the greatest impact on customer satisfaction levels and overall business
performance.
➢ Helps to foster customer loyalty: Customer loyalty is critical for businesses seeking to build a
sustainable customer base over the long term. By measuring and improving customer satisfaction
levels, businesses can create a positive customer experience that fosters loyalty and encourages
repeat purchases, leading to increased revenue and profitability over time.
In summary, customer satisfaction research is important for businesses seeking to improve customer
experience, reduce customer acquisition costs, increase customer lifetime value, and foster customer
loyalty. By measuring and improving customer satisfaction levels, businesses can prioritize
investments, assess the effectiveness of marketing campaigns, and create a positive customer-centric
culture that drives long-term success.
✓ SERVQUAL model: This model measures customer satisfaction based on five dimensions of service
quality: tangibles, reliability, responsiveness, assurance, and empathy. Customers rate the
performance of the service provider on each of these dimensions and their perception of service
quality is calculated as the difference between their expectations and perceptions.
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✓ Kano model: This model categorizes product features into three categories: basic, performance, and
excitement. Basic features are essential but do not necessarily lead to customer satisfaction, while
performance features increase satisfaction linearly with their presence, and excitement features create
a disproportionate increase in customer satisfaction when present.
✓ Herzberg's two-factor theory: This theory suggests that job satisfaction is influenced by two types of
factors: hygiene factors and motivators. Similarly, in customer satisfaction research, hygiene factors
such as product quality and service reliability must be met before motivators such as personalized
service and product innovation can contribute to satisfaction.
✓ Expectancy-disconfirmation theory: This theory suggests that customers form expectations about a
product or service before using it, and their satisfaction is determined by the extent to which their
actual experience matches their expectations. If the experience is better than expected, the customer
will be satisfied; if it is worse, the customer will be dissatisfied.
✓ Hierarchy of needs theory: This theory suggests that customers have a hierarchy of needs that must
be met before they can be satisfied. These needs include basic physiological needs, safety needs,
social needs, esteem needs, and self-actualization needs. Organizations must understand the needs of
their customers and tailor their products and services to meet these needs.
✓ Zone of tolerance model: This model suggests that customers have a range of acceptable levels of
service quality, and their satisfaction is influenced by the level of service they receive within this
range. If the service quality falls below their minimum acceptable level, customers will be
dissatisfied; if it exceeds their maximum acceptable level, customers will not be significantly more
satisfied.
✓ Equity theory: This theory posits that customers evaluate their satisfaction based on a comparison of
their inputs (e.g., time, effort, money) with the outcomes they receive (e.g., product quality, service
delivery). If the outcomes are perceived as fair relative to the inputs, customers will be satisfied.
✓ Cognitive dissonance theory: This theory suggests that customers may experience psychological
discomfort or "cognitive dissonance" after making a purchase if they feel uncertain or conflicted
about their decision. Reducing cognitive dissonance can lead to increased customer satisfaction.
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✓ Attribution theory: This theory suggests that customers attribute the cause of their satisfaction or
dissatisfaction to specific factors, such as the product quality, service delivery, or external factors
such as the weather or traffic. Understanding the factors that customers attribute to their satisfaction
or dissatisfaction can help organizations improve their products and services.
There are several types of customer satisfaction research that businesses can use to measure and understand
their customers' satisfaction levels. Some of the most common types include:
1. Transactional surveys: These surveys are conducted after a specific transaction or interaction with a
customer, such as after a purchase or a customer service call. Transactional surveys typically
measure satisfaction with the specific interaction or transaction.
2. Relationship surveys: These surveys are conducted periodically to measure overall satisfaction with
the relationship between the customer and the business, rather than a specific transaction or
interaction. Relationship surveys can provide insights into long-term satisfaction levels and loyalty.
3. Net Promoter Score (NPS) surveys: NPS surveys ask customers how likely they are to recommend
the business to others, typically on a scale of 0-10. The NPS is calculated by subtracting the
percentage of detractors (those who give a score of 0-6) from the percentage of promoters (those who
give a score of 9-10).
4. Customer effort score (CES) surveys: These surveys measure the effort a customer had to exert to
complete a specific task or interaction, such as resolving an issue with customer service. The CES
can provide insights into areas where the business can reduce customer effort and improve
satisfaction.
5. Online reviews and social media monitoring: These methods involve monitoring online reviews and
social media posts to identify customer feedback and sentiment. Online reviews and social media
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monitoring can provide valuable insights into areas where the business is excelling or areas where
improvement is needed.
6. Customer focus groups and interviews: These qualitative research methods involve in-depth
discussions with customers to gain insights into their perceptions and experiences. Customer focus
groups and interviews can provide detailed feedback on customer needs and preferences.
7. Mystery shopping: Mystery shopping involves hiring a third party to pose as a customer and assess
the quality of service provided by the business. Mystery shopping can provide insights into areas
where the business is excelling or areas where improvement is needed.
8. Customer journey mapping: Customer journey mapping involves mapping out the customer's journey
from initial contact with the business to post-purchase follow-up. Customer journey mapping can
provide insights into areas where the business can improve the customer experience and increase
satisfaction levels.
9. Churn analysis: Churn analysis involves analysing customer data to identify customers who have
stopped doing business with the company. Churn analysis can provide insights into areas where the
business is losing customers and can help identify ways to improve customer retention.
10. Customer segmentation: Customer segmentation involves dividing customers into different groups
based on shared characteristics, such as demographics or purchase behavior. Customer segmentation
can provide insights into the needs and preferences of different customer groups and can help the
business tailor its offerings to meet those needs.
11. Competitive analysis: Competitive analysis involves analysing the strengths and weaknesses of the
business's competitors. Competitive analysis can provide insights into areas where the business can
improve to better compete in the market and increase customer satisfaction.
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2.4 LIMITATIONS OF EACH TYPE OF CUSTOMER SATISFACTION
RESEARCH METHODS:
1. Transactional surveys: Transactional surveys may not provide a complete picture of overall satisfaction
with the business, as they only measure satisfaction with a specific transaction or interaction.
Additionally, customers may be more likely to provide positive feedback immediately after a positive
interaction and negative feedback immediately after a negative interaction, which can skew results.
2. Relationship surveys: Relationship surveys can be time-consuming and expensive to administer, and
customers may be less likely to respond to these types of surveys if they are not incentivized.
Additionally, changes in customer satisfaction levels over time may be influenced by factors outside of
the business's control, such as changes in the economy or industry trends.
3. Net Promoter Score (NPS) surveys: NPS surveys are based on a single question and may not provide a
complete picture of customer satisfaction. Additionally, the NPS can be influenced by factors outside of
the business's control, such as the customer's personal relationships or perceptions of the industry.
4. Customer effort score (CES) surveys: CES surveys only measure satisfaction with a specific task or
interaction, and may not provide insights into overall satisfaction with the business. Additionally,
customers may not accurately remember the level of effort they exerted to complete a task.
5. Online reviews and social media monitoring: Online reviews and social media monitoring may not be
representative of the overall customer base, as only a small percentage of customers may choose to leave
a review or post on social media. Additionally, customers may be more likely to leave extreme reviews,
either positive or negative, which can skew results.
6. Customer focus groups and interviews: Customer focus groups and interviews can be time-consuming
and expensive to conduct, and may not be representative of the overall customer base. Additionally,
customers may not accurately remember their experiences or may not be willing to provide honest
feedback.
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7. Mystery shopping: Mystery shopping can be expensive and time-consuming to conduct, especially if it
requires hiring third-party agencies. Additionally, mystery shoppers may not provide a completely
accurate representation of the customer experience, as their behavior may differ from that of a typical
customer.
8. Customer journey mapping: Customer journey mapping can be complex and time-consuming, as it
involves mapping out the entire customer experience. Additionally, customer journey mapping may not
be representative of all customer experiences, as different customers may have different journeys.
9. Churn analysis: Churn analysis may not provide insights into why customers are leaving, as there may
be factors outside of the business's control that are contributing to churn. Additionally, churn analysis
may not be effective at identifying customers who are at risk of leaving in the future.
10. Customer segmentation: Customer segmentation can be complex and time-consuming, as it requires
analysing customer data to identify shared characteristics. Additionally, customer segmentation may not
provide insights into the specific needs and preferences of individual customers.
11. Competitive analysis: Competitive analysis may not provide a complete picture of customer satisfaction,
as customers may be satisfied with the business but still choose to do business with a competitor due to
factors such as price or convenience. Additionally, competitive analysis may not provide insights into the
specific needs and preferences of the business's own customers.
It is important to consider these limitations when selecting a research method and interpreting the results of
customer satisfaction research.
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2.5 HYPOTHESES BASED ON THE THEORETICAL FRAMEWORK:
❖ H1: There is a positive relationship between customer expectations and customer satisfaction, such
that when a product or service meets or exceeds expectations, customer satisfaction will be higher
than when expectations are not met.
❖ H2: The Kano model can be used to identify the key features of a product or service that will lead to
customer satisfaction. Specifically, meeting basic needs will prevent dissatisfaction, meeting
performance needs will lead to satisfaction, and exceeding excitement needs will lead to customer
delight.
❖ H3: The dimensions of service quality identified in the SERVQUAL model (tangibles, reliability,
responsiveness, assurance, and empathy) will be positively related to customer satisfaction, such that
higher levels of service quality will lead to higher levels of customer satisfaction.
❖ H4: Hygiene factors (e.g., working conditions, salary) will have a weaker impact on customer
satisfaction than motivators (e.g., achievement, recognition), according to Herzberg's two-factor
theory.
❖ H5: Customer satisfaction will have a positive impact on customer loyalty and retention, based on
previous research (Anderson and Sullivan, 1993; Reichheld and Sasser, 1990; Homburg et al., 2005)
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CHAPTER 3: FINDINGS
▪ Customer satisfaction is a complex construct that is influenced by various factors, including product
quality, service quality, customer expectations, and the overall customer experience.
▪ Customer satisfaction has been shown to have a positive impact on customer loyalty, retention, and
repeat purchase behavior, which can ultimately lead to higher profits and business success.
▪ There are several theories and models that have been developed to explain the drivers of customer
satisfaction, including the Kano model, Herzberg's two-factor theory, and the SERVQUAL model.
▪ Service quality is a key factor in customer satisfaction, and the SERVQUAL model has been
developed to measure service quality based on five dimensions: tangibles, reliability, responsiveness,
assurance, and empathy.
▪ Customer satisfaction is not a one-time event, but rather an ongoing process that requires continual
monitoring and improvement. Companies that prioritize customer satisfaction are more likely to see
long-term success.
▪ Customer satisfaction can be influenced by a variety of factors, including product design, pricing,
marketing, and customer service. Companies that take a holistic approach to customer satisfaction
are more likely to achieve high levels of satisfaction.
▪ In addition to improving customer satisfaction, companies can also benefit from reducing customer
dissatisfaction. This can be achieved by identifying and addressing factors that lead to customer
complaints and negative experiences.
▪ Customer satisfaction is often closely related to brand loyalty. Companies that are able to create a
strong brand image and reputation are more likely to have satisfied customers who are loyal to their
brand.
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▪ Different industries may have different factors that influence customer satisfaction. For example, in
the hospitality industry, factors such as cleanliness, comfort, and friendliness of staff may be more
important than in other industries.
▪ Cultural factors can also influence customer satisfaction, as different cultures may have different
expectations and norms for customer service and product quality.
▪ Customer satisfaction has a positive impact on customer loyalty, retention, and repeat purchase
behavior. Satisfied customers are more likely to remain loyal to a brand and make additional
purchases over time.
▪ Customer satisfaction is influenced by a variety of factors, including product quality, service quality,
price, and customer experience. Companies that prioritize customer satisfaction across these factors
are more likely to succeed.
▪ The Kano model is a popular framework for understanding the factors that influence customer
satisfaction. The model identifies three types of customer needs: basic needs, performance needs, and
excitement needs. Meeting basic needs is essential for avoiding customer dissatisfaction, while
meeting performance needs can lead to satisfaction, and exceeding excitement needs can lead to
customer delight.
▪ Online reviews and ratings have become an increasingly important source of information for
consumers when making purchasing decisions. Companies that prioritize customer satisfaction and
monitor and respond to online reviews are more likely to maintain a positive reputation and attract
new customers.
▪ The relationship between customer satisfaction and customer loyalty is complex, with factors such as
product price, convenience, and competition playing a role. Companies that understand the nuances
of this relationship and develop targeted strategies for improving satisfaction and loyalty are more
likely to succeed.
▪ Employee satisfaction and engagement can also have an impact on customer satisfaction, as satisfied
and engaged employees are more likely to provide high-quality service and positive interactions with
customers.
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▪ Customer satisfaction can be measured and analysed using a variety of quantitative and qualitative
methods, including surveys, focus groups, and social media listening tools. Companies that use these
methods to gather and analyse customer feedback are better equipped to make informed decisions
and improvements to their products and services.
▪ Customer Satisfaction Research is an important tool for companies to better understand their
customers and develop strategies for improving satisfaction levels. By prioritizing customer
satisfaction and taking a holistic approach to customer experience, companies can create more loyal
and satisfied customers and achieve long-term business success.
▪ Customer expectations play a crucial role in determining satisfaction levels. Understanding customer
expectations and tailoring products and services to meet those expectations can help companies
achieve higher levels of satisfaction.
▪ Customer satisfaction can be influenced by the perception of fairness, both in terms of pricing and in
how customers are treated. Companies that prioritize transparency and fairness in their interactions
with customers are more likely to achieve high levels of satisfaction.
• Customer satisfaction can be enhanced through personalization and customization. Companies that
offer personalized products and services that meet the unique needs and preferences of individual
customers are more likely to achieve high levels of satisfaction.
▪ Social influence and word-of-mouth can also impact customer satisfaction. Negative reviews and
feedback can lead to decreased satisfaction, while positive reviews and recommendations can lead to
increased satisfaction and loyalty.
▪ Customer satisfaction is not a static measure, but rather one that is constantly changing and evolving.
Companies that stay up-to-date on changing customer needs and preferences and are able to adapt
and innovate their products and services accordingly are more likely to achieve high levels of
satisfaction.
▪ In addition to traditional measures of customer satisfaction, such as surveys and feedback, companies
can also use customer analytics to gain insights into customer behavior and preferences. Analysing
data on customer purchases, browsing behavior, and social media activity can help companies better
understand their customers and improve satisfaction levels.
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▪ Customer satisfaction can be influenced by a variety of external factors, such as economic conditions
and changing consumer trends. Companies that are able to anticipate and respond to these external
factors are more likely to achieve high levels of satisfaction.
▪ Customer Satisfaction Research is a complex and multifaceted field that requires ongoing attention
and investment from companies. By staying up-to-date on the latest research and trends, and by
prioritizing customer satisfaction across all aspects of their business, companies can create more
loyal and satisfied customers and achieve long-term success.
▪ The role of customer service in customer satisfaction cannot be underestimated. Positive interactions
with customer service representatives can greatly impact customer satisfaction levels, while negative
interactions can lead to decreased satisfaction and even customer churn.
▪ Cultural differences can impact customer satisfaction levels. Companies that operate in multiple
countries or serve diverse customer populations need to take into account cultural differences and
adjust their approach accordingly.
▪ Customers expect companies to be responsive to their needs and concerns in real-time. Companies
that are able to quickly respond to customer inquiries and complaints, and resolve issues in a timely
and satisfactory manner, are more likely to achieve high levels of satisfaction.
▪ Trust is a key factor in customer satisfaction. Customers are more likely to be satisfied with a
company if they feel that the company is trustworthy and has their best interests in mind.
▪ The role of technology in customer satisfaction is growing. Companies that use technology to
enhance the customer experience, such as through personalized recommendations or real-time
chatbots, are more likely to achieve high levels of satisfaction.
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▪ Customer satisfaction is not just about meeting basic needs, but also about exceeding expectations.
Companies that are able to surprise and delight customers by going above and beyond what is
expected are more likely to achieve high levels of satisfaction and loyalty.
▪ Finally, customer satisfaction is not just a measure of how customers feel about a company, but also
an indicator of how well a company is meeting its business goals. Companies that prioritize customer
satisfaction are more likely to achieve business success and long-term sustainability.
▪ Customer Satisfaction Research is an important and dynamic field that requires ongoing attention
and investment from companies. By staying up-to-date on the latest research and trends, and by
prioritizing customer satisfaction across all aspects of their business, companies can create more
loyal and satisfied customers and achieve long-term success.
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CHAPTER 4: CONCLUSION AND SUGGESTIONS
o CONCLUSION:
Customer Satisfaction is a crucial concept in the field of marketing research, as it directly affects a
company's bottom line. Understanding the factors that contribute to customer satisfaction, such as product
quality, price, service quality, and the overall customer experience, is essential for companies to develop
effective marketing strategies that enhance customer satisfaction and loyalty. Measuring customer
satisfaction through surveys, interviews, and focus groups is necessary to determine customer perceptions
accurately. Finally, research has shown that customer satisfaction is a significant predictor of customer
loyalty, which leads to increased customer retention and repeat purchases. Therefore, companies that
prioritize customer satisfaction will be more successful in retaining their customers and achieving long-term
business success.
• Companies that prioritize customer satisfaction have been shown to enjoy several benefits, including
increased customer retention, higher profits, and positive word-of-mouth marketing.
• Customer satisfaction is not just about meeting customers' basic needs but also about exceeding their
expectations, which can be achieved through exceptional customer service, personalized experiences,
and quality products.
• Measuring customer satisfaction should be an ongoing process for companies, as it can provide
valuable insights into customer perceptions and identify areas for improvement.
• Customer satisfaction is not a one-time achievement but requires continuous effort and investment
from companies to maintain high levels of satisfaction and retain loyal customers.
• In today's digital age, customer satisfaction is more critical than ever, as social media and online
reviews can quickly spread positive or negative word-of-mouth about a company's products and
services, affecting its reputation and bottom line.
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• Customer satisfaction is closely related to customer loyalty, as satisfied customers are more likely to
return to a company for future purchases and recommend it to others.
• While product quality and service are important factors in customer satisfaction, companies must
also consider other factors such as brand image, convenience, and emotional connection with
customers.
• Companies can enhance customer satisfaction by investing in employee training and development, as
happy and engaged employees are more likely to provide excellent service and create positive
customer experiences.
• Customer satisfaction surveys and feedback mechanisms are valuable tools for companies to
understand customer needs and preferences, but it's also essential to act on the feedback received to
improve the customer experience.
• While customer satisfaction is essential, it's also essential to balance it with other business goals such
as profitability, growth, and sustainability. Companies must find the right balance between satisfying
customers and achieving their business objectives.
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o SUGGESTIONS:
Here are some suggestions for companies looking to improve customer satisfaction:
✓ Focus on providing exceptional customer service, such as quick response times, personalized
interactions, and attentive listening to customer needs.
✓ Continuously improve product quality by investing in research and development, quality control
measures, and product testing.
✓ Provide convenient and efficient delivery options, such as same-day or next-day delivery and flexible
return policies.
✓ Create a positive brand image by communicating company values, social responsibility, and
sustainability efforts.
✓ Offer loyalty programs, discounts, and incentives to reward and retain loyal customers.
✓ Act on customer feedback and suggestions to address any issues or concerns and improve the
customer experience.
✓ Use data analytics and customer insights to tailor marketing strategies and personalize customer
interactions.
✓ Invest in employee training and development to enhance service quality and create a positive work
culture.
✓ Stay up-to-date with the latest technology trends and innovations to provide a seamless and
enjoyable customer experience across all channels and touchpoints.
✓ Develop a strong online presence by creating an easy-to-use website, providing helpful and
informative content, and engaging customers through social media and other digital channels.
✓ Offer multiple communication channels, such as phone, email, chatbots, and social media, to give
customers the flexibility to choose their preferred method of communication.
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BIBLIOGRAPHY AND WEBLIOGRAPHY
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WEBLIOGRAPHY:
➢ https://en.wikipedia.org/wiki/Customer_satisfaction
➢ https://en.wikipedia.org/wiki/Customer_satisfaction_research
➢ https://hbswk.hbs.edu/Pages/browse.aspx?HBSTopic=Customer%20Satisfaction
➢ https://www.researchgate.net/publication/313966638_Customer_Satisfaction
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