The topic of the report that I have selected to write on is ‘Customer Satisfaction and its relationship with Branding’. Customer Satisfaction and Branding are very important for any organization these days because of the intense competition out there. Organizations now need to make sure that they retain competitors and do not let them go to the competitors in order to maintain market share and survive. Since these concepts are becoming so common in organizations, I feel that there is a need to research on these and find out about the relationship that is there between them. This is the reason why I have selected this as the topic of my research paper. In order to collect the data to prepare the final report, both primary and secondary sources will be used. Employees from different levels of hierarchy will be surveyed and interviewed. For secondary research, articles, books, internet and research journals were used. The information from these sources was used to understand the concepts and develop a framework for primary research. By the end of the research, we aim to highlight the importance of customer satisfaction and we also expect to discover an evident relationship between customer satisfaction and branding. This research paper will provide insight for its readers and it will be helpful in understanding these two very important concepts.
As already mentioned, the concepts that are being researched in this report are very important and evident in the organizations. These are very critical for any businesses success. Customer satisfaction is important because it increases customer loyalty and customer retention. Branding, on the other hand, is important because this is the tool that is used by organizations to increase customer satisfaction. This is the reason why I feel that there is a need to carry out further research on this and understand the topic at hand.
The main topic of the research paper is customer satisfaction. Under this topic, we will first of all understand what this concept is. We will include various definitions to understand it better. Next we will look at its importance for businesses and lastly, we will look at what branding is and develop a relationship between the two.
The secondary data was mainly from the internet, books, journals and magazines. These sources were all up to date. More specifically, all of the sources were dated 1995 onwards. The sources need to be up to date because the topics that are being studied are constantly changing. New definitions, theories and concepts keep coming up. By using the latest sources, we can be certain that the information that is included in the research is new.
The articles had a great deal of knowledge and by using various sources, we were able to compare and contrast the views of different authors and specialists in the field. They covered the topic of customer satisfaction and its sub topics in great detail therefore this research paper covered everything.
The report was mainly based on data from two basic types of sources. These sources were the secondary data and the primary data. The secondary data was used before primary research and fieldwork was carried out. This secondary data was used to understand the different elements and variables that were being researched. These phenomenon included different theories of customer satisfaction. These sources helped in developing a platform, framework and setting a base for primary research.
Once we were ready to conduct the primary research with the help of secondary data, in depth interviews and surveys were carried out. The in depth interviews were carried out with one department heads while the survey was carried out with 10 department heads and 50 lower level of employees. The surveys revealed a great deal of information and most of the information was implied. This means that the respondent of the information did not know what aspect of customer satisfaction he or she was being tested on. The in depth interviews only revealed qualitative information while the surveys generated both qualitative and quantitative information.
From our research, we expect to find a significant relationship between customer satisfaction and branding. We will be able to discover what affects what. In addition to this, we will accept or reject the hypothesis that was presented before the research. A research like this one will definitely help in understanding the concept of customer relationship better and its relationship with branding. As a result, branding can be used as a tool to improve customer satisfaction.
As it is evident, most of the secondary sources that were used are books or articles from journals. All the sources are up-to-date therefore the information that was obtained from them must be accurate. All the sources provided a great deal of insight in the topic which allowed us to touch every aspect of customer satisfaction. These sources were used to understand the basic concepts before carrying out the primary information.
Customers are a very important part of a business because it is because of them the business makes its sales. Therefore, it is very important for them to be satisfied. It is one of those terms which have a lot of different definitions. For this reason, we will include a few of them to compare them and understand this term better. Customer satisfaction is simply the extent the customers are pleased with the goods or services being provided to them by a company (The Times 100, 2008).
The topic of Customer Satisfaction interested me because I observed how most organizations emphasize on this concept so much. I wanted to understand the importance of customer satisfaction and how this concept is related to another very important concept of branding these days. This is the reason I have chosen the topic of my report as Customer Satisfaction and its relationship with Branding.
Customer satisfaction is basically the extent to which the customers are pleased with the offering of an organization. The customers have certain expectations from a good or service. Once these customers consume the good or service, they compare with their expectations with the actual experience with the product and this is what determines their customer satisfaction level. This will be discussed in more detail in the coming parts of the research paper.
Now that we have understood what customer satisfaction is, we are in a better position to understand the purpose of this research paper. The purpose of this research paper is to understand what customer satisfaction really is and develop its relationship with branding.
The following is the hypothesis of this research paper.
“Customer Satisfaction and Branding are strongly related to each other. An effective branding strategy means a high customer satisfaction level.”
Before anything else, we need to understand the concepts of Customer Satisfaction and Branding. For this reason a few definitions will be included in the paper.
Customer Satisfaction is a subjective term and this is why it has been defined by various authors in different ways. A definition given by Richard L. Oliver in his book ‘Satisfaction: A Behavioral Perspective on the Consumer’ will help explain this concept perfectly. According to him, “Satisfaction is the consumer’s fulfillment response. It is a judgment that a product or service feature, or the product of service itself, provided (or is providing) a pleasurable level of consumption-related fulfillment, including levels of under- or over-fulfillment.” (Oliver, R. 1997) Another short definition of customer satisfaction was found in the book ‘How to Measure Customer Satisfaction’. It defines Customer Satisfaction as “a measure of how your organization’s ‘total-product’ performs in relation to a set of customer requirements.” (Hill, N., Brierley, J. MacDougall, R., 2004) As long as these requirements of the customers are met, he will be satisfied. Another definition of customer satisfaction is “the end state resulting from having consumed a product or service.” (Vavra, G. T., 2001)
All these definitions bring out two important concepts that need to be highlighted. First of all, customer satisfaction is a response. This response can be either in terms of his perception of our product or his future buying habits. Second important concept is that customer satisfaction is only achieved when a customer’s requirements are compared with his post consumption experience. If the experience was as he had expected and fulfilled his requirements, he would be satisfied.
Branding, on the other hand, is the process of creating and maintaining a brand for your organization. According to Kumar N., “Branding is the management process by which a product is branded. It is a general term covering various activities such as giving a brand name to a product, designing a brand mark, and establishing and popularizing it” (Kumar, N., 2002). The ultimate aim of branding is creating controlling and dominant identity in the mind of their target customers. The companies therefore invest more and more into this procedure in order to make this identity better and more powerful than their competitors. (Hasanali, F. et al, 2005)
However, there are some people who say that the relationship between the two concepts of customer satisfaction and branding may not be as strong as most people claim that it is. They claim that they may be related but there is no direct relationship between them. It is said that branding covers a lot more than customer satisfaction. Branding has to do with the product, competition and a lot of different aspects while customer satisfaction is just making sure that the expectations are equal to the experience therefore it is incorrect to say that there a strong relationship between the two.
However, one thing that is often missed out when making this claim is that all the elements of branding ultimately affect the customers. They are carried out so that the product is positioned and demanded by the customers properly. Therefore the relationship is evident.
Importance of Customer Satisfaction
“To achieve customer satisfaction is one of the main aims of businesses”. This was one thing that we heard from every manager who was interview. We also found out through interviews that every decision taken by a business affects its customers in one way or the other. This is why the process of decision-making is carried out in such a way so that the customers would not be displeased. The organization must remember that it is much more costly to attract a new customer than keeping an old one. These old customers, if remain satisfied will become loyal to the company. Brand loyalty will result in frequent purchases which will directly influence the profitability of the company directly.
Also, when unsatisfied customers start switching from a particular brand to another one, it is a sign that the business is failing to provide to the customer what it wants and therefore it is a sign that the business is failing. The organization must, at this stage analyze where they are not doing well understand the causes of switching. Once the company manages to search for the root causes for the switching behavior, it can amend its policies accordingly and win back its lost customers and encourage brand loyalty. Companies with unsatisfied customers are in danger because losing them means losing everything. Paurav Shukla explained that it is important to know and measure the level of satisfaction of the customers but this should not be the only criterion to determine the level of brand loyalty and brand switching behavior (Shukla, P. 2004). According to another source, the benefits of customer satisfaction include that firstly when a customer is satisfied, he stays longer with the organization. Secondly, customer satisfaction deepens its relationship with the company. Thirdly, the customer, when satisfied becomes less sensitive and elastic to changes in price. And lastly, the satisfied customer will always suggest the company’s brand to other people. Statistics also show that it costs a company five to six times more to win back a new customer than keep the one it already has. By keeping 5 percent of its customers satisfied, the company can benefit by enjoying a profit increase ranging from 25 to 125 percent. Another fact is that one out of every 25 customers who is dissatisfied with the company will express how he feels and these customers on average tell nine to twelve people about their experience with the product. (1000 Ventures, 2008)
When the survey was carried out, we found that that the majority of the respondents agreed with the fact that customer satisfaction is very important for any organization. The following table shows the results of this one related question in the survey.
The responses clearly show that most people agree that customer satisfaction is very important for any organization, be it customer to customer or business to business.
Through our survey we also found out that most people thought that customer satisfaction was important because it increased customer retention and market share. This is shown in the graph below.
Because of all these reasons and statistics, it is clear why a lot of companies from all over the world are concentrating on measurement of customer satisfaction. Besides this, measurement and comparison of customer satisfaction is so important now that in the new ISO9000: 2000 standard, this is an addition. According to this, organizations certified to this standard have to recognize, identify and measure parameters that result in a customer being satisfied or dissatisfied. This measurement will then be compared with those of the competitors or with benchmarks set by the company and will lastly be reviewed by senior officials (Bhave, A. 2008).
The Relationship between Brand/Branding and Customer’s Satisfaction
The relationship between a brand and customer’s satisfaction is very simple and clear. For better understanding, we will try to connect both the definition of brand and customer’s satisfaction. A brand is something that gives the customers added value. This value is even more than the value of the functions that the product will carry out. The brand differentiates itself with its competitors and hence becomes a basis of customer satisfaction. The customers later start preferring the goods under this brand over other goods and lastly become brand loyal. (Knox, S., 2004) We defined customer satisfaction as Customer satisfaction is simply the extent the customers are pleased with the goods or services being provided to them by a company. How does the customer see the goods and services provided by the company? It sees them through the brand under which the goods and services are being provided to him. Therefore, if the customer is satisfied with the goods and services being provided by a particular brand, he will be satisfied with the brand and as a result, he will become brand loyal. In simpler words, customer satisfaction would result in brand loyalty. The brand has such a strong link with the business that the customer hardly separates the brand from a store. Therefore, the extent to which the customer is satisfied has a great impact on the brand.
Customer satisfaction is merely how a customer perceives goods and services provided by a business. These customers base their perceptions on various factors. Customers form their assessment of a brand by using various types and sources of information provided by retailers. If their perception is positive, they will be satisfied with the brand while on the other hand, if their perception is negative, they will not be pleased with the brand. Therefore, when a customer forms a perception about a brand, a relationship is also developed between a brand and customer satisfaction. (Grewal, D. et all, 2004)
Brand equity is the value of a brand. Another concept called Customer-based brand equity will help clear this relationship further. Customer-based brand equity is defined as the effect of a brand’s knowledge on the customer’s response to the marketing of that brand. A brand has more value when customers show a moderately subtle reaction to a change in its marketing mix rather than if it were a change in the marketing mix of another unknown and insignificant, brand less product. This means that if a popular brand which has managed to satisfy its customers changes its product, it will result the customers to most probably be less sensitive to this change and still be brand loyal. (Scholderer, J., 2002)
One fact that we did not find in secondary sources but was mentioned in one of our interviews was how the increase in knowledge on the part of the customers has made customer satisfaction difficult through branding. He said that “Recently the customer is become very smart and knowledgeable. Therefore, he is not satisfied until he trusts the brand completely”. This has become another link between customer satisfaction and branding. Because of a wide variety of goods and services available to them through internet and other media, the customer has become very demanding. In order to make the customer happy and satisfied, the branding strategy of the company will be such which will individually cater to every customer’s demands.
We also asked the participants in our survey if they believed that there was a relationship between customer satisfaction and branding. The results of the question are showed in the following column chart. The results clearly show that most people believe that there is a significant relationship between customer satisfaction and branding as the majority of the respondents agreed.
In the beginning of the research paper the claim that was made was that customer satisfaction is very important and that it has a very significant relationship with branding. Research was carried out from both primary and secondary sources and it is evident that customer satisfaction is very important for any kind of business and also that it has a very strong relationship with branding.
Customer satisfaction is important because it leads to brand loyalty, less sensitivity to price, better relationship with customers and positive viral marketing. All these benefits result in increased market share, stronger position in the market and ultimately higher profits. Therefore every organization benefits from it.
In addition to this, it is related to branding because branding is the process of creating value for the customers and this increased value results in customer satisfaction. Also, the customer interacts with the product through the brand, therefore if the interaction with the brand is positive, he or she will have a positive perception about the brand and he or she will be satisfied.
This research paper will provide a lot of insight to its readers on two of the most important aspects of a business. It will highlight the importance of customer satisfaction. This research paper also established a relationship between customer satisfaction and branding. This has broadened the way customer satisfaction is seen. Organizations can now aim to increase customer satisfaction directly from its branding strategies.
There has been a considerable amount of research in literature on the concepts of customer satisfaction and branding. This shows the importance of them. Through this research paper, we have tried to look at customer satisfaction from a different perspective, more specifically, the branding point of view.
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