Consumer Satisfaction, Loyalty and Relationship Marketing: Expectations, Service Quality and Retention (Basics) Questions

Q: Differentiate between behavioral loyalty and attitudinal loyalty.

Difference: | Basis | **Behavioral loyalty** | **Attitudinal loyalty** | |---|---|---| | Focus | repeat purchase | emotional attachment/preference | | Evidence | purchase frequency | advocacy and strong belief | | Risk | may switch if offer changes | more resistant to competitors | Both together create strong long-term loyalty.

Q: Explain relationship marketing and mention any three pillars.

**Relationship marketing** focuses on building long-term customer relationships instead of one-time transactions. Pillars (any three): - **trust** - **commitment** - **communication** - value creation/support These help improve retention and loyalty.

Q: Explain service quality and list any three SERVQUAL dimensions.

**Service quality** is the customer’s judgment about the excellence of a service. Any three SERVQUAL dimensions: - **Reliability** (doing it right consistently) - **Responsiveness** (quick help) - **Assurance** (trust and competence) - Empathy, Tangibles Higher service quality improves satisfaction and repeat purchase.

Question 1

Define customer satisfaction.

Accepted Answer

Customer satisfaction is the consumer’s evaluation after purchase based on comparing expectations with perceived performance.

Question 2

What is customer loyalty?

Accepted Answer

Customer loyalty is the commitment to repurchase and recommend a brand consistently, even when alternatives exist.

Question 3

State any one source of customer expectations.

Accepted Answer

Past experience is one major source of customer expectations.

Question 4

What is service recovery?

Accepted Answer

Service recovery refers to actions taken by a firm to correct a service failure and regain customer satisfaction and trust.

Question 5

Mention any one SERVQUAL dimension.

Accepted Answer

Reliability is one SERVQUAL dimension.

Question 6

What is customer retention?

Accepted Answer

Customer retention is a firm’s ability to keep customers continuing to buy from it over time.

Question 7

Explain the satisfaction equation using expectations and performance.

Accepted Answer

Satisfaction depends on the **gap** between **expectations** and **perceived performance**:

- Performance **>** expectations → **delight**
- Performance **=** expectations → **satisfaction**
- Performance **<** expectations → **dissatisfaction**

Thus, managing expectations and delivering quality both matter.

Question 8

Differentiate between behavioral loyalty and attitudinal loyalty.

Accepted Answer

Difference:

| Basis | **Behavioral loyalty** | **Attitudinal loyalty** |
|---|---|---|
| Focus | repeat purchase | emotional attachment/preference |
| Evidence | purchase frequency | advocacy and strong belief |
| Risk | may switch if offer changes | more resistant to competitors |

Both together create strong long-term loyalty.

Question 9

Explain relationship marketing and mention any three pillars.

Accepted Answer

**Relationship marketing** focuses on building long-term customer relationships instead of one-time transactions.

Pillars (any three):
- **trust**
- **commitment**
- **communication**
- value creation/support

These help improve retention and loyalty.

Question 10

Explain service quality and list any three SERVQUAL dimensions.

Accepted Answer

**Service quality** is the customer’s judgment about the excellence of a service.

Any three SERVQUAL dimensions:
- **Reliability** (doing it right consistently)
- **Responsiveness** (quick help)
- **Assurance** (trust and competence)
- Empathy, Tangibles

Higher service quality improves satisfaction and repeat purchase.

Question 11

Explain customer satisfaction and list any three benefits of satisfied customers to a firm.

Accepted Answer

**Customer satisfaction** is the post-purchase evaluation where perceived performance is compared with expectations.

Benefits to the firm (any three):
- Higher **repeat purchase** and retention.
- Positive **word of mouth (WOM/e-WOM)**.
- Lower **customer acquisition cost** due to referrals.

Flow (write): Satisfaction → Loyalty → Repeat purchase → Advocacy

Question 12

Differentiate between customer satisfaction and customer loyalty (any three points).

Accepted Answer

Satisfaction vs loyalty:

| Basis | **Satisfaction** | **Loyalty** |
|---|---|---|
| Meaning | evaluation after purchase | commitment to repurchase/recommend |
| Time | often **short-term** | more **long-term** |
| Result | may or may not repeat buy | repeat purchase + resistance to competitors |

A customer can be satisfied once, but loyalty means sustained preference over time.

Question 13

Explain customer retention and suggest strategies to improve it (use a table).

Accepted Answer

**Customer retention** means keeping customers buying from the firm over time. Retention is important because acquiring new customers is usually costlier than keeping existing ones.

### Strategies to improve retention
- Improve **product/service quality** and consistency.
- Provide strong **after-sales support** and easy returns.
- Use **loyalty programs** (points, tiers) to reinforce repeat purchase.
- Personalised communication and offers through **CRM**.
- Fast complaint handling and **service recovery**.

| Strategy | **Keyword** | Effect |
|---|---|---|
| Loyalty program | **reinforcement** | repeat purchase |
| Service recovery | **trust** | reduces churn |

### Conclusion
Retention increases lifetime value and creates brand advocates through positive e-WOM.

Question 14

Explain complaint handling and service recovery process with a neat flowchart.

Accepted Answer

Complaint handling is important because a well-solved complaint can convert a dissatisfied customer into a loyal one.

### Service recovery steps
1) **Listen** and acknowledge the problem.
2) **Apologise** and show empathy.
3) **Solve** quickly (refund/replace/fix).
4) **Follow-up** to confirm satisfaction.

Flowchart (write/draw):
Complaint → Acknowledge → Apologise → Resolve → Follow-up → Retention

### Conclusion
Effective service recovery reduces negative word of mouth and improves satisfaction and loyalty.

Question 15

Explain how expectations are formed and how firms can manage expectations to improve satisfaction.

Accepted Answer

Customer expectations are formed before purchase and strongly influence satisfaction.

### Sources of expectations
- **Past experience** with the brand.
- **Advertising promises** and salespeople claims.
- **Word of mouth / reviews (e-WOM)**.
- Competitor benchmarks and price cues.

### Managing expectations (firm actions)
- Avoid **over-promising**; communicate realistic benefits.
- Provide clear terms (delivery time, warranty, charges).
- Deliver consistent **service quality**.
- Provide proactive updates and support.

| Action | **Keyword** | Result |
|---|---|---|
| Clear communication | **transparency** | reduces disappointment |
| Consistent delivery | **reliability** | increases satisfaction |

### Conclusion
Satisfaction improves when firms align promises with performance and deliver reliable experiences.

Consumer Satisfaction, Loyalty and Relationship Marketing: Expectations, Service Quality and Retention (Basics)

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