MRKT 452 Lecture Notes - Lecture 4: Customer Satisfaction, Confirmation Bias, Price Premium
18 Feb 2018
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Customer satisfaction is important because it leads to repeat purchase. More profitable for firms than one time purchase. Ex starbucks initial costs will get covered by revenues when setting up new store. First period initial sales because of ads and price discount. After a while savings greater profits/lower costs ex no more coupons, no more ads. Lack of competition leads to repeat business but no control over competition. Cutting prices leads to repeat business however leads to lower profits therefore managers work on customer satisfaction as main driver of repeat business. Also on products which you never used based on second hand information. Performance of the brand on the attributes ex on-time, efficient baggage handling, cleanliness of cabin, price. Expectation of customers about attributes sometimes set by advertising. Setting high expectations is a good thing as long as performance can be met. Confirmation bias: the customer has bias to confirm expectations.
