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.
Because satisfaction is basically a psychological state, care should be taken in the effort of quantitative measurement, although a large quantity of research in this area has recently been developed. Work done by Berry, Brodeur between 1990 and 1998(1) defined ten ‘Quality Values’ which influence satisfaction behavior, further expanded by Berry in 2002 and known as the ten domains of satisfaction. These ten domains of satisfaction include: Quality, Value, Timeliness, Efficiency, Ease of Access, Environment, Inter-departmental Teamwork, Front line Service Behaviors, Commitment to the Customer and Innovation. These factors are emphasized for continuous improvement and organizational change measurement and are most often utilized to develop the architecture for satisfaction measurement as an integrated model. Work done by Parasuraman, Zeithaml and Berry 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. According to Garbrand, customer satisfaction equals perception of performance divided by expectation of performance.
The usual measures of customer satisfaction involve a survey (2) with a set of statements using a Likert Technique or scale. The customer is asked to evaluate each statement and in term of their perception and expectation of the performance of the organisation being measured.
To efficiently deal with customer satisfaction, coordination of all departments of a company, from the marketing to the human resources, operations and financial departments is not only critical, but they should also be involved in the process.
The aim of this report is to reflect on the customer satisfaction in all the processes and operations at the NIKE, Inc. The focus will be on the numerous systems and activities set up by the company to meet overall customer satisfaction. However, it would be of great relevance to firstly investigate who is a customer in general and what is the nature of customer service. A literature review on customer satisfaction and an assessment of the business environment will then follow. Secondly, an analysis of customer satisfaction through the various processes and systems established at the NIKE, Inc. will be undertaken. In a third chapter, an evaluation of customer satisfaction at the BMW Group in relation to the theories will be carried out. Finally, a conclusion and recommendations will follow.
NIKE, pronounced NI-KEY, is the winged goddess of victory according to Greek mythology. She sat at the side of Zeus, the ruler of the Olympic pantheon, in Olympus. A mystical presence, symbolizing victorious encounters, NIKE presided over history’s earliest battlefields. A Greek would say, “When we go to battle and win, we say it is NIKE.” Synonymous with honored conquest, NIKE is the twentieth century footwear that lifts the world’s greatest athletes to new levels of mastery and achievement. The NIKE ‘swoosh’ embodies the spirit of the winged goddess who inspired the most courageous and chivalrous warriors at the dawn of civilization. (from Nike Consumer Affairs packet, 1996)
The SWOOSH logo is a graphic design created by Caroline Davidson in 1971. It represents the wing of the Greek Goddess NIKE. Caroline Davidson was a student at Portland State University in advertising. She met Phil Knight while he was teaching accounting classes and she started doing some freelance work for his company. Phil Knight asked Caroline to design a logo that could be placed on the side of a shoe. She handed him the SWOOSH, he handed her $35.00. In spring of 1972, the first shoe with the NIKE SWOOSH was introduced. (from Nike Consumer Affairs packet, 1996)
Nike was founded in the year of 1968 by Philip H. Knight, who is currently the Owner, Chairman, and CEO of the company. Phil Knight completed his education from the University of Oregon and the Stanford Business School by 1962, (Moore, 128). As an aspiring young business man, he decided to travel to Japan and speak to the president of “Tiger shoes.” He presented himself as an American distributor of athletic equipment when he actually had nothing. He was pretty sneaky, however, he got what he wanted and began selling running shoes under the name of Blue Ribbon Sports (BRS). Once he became bored with selling shoes at sporting events from the back of his truck, he began producing his own athletic apparel, (nike/history.htm). He renamed his so-called company Nike and hoped for the best to happen. Within the first year, he sold $8000.00 worth of shoes and only received a $250.00 profit, (nike/history.htm). After some time, Knight turned to his old coach from school, Bill Bowerman, for advice on what to do next. Phil Knight wanted Nike to stand out above the rest. Once Bill Bowerman came up with the idea for having traction on the bottom of shoes, Nike had finally made its mark, (nike/history.htm). The Nike Waffle Trainer stood out and made Nike the most unique shoe company of the 1970s. By the year of 1979, Nike was the most well-known shoe company in the world. They no longer just sold shoes but sporting equipment as well. However, the joy of being on top came crashing down when Reebok surpassed Nike with the aerobic phase in athletics. In order to maintain the reputation of Nike, the worlds best shoe corporation, Nike struck back by diversifying their shoes for different kinds of sports activities. Nike continued to rise in success throughout its prosperity by signing famous sports players ( ex. Michael Jordan) and using intelligent advertising tactics, (nike/history.htm). Today, Nike is a four billion dollar business that has had its ups and downs. As of now, Nike is having difficulties with the publicity it is receiving about its labor practices in China, South Korea, Indonesia, and Vietnam.
Chapter 1: Theoretical aspects of customer satisfaction
1. The concept of customer in general
A customer refers to individuals or households that purchase goods and services generated within the economy. The word historically derives from “custom,” meaning “habit”; a customer was someone who frequented a particular shop, who made it a habit to purchase goods there, and with whom the shopkeeper had to maintain a relationship to keep his or her “custom,” meaning expected purchases in the future.
Customer needs may be defined as the goods or services a customer requires to achieve specific goals. Different needs are of varying importance to the customer. Customer expectations are influenced by cultural values, advertising, marketing, and other communications, both with the supplier and with other sources.
Both customer needs and expectations may be determined through interviews, surveys, conversations, data mining or other methods of collecting information. Customers at times do not have a clear understanding of their needs. Assisting in determining needs can be a valuable service to the customer. In the process, expectations may be set or adjusted to correspond to known product capabilities or service.
1.1 Customer Service
Customers are the essential to the business. Basically, the business makes profit from the product sales, so it depends how many customers purchase the company’s products. Recently, most of firms are not only to focus their product’s decoration and price, but also pay attention to the those customer whom buy the products. For instance: listen with understanding, ask questions, apologize, take fair and corrective action and remain courteous to the customers.The profit of a business increase markedly the more loyal, long-standing customers it has. Therefore, it is crucial to provide an excellent service to attract and keep the customer.
To begin with, a customer who is a person or business buying goods or services from another. And the customer service is helping and supporting the customer before, during and after they purchase the product. Normally, the customers can be broken into to two types categories: external and internal. External customers are who buy goods or services that are not employed by or combined with the business selling the goods or providing the service. Internal customers which means the people within an organization to whom work is passed or to whim a service provided. The four basic aims for the customers are, what they want, when they want, where there want it and what price they willing to pay.
Nowadays, the customers service is quite important to a firm, because of the following reasons. First one is to make the business profitable; of course, it is most important principle to a firm. The second reason, it is differentiation with other competitors. In a market, may be have many of firms produce the products almost the same style, same quality and same price. Hence, the customers might depends the which firms can be provided good service, and this can be helped them to make a decision to buy which brand of product. Beside that above two reasons, if the company provides the excellent services to the customer, who will come back. This is the key for a firm to live longer in a competition market. How many customers will do “repeat business” with company according to how better services they can obtain. Lastly, as the similar reason with second one, which is increasing competition in the market. Especially, currently most of Mutil-company joining into the domestic economic, therefore, the firms really needs to keep their good customer service that not going to be eliminated by the market.
Customer services are so crucial to any company, hence, there have some ways that to provide an excellent customer service. First of all, responding any questions from customers. Whatever from the customer calls, E-mail and letters. Customers have higher requirement of response time. If the customer will not be answered quickly, they may think that they are not important and have been ignored; and start to move to other company. One example, like UGR company, we have three groups each week and many sales people to do the same job, which is responding the customers E-mails or letters. However, due to the improper manage, lots of letters and E-mails response to one customer too many times, in contrast, other customers have been ignored. As a result, the company will lose the business with those customers.
Secondly, understanding the customer’s need, such as satisfy customers’ emotional satisfaction. There are 4 main points that the enterprise should achieve to satisfy customers emotional needs. Fist one is making the customers feel to be understood. This depends on the communication between the company and clients, like a good listener, it lets the customer feel nothing is hindering between their and the company. The second one is to feel welcome. They like to feel that you are happy to see them and that they are important to you. Welcome delivery the image about that the company is happy to see them to the customer. Then the customers need to feel to be important. Ensuring that every customer feels that they are attached importance. To feel important can increase the goods that are consumed by every customer, because they feel the company respects them. Finally, the company should supply a comfort environment to the customer, such as good decoration, a nice music, some soft seats to sit and cup of drinks. All of these images not only make the customers have a happy mood, but also give them a feeling of that the company can take care them properly.
To be a great people is other point. For example, speak to people, smile, be friendly and helpful, call people by name, enjoy yourself, be genuine ,be considerate, be thoughtful, be willing and be generous. Sometimes, I do not want to buy something from shop, however, the staffs make me feel they are polite and have a beautiful smile. Therefore, I change my mind to buy something.
The other point is listening and communication with your workers. A good leader who is always concerns their employees’ thinking. Workers to understand that their own well-being is affected by providing good customer service. For example, I had a part-time job before, which is selling the earrings and necklaces. In the first few weeks, my boss just told me try to sell them as much as you can, but she did not taught me how to do. Later, I told her I do not how to describe the feature about each style and she taught me how to say, at the end, I sold many products. Hence, the communication is quite important between the boss and work.
Lastly, the enterprise attempts to reducing high product in order to reduce the loss in the business. The enterprise needs concern the household in the whole economy. Most of people cannot afford the high price. Therefore, for the firms might be lost some customers that affect the profit into the business. For instance, if I am going to buy a laptop, the first thing I see the price then its function. I think not too many people can afford high price whether it has high-tech. So, the company might be lost that kind of customer who really cares about the price.
In conclusion, the keys of keep a high customer loyalty is to provide the service that could satisfy the customers’ wants, needs and use proper attitude. However, it is the most important to understand that to deliver the excellent service makes more profit to the business.
1.2. SWOT and PEST analyses of the business environment
1.2.1. SWOT Analysis
SWOT analysis summarizes the key issues from an analysis of the business environment and the strategic capability of an organization. The main objectives of conducting SWOT analysis is to identify the extent to which the current strategy of an organization and its more specific strength and weaknesses are relevant to, and capable of, dealing with the changes taking place in the business environment. It also uses to assess whether there are opportunities to exploit further the unique resources or core competence of organization. SWOT stands for strengths, weaknesses, opportunities and threats.
Strengths are internal characteristic that has the potential of improving the organization’s competitive situation. Every organization has some strength.
A strength could be:
* A new product or service
* New machinery or equipment.
* Strong market share.
* Strong financial.
* Specialist Hardware and Software expertise.
Weaknesses are an internal characteristics that leaves the organization potentially vulnerable to strategic moves by competitors. Every organization also has some weakness.
A weakness could be:
* Poor reputation.
* Lack of marketing strategies.
* Location of the business in respect of the market-place.
* Poor after-sales service record.
Opportunities are an environment situation that offers significant prospects for improving an organization’s situation relative to competitors. All organizations have some opportunities that they can gain from. These could range from diversification to sale of operations.
An opportunity could be:
* A new or developing market.
* Possibility of purchasing an effective competitor.
* Government grants offered for new market development.
The possibility of cheaper raw materials.
Threats are an environment situation that offers significant prospects for undermining an organization’s competitive situation. No organization is exceptional to threats. These could be internal, such as falling productivity. Or they could be external, such as lower priced international competition.
A threat could be:
* Competitors developing new products or services.
* Extra competitors in the main market area.
* High bargaining power of suppliers.
* Taxation is introduced on the products or services
1.2.2. PEST Analysis
A PEST analysis, as defined by David Lines et al is ‘Political, Economical, Social and Technological analysis, a means of analysing the external factors that may present opportunities or threats to a business.'(David Lines et al, 2004:p212 ). It is also known as PESTEL analysis when Environmental and Legal factors are included.
It is used to identify external factors which may affect a company. (http://www.marketing-intelligence.co.uk/help/Q&A/question24.htm)
The political factors PEST looks at include government stability, taxation policy, foreign trade regulations and social welfare policies. Foreign trade regulations in particular are important for an organisation planning on opening up in a different country or trading with a different country as their laws may differ from those the organisation already employs.
Economical factors include business cycles, interest rates, money supply, inflation, unemployment and disposable income. An organisation planning on breaking into a new market would be well advised to look at the economical factors that may affect their proposed business plans, such as market trends and consumer patterns.
Sociocultural factors, such as population demographics, social mobility, lifestyle changes, consumerism and levels of education, should also be monitored closely, and example being the tobacco industry. With people becoming more health conscious and with social pressures on smokers growing in western countries the sales of tobacco have been adversely affected in this market. Anti smoking campaigns, restrictions on advertising and packaging and the banning of smoking in most public places, as well as heavy taxes and court cases, have led tobacco companies to concentrate their marketing efforts mainly on the developing world.(Gerry Johnson and Kevan Scholes, 2002)
Technological factors include new discoveries, speed of technological transfer, government spending on research and rates of obsolescence. These are important factors to watch, especially for people in the hi-technology industry which changes constantly. For example in the mobile phones industry new models with bigger memory, new extras and applications and other technological advances have replaced the original ‘mobile’. A mobile phone is no longer just a mobile phone but a computer, diary, calendar, and in some cases office. With new models coming out almost every month it is important the mobile phone companies keep up with current trends to ensure their mobiles do not become obsolete.
1.3. Service/ Product quality
In its broadest sense, quality is a degree of excellence: the extent to which something is fit for its purpose. In the narrow sense, product or service quality is defined as conformance with requirement, freedom from defects or contamination, or simply a degree of customer satisfaction. In quality management, quality is defined as the totality of characteristics of a product or service that bears on its ability to satisfy stated and implied needs. Quality is also rapidly embracing the nature or degree of impact an organisation has on its stakeholders, environment and society.
Specifications are an imprecise means of conveying subjective aspects – not everything can be reduced to figures or measurable characteristics. For instance, the characteristics of friendliness or courtesy in a service industry are difficult to measure reliably and repeatedly. Therefore, conformance to requirements is not necessarily all there is to achieving quality.
Quality is a result
Quality is the result of a comparison between what was required and what was provided. It is judged not by the producer but by the receiver. The judgement can be made of an intention, as is the case when selecting suppliers, or an output, as is the case when purchasing a product or service.
The only true measure of acceptable quality is customer satisfaction, which takes into account both objective and subjective interpretations of the needs and expectations of customers. If customers are satisfied with the products and services offered, the organisation has not only correctly interpreted customer needs and expectations but it is also providing products and services of acceptable quality.
Changing customer perceptions
Customer needs and expectations are constantly changing. Awareness of new technology, legislation, problems, competitor products or services creates new wants for customers. Wants turn into demands when these customers begin their next purchase. Therefore, it is vital for organisations to constantly improve quality so that satisfied customers are retained as well as created.
Quality and value
Value is not a price tag but a measure of the benefits derived from a product or service for what is given in return. A product may well meet physical and functional requirements but be overpriced when compared to others of the same class and grade. Alternatively, the same product may be on offer at another store for 50 per cent less, indicating exceedingly good value for money.
In an effort to reduce costs, some organisations have forgotten that it is the quality of the complete transaction that counts. Getting product quality right while ignoring the human relationship between customer and supplier will not lead to satisfied customers.
What quality is not?
Quality is not perfection, a standard, a procedure, a measure or an adjective. No amount of inspection changes the quality of a product or service. Quality does not exist in isolation – there has to be an entity, the quality of which is being discussed. Quality is not a specific characteristic of an entity but the extent to which that characteristic meets certain needs. The value of the characteristic is unimportant – it is how its value compares with customer needs that signifies its quality.
Why should an organisation be interested in quality?
Every business exists not to make a profit, as many would have us believe, but to create and retain satisfied customers. A business would have no profits if it failed to create and retain satisfied customers. Providing products and services which meet customer needs and expectations creates satisfied customers. Anticipating future needs and expectations retains satisfied customers. Therefore, quality is vital to the survival of every enterprise.
What does quality apply to?
Every product, service, process, task, action, decision can either be acceptable or unacceptable. Hence, there is an intrinsic quality in everything that an organisation does. Everyone must pay attention to quality, from the chief executive to the shopfloor across all functions in an enterprise. It is as important for support staff to pay attention to quality as production staff.
Who is responsible for quality?
One can only be responsible for doing something relative to quality. Hence a person can be responsible for:
- specifying quality requirements
- achieving quality requirements
- determining the quality of something
Assigning responsibility means giving a person the right to cause things to happen and with this right should be delegated the authority to control the processes which deliver the output the quality of which the person is responsible for.
One manager cannot be made responsible for quality within an organisation unless that manager is the CEO. All a specialist manager such as a Quality Manager can do it is to enable others to achieve quality by providing encouragement, leadership, training, tools, techniques and performance data. However, it is important for someone in the business to give leadership and results on quality performance and this person needs special knowledge and skills.
How can quality be achieved?
Several methods have evolved to achieve, sustain and improve quality. They are known as quality control, quality improvement and quality assurance – collectively known as quality management. Quality management is not the preserve of one manager but of all managers. Quality is achieved through a chain of processes, each of which has to be under control and subject to continual improvement. The chain starts with top management expressing a firm commitment to quality, then:
- establishing customer needs and expectations
- developing and maintaining a management system that will enable achievement of customer needs and expectations – reliably, repeatedly and economically
- designing products and services with features which reflect customer needs
- building products and services so as to reproduce faithfully the design
- verifying before delivery that products and services possess the features required
- preventing the supply of products and services which possess features which dissatisfy customers
- discovering and eliminating undesirable features in products and services
- finding less expensive solutions to customer needs
- making operations more efficient and effective
- discovering what will delight customers and providing it
- most importantly, honouring commitments
A variety of standards, philosophies, methodologies, tools, techniques and measures have been developed to help organisations meet these goals:
- management systems – ISO 9000, ISO 14000, BS 8800, BS 7799
- philosophies – total quality management
- methodologies – business process management, continual improvement
- tools and techniques – process charts, failure mode and effects analysis, statistical process control, quality function deployment
- measures – quality awards, best value, ISO 9000 and Investors in People
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3. Literature review on customer satisfaction
3.1. What is customer satisfaction?
Customer satisfaction is the provision of goods or services which fulfil the customer’s expectations in terms of quality and service, in relation to price paid. Customer satisfaction can help the businesses achieve a sustainable competitive advantage. It is about understanding the way a customer feels after purchasing a product or service and, in particular, whether or not that product or service met the customer’s expectations.
Customers primarily form their expectations through past purchasing experiences, word-of-mouth from family, friends and colleagues and information delivered through marketing activities, such as advertising or public relations. If the customer’s expectation is not met, they will be dissatisfied and it is very likely they will tell others about their experience.
Why customer satisfaction is important?
The organisations should not underestimate the value of customer satisfaction. It is becoming an important area of competition.
A high level of satisfaction can deliver many benefits, including:
-Loyalty: a highly satisfied customer is a loyal customer.
-Repeat purchase: a highly satisfied customer buys more products.
-Referrals: a highly satisfied customer tells their family and friends about the product or service.
-Retention: a highly satisfied customer is less likely to switch brands.
-Reduced costs: a highly satisfied customer costs less to serve than a new customer.
-Premium prices: a highly satisfied customer is willing to pay more for the product or service.
‘Not happy Jan’
Monitoring customer satisfaction is important because we are much more likely to tell our friends and family about a bad experience with a product or service than a good experience. The introduction of blogs and websites such as www.notgoodenough.com.au has provided customers with an excellent platform to spread the bad word about a product or service to thousands of people. And there’s always the threat of negative publicity generated from current affairs programs or other media outlets. Don’t learn the lesson about customer satisfaction the hard way!
Customer satisfaction research
Satisfaction surveys are an important method for collecting information about how the customers think and feel about the organisations’ brand, product or service.
A satisfaction survey can help the organisations to understand the expectations of their customers, determine whether the customers believe they are meeting those expectations, identify new customer requirements or trends in the market and determine what areas of the organisations’ business need investment.
A good customer satisfaction survey will also help the organisations to understand the causes of dissatisfaction among their customers. Once the organisations have identified these issues, they will be able to implement new practices to improve customer satisfaction.
Many businesses systematically measure customer satisfaction through independent surveys, feedback forms, mystery shopping and focus groups. Some third party surveys also compare the customer satisfaction of major competitors, which allows companies to benchmark themselves in their relevant sector.
Measuring customer satisfaction doesn’t have to be expensive. It can be as simple as preparing a short feedback form or conducting a brief telephone interview that asks the customer to rate the product or service on a number of criteria.
Indicators of customer satisfaction
An important indicator of customer satisfaction is the customer retention rate. To calculate the customer retention rate, the organisations will need to capture data about the total number of customers and the number of customers switching brands. If they track this information over time, they will be able to see whether they are improving their customer retention and satisfaction.
Another tool that has been introduced in Australia is the Net Promoter Scores, which provide a new metric for measuring customer loyalty. The Net Promoter Scores ask one simple question about whether a customer would recommend a product or service to a friend or colleague. This question has been identified as the ultimate determinant of customer satisfaction or loyalty. Research in the UK and the US has found a clear correlation between the Net Promoter Scores and revenue growth, illustrating the importance of customer satisfaction to future growth potential.
Satisfaction affects the bottom line
Where there is high customer satisfaction, the customer retention rate will also be high and business results will follow. The organisations should gain an edge on their competition by focussing on what really matters.
2. Analysis of customer satisfaction at the NIKE, Inc.
In this chapter, the analysis will specifically be on customer satisfaction at the NIKE, Inc. Particular attention will be drawn to processes and systems established by the company to meet their customers’ expectations. These will then be assessed and evaluated in relation to the theories presented in the previous chapter. This task will be performed in the third and final chapter.
2.1. How does the NIKE, Inc. establish customer requirements?
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