Chapter areas that include before, during and

Chapter2 – Literature Review  2.1 IntroductionThis chapterattempts to review the essential background themes and topics for this study.

It will critically review existing literature surrounding this topic, providingan in depth analysis in relation to project aims and objectives. The sectionwill explore elements of customer service – service improvement practices,customer relationship management and training of staff – followed by anevaluation of consumer buying behaviour which includes components of customersatisfaction and customer loyalty. Finally, a summary of the chapter will begiven, hereafter presenting the hypothesise and a theoretical framework forthis study. 2.

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2 Customer ServiceCustomer servicecan simply be defined as the relations that an organisations employees hold andmaintain with its consumers. It covers a wide range of areas that includebefore, during and after sales service (Kursunluoglu, 2014). Different firmsadopt differing levels of customer service. Whilst some firms place great emphasison their customers to put their wants and needs before anything else, otherorganisations simply look to derive profits by all means. The types and amountsof customer service provided depends on the individual organisation, as well asthe market that they are present in (Batra, 2017).

The attaining of competitivecapabilities is essential in order for firms to contest in any competitivemarket place. Competitive capabilities can be seen as a manufacturer’s actualor realised strength in comparison to its competitors. Firms must deliverspecific requirements needed by customers in an attempt to drive them away fromcompetition. With increasing competition and rise in technology, customerrequirements have evolved to include not only high quality products, but alsoexceptional customer service (Hong et al. 2014).   2.2.

1 Customer Service Improvement PracticesThere are numberof factors that contribute towards efficient customer service. A serviceimprovement practice (SIP) is a method, process or way of doing things toimprove customer service processes through increasing service deliveryperformances. Firms that adopt the greatest number of customer serviceimprovement practices are more likely to persistently raise the quality oftheir customer service (Dickson, 2015). As an illustration, some organisations offerrepair and replacement services, provide various goodwill gestures to customerson a day to day basis (Law, 2016), as well as constantly assembling and analysingcustomer complaints, something which is vital as it directly focuses oncustomer needs and wants (Dickson, 2015). Jebarajakirthy andSivapalan (2017) believe that high service quality provides a source ofcompetitive advantage for organisations. They established that by maintaininghigh service quality, customer intention to repurchase will be enhanced,enabling firms to maintain a long term relationship with their customers. Thisis further reinforced by Prakash and Mohanty (2013) who state that higherlevels of service quality produce increased customer satisfaction and a growthin sales. Although numerous strategies can generate such outcomes, if servicequality is distinctively created, it is difficult to imitate.

This can offer aunique selling point to organisations in comparison to its competitors. Byadopting greater customer SIP’s, firms will enhance their level of quality,hence enabling them to create improved customer value and inevitably increaseloyalty to their organisation.  Whilst efficientcustomer service can be achieved in countless number of ways, service failurescan have detrimental effects on successful and profitable customerrelationships (Cambra-Fierro et al.

2015). When services are unsuccessful inmeeting customer expectations, they are regarded as service failures. This caninstigate customer dissatisfaction, negative word of mouth or customerdefection which can consequently lead to a loss of customers to competitors(Koc et al.

2017). According to Cheung and To (2017), the response of anorganisation to service failures determines whether a strong brand image isbuilt or whether their previous efforts are threatened, hence damaging thereputation of the organisation. This is supported by Andreea (2015), who claimsthat organisations who establish particular recovery strategies after servicefailures can create an extensive advantage. Whilst service failures areconsidered to be unavoidable, the most important factor for organisations istheir customers’ confidence in the firm to put things right, and inevitablyproduce a satisfactory solution. By correctively responding to servicefailures, organisations successfully maintain trust of their customers, henceencouraging customer retention.

 2.2.2 Customer Relationship Management Customerrelationship management (CRM) can be defined as the core organisationalprocesses that focus on establishing, maintaining and enhancing long-termassociations with customers in an attempt to increase customer satisfaction,loyalty and retention (Herhausen and Schögel, 2013). The purpose ofCRM is to build connections with customers in order to understand their wantsand needs. It is increasingly being recognised as a means of developinginnovative abilities and constructing a long-standing competitive advantage(Bhat and Darzi, 2016).  According to Tseng (2016), CRM can beclassified into analytical and behavioural CRM.

Analytical CRM signifies how afirm collects and examines valuable information through communication withtheir customers. The information is developed into modified strategies whichattempt to fulfil and exceed customer wants and needs. Behavioural CRM refersto the integration of a firms’ connection channels with its customers. Thevarious networks such as the stores, customer service and the website for whichcustomer purchase and service records are documented help companies understand theircustomers’ purchase behaviour (Tseng, 2016). CRM is therefore used to recogniseand prioritise the most suitable customers in accordance to numerous scoringprocedures, illustrating clear goals and objectives for the firm.  However, Bhat and Darzi (2016) believe that CRMis a concept made up of four differing components; complaint resolution,customer knowledge, customer empowerment and customer orientation. Complaintresolution is how a firm addresses customer complications, whereas customerknowledge considers how an organisation gathers, manages and shares informationto, from and about customers (Ashnai et al. 2010).

Customer empowerment looksat how a firm gives its customers power/authority to make decisions, with customerorientation referring to a set of beliefs that place the interests of customersfirst. By adopting these four concepts, firms can instil CRM to the highestlevel, inevitably leading to customer loyalty and competitive advantage (Bhatand Darzi, 2016).  2.2.3 Training of staff The importance oftraining has increasingly been recognised as a means of intensifying theorganisations level of customer service. Training can be expressed as acontinuous process of direction, correction and improvement at every level ofperformance. It is a fundamental part of every organisation as it helps to accumulatehuman resources which are crucial assets to a firms’ success (Sharma, 2014). Lee(2012) believes that training improves knowledge, skills and abilities ofemployees, enabling individuals to not only perform better, but also permit themto implement organisational practices to required standards.

Moreover, Currie(2010) states that coordinated communication and training of employees arevital to internal organisational success, as well as the quality of serviceoffered to customers. This is supported by Zumrah (2015), whose studydemonstrated a positive relationship between training and customer serviceofferings.  Nevertheless,there are other factors which are overlooked by these studies that need to beconsidered. For example, an individuals level of competence and interpersonalskills can have a vast influence on quality of service offered. Ro and Mattila(2015) found that discontent customers can be identified by organisationsthrough recruiting individuals with worthy interpersonal skills and authentic friendlinesstraits. Compassionate employees are able to identify customers’ personalcharacteristics and communication styles, hence being able to correctlyevaluate a particular situation and ultimately decide on the appropriate actionneeded to fulfil customer wants and needs.

Furthermore, Punia and Kant (2013) acknowledgedelements that influenced the effectiveness of training, hence shaping the levelof service offered. They stated that lack of support from top management andcolleagues, employees’ individual attitudes, job related factors as well asdeficiencies in training programmes all have an immeasurable affect on trainingeffectiveness. Through regulating these factors, firms can offer successfultraining, hence providing optimal customer service.  2.3 Consumer Buying BehaviourConsumer buyingbehaviour refers to the purchasing behaviours of customers before, during andafter a sale. Consumers are influenced by organisations on distinctive levelsincluding administrative communication, atmosphere within the stores as well asthe qualities of each individual brand (Elg and Hultman, 2016). As we know,every individual holds their own preferences of items they purchase, as well asthe location they purchase it from. Organisations therefore adopt distinctmarketing strategies in an attempt to influence individual buying behaviours ofconsumers, hence attracting them towards their firm.

It is important for firmsto create value to customers to drive their satisfaction, loyalty andprofitability (Kumar and Reinartz, 2016). In doing so, firms can find ways toinfluence buying behaviours of their customers, creating customer loyalty andretention, and ultimately increase the long term success of the business.  2.3.1 Customer SatisfactionCustomersatisfaction can be seen an individual’s perception of the performance of aproduct or service in relation to his or her expectations (Torres and Kline,2013).

It involves meeting the needs at the end of the service. Whilst eachcustomer will have a distinct level of contentment from differing services,satisfaction can simply be seen as an evaluation of how much a firm could meetor exceed customer expectations (Kursunluoglu, 2014). Customer satisfaction isessential for every competing firm as it primary determinant of the level ofsuccess in today’s competitive business world (Marinkovic and Ka1linic, 2017).A satisfied customer is highly likely to share their experiences with familyand friends, encouraging them to buy into a product/service. Likewise, adissatisfied customer could potentially switch brands and possibly disperseinformation about their negative experiences, consequently damaging anorganisations reputation and therefore sales (Evans et al. 2009). Furthermore,a customers repurchase intention is strongly linked with customer satisfaction(Marinkovic and Kalinic, 2017), demonstrating the vast importance of the topicto organisations and marketers.  There is muchresearch surrounding customer satisfaction.

According to Isac and Rusu, 2014, customersatisfaction or dissatisfaction is based upon an individual’s ability to learnfrom past experiences. The theory of expectation disconfirmation explains thatan individual compares their post purchase perceptions to their prior prepurchase expectancies. The resulting gap between expectations and performance resultsin disconfirmation (Van-Ryzin, 2013). For example, when a firms perceivedperformance exceeds customer’s expectations, a positive disconfirmation iscreated, hence leading to customer satisfaction. Moreover, if a firms perceivedperformance doesn’t fulfil customer expectations, a negative disconfirmation canoccur, therefore leading to customer dissatisfaction (Petrovsky et al.

2017). Furtherto this, the theory of assimilation states that consumers attempt to avoiddissonance by adjusting perceptions to a certain product/service in an attemptto bring it closer to their expectations. Customers can reduce uncertaintycaused by the difference in anticipation and performance, by either alteringtheir expectations to match the product’s perceived performance, or byincreasing level of satisfaction through minimising importance ofdisconfirmation (Isac andRusu, 2014).  However, it isargued these theories may have many potential downfalls.

Firstly, bothapproaches make an assumption of a connection between expectation andsatisfaction, but do not specify how expectation disconfirmation can lead tosatisfaction or dissatisfaction. Secondly, the assimilation theory theorises that individuals aremotivated enough to regulate either their expectations or perceptions ofproduct performance. Adjusting for actual product performance can lead topositive relationship between customer expectation and satisfaction, hencepredicting that couldn’t occur unless expectations were negative at the start(Isac and Rusu, 2014).  2.3.2 Customer LoyaltyCustomer loyalty canbe described as an intentional user solution to build a relationship with acompany over a long period of time (Išorait? , 2016). Firmsincreasingly acknowledge the importance of greater loyalty, as it can lead to anumber of benefits such as a reduction in marketing costs, enlarged prospectsfor brand extension, as well as an enhanced market share (Evans et al.

, 2009). Popularorganisations can build customer loyalty to such an extent that their customersengage to a point of sharing the company’s purpose and values, delivering aunique and powerful customer experience (Grewal et al., 2017). It is one of thegreatest intangible assets a firm can have, offering not only vast potential fordifferentiation, but also delivering a source of competitive advantage (Cossío-Silva et al. 2016). According to Evans et al.(2009), loyal customers are a good source for spreading positive word of mouth,as well as illustrating great resistance to competitive offerings.

Customer loyalty is vitally important to organisations. The costs ofdealing with loyal customers are significantly inferior to the costs ofattracting new customers, as loyal customers are more likely to pay forproducts or services to other potential customers (Cossio-Silva et al. 2016). Furthermore,individuals who are loyal to a firm are less sensitive to price changes andalso buy more often and in large quantities from firms, demonstrating the crucialnature of customer loyalty to firms (Alves et al.

2016).  The concept ofcustomer loyalty has much been studied by several researchers. Beck et al.(2015) stated that customer loyalty is made up from two theoretical elements ofattitudes and behaviours. Firstly, attitudinal loyalty is simply a perceptionthat desires a particular entity. Individuals are seen to be informationprocessors who collect information to form attitudes. The collection of robustpositive attitudes through systematic evaluation influence manycustomer-related behaviours.

Even without repeat purchase, the recommendationof suppliers from one customer to the other demonstrates the presence ofattitudinal loyalty (Cossío-Silva et al. 2016). Secondly, behaviouralloyalty involves repeated purchase, which originates from an individuals’ habit(Beck et al. 2015). Loyalty is perceived to be a way of behaving, with’repeated purchase’ being a loyalty indicator. Behavioural loyalty isfundamental, whereas attitudinal loyalty is considered a cognitive perception.Research indicates a positive relationship between behavioural and attitudinalloyalty (Cossío-Silva et al. 2016).

 However, Fraering and Minor (2013) indicated afour stage process needed to form customer loyalty which were formed bycognitive, affective, conative and action loyalty. The initial stage iscognitive loyalty which is derived from an individual’s knowledge from previousor recent experiences, followed by affective loyalty which refers to anemotional connection being shaped between the customer and the product (Ordun,2016). The third stage is conative loyalty, where repurchase becomes abehavioural intention such as impulse buying, followed lastly by action loyaltywhere customers not only have the intention to buy, but also the motivation torepurchase. The commitment of action loyal customers is thought to beunchangeable, regardless of any competitor movements (Fraering and Minor, 2013).

This four stage process is further supported by Han et al. 2011, who attemptedto test earlier work based on loyalty. Their results illustrated a strongconnection between the four stages, and discovered that the theoreticalframework had a convincing capacity for predicting the last stage of loyalty.  Whilst customerloyalty brings about rewards to firms, it also provides benefits to customers. Switchingcosts are seen as the one time costs that customers associate with the processof switching from one provider to the other. When individuals switch away from anentity, they are faced with several different switching costs (Chebat andHaj-Salem, 2014). By sticking to one provider, individuals won’t have tocompensate for these costs.

Furthermore, most organisations offer loyaltyreward programmes and loyalty cards. Not only does this derive profits fororganisations, but it also allows individuals to rack up loyalty points andsave money when purchasing items from the same firm (Meyer-Waarden, 2015).   2.

4 Purchase IntentionFor this study,customer service is considered to be effective if it has a positive influenceon consumer buying behaviour. Purchase intention refers to an individuals’conscious plan to buy a product/service. It stimulates and drives consumerbuying behaviours (Haque et al.

2015). According to Hassan et al. 2015, theAIDA (Attention, Interest, Desire, Action) model is a marketing model thatfocuses on transactions and purchases performed by individuals. By offeringexceptional service, firms can encourage consumers to go through these stages,hence creating a willingness to buy from that particular brand. The attentionstage involves gaining the awareness of customers, followed by the intereststage where they become attracted to the product/service. FINISH Pornpitakpan et al.

2017, believethat the extent of customer service offered can vastly influence consumersbuying behaviour. The level of interaction between customers and serviceemployees are seen to be essential, as that plays a large part in consumers’assessment of the overall quality provided. Kursunluoglu (2014) found that thelevel of customer service provided has an impact on customer satisfaction andcustomer loyalty. (FINISHTHIS)  2.5 Chapter SummaryThis chapter outlinedessential literature surrounding customer service and consumer buying behaviourby identifying key elements of service improvement practices, customerrelationship management, training of staff, customer satisfaction and customerloyalty. Hereafter, literature based upon purchase intention of customers wasdiscussed, determining how customer service can influence individual buyingbehaviours.

However, the body of literature provided above highlighted a fewkey research gaps that need to be filled. Firstly, although currentresearch states that high service quality influences customer satisfaction andloyalty, there is no considerable empirical evidence to suggest a similarpattern in UK supermarkets.The secondresearch gap involves service failures. Whilst research declares that servicingfailures can have detrimental affects to organisations, and that the responseof firms to these failures are vital, there isn’t much indication ofindividuals’ true perceptions to organisational responses, and what they trulypursue in those particular situations.Finally, despitestudies showing that relationships with employees are essential fororganisations, and that fully trained and competent staff can lead to bettercustomer service, there is no true evidence to suggest these matters, henceremaining vastly controversial.

Therefore, to understand thevariables determining customer service and how that impacts consumer buyingbehaviour, the following hypothesise have been developed:

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