Anthony J. Zahorik

Customer satisfaction, customer retention, and market share

Abstract We provide a mathematical framework for assessing the value of customer satisfaction. The framework enables managers to determine which customer satisfaction elements have the greatest impact, and how much money should be spent to improve particular customer satisfaction elements. This makes it possible to hold customer satisfaction programs accountable, in the way that other business programs are held accountable, by forcing them to demonstrate their benefits with respect to bottom-line profitability. We use an individual-level model of loyalty and retention, and then build up to market share by aggregation. We demonstrate the application of our approach in a pilot study of a citys retail banking market.

Why Improving Quality Doesn't Improve Quality (Or Whatever Happened to Marketing?)

Too often, quality programs fail to improve quality because they concentrate on internal processes which do not affect the customer. This is at least partially due to the alienation of marketing from the quality movement, a situation for which both sides are partially at fault. Ideally, marketing should serve as the eyes and ears of the organization, linking the external customer to managerial processes. One way to do this is to organize the collection of customer satisfaction measures around the managerial processes themselves. This forms a natural bridge from the customer to management and allows management to track the impact of quality improvements all the way from internal process measures to overall customer satisfaction and market share.

A nonhierarchical brand switching model for inferring market structure

Abstract An aggregate model of market structure based on brand switching data is presented which depicts the market as a set of overlapping clusters of substitutable brands. It generalizes earlier models based on latent class analysis by accounting for heterogeneity among consumers and by allowing for brand switching across clusters—a way of depicting variety seeking. A behavioral rationale for these aggregate models is demonstrated by deriving the aggregate model from an individual level of brand switching. An application to the ground caffeinated coffee market is given.

Determining the Return on Quality (ROQ)

Beginning in the late 1960s, U.S. manufacturers found themselves in intense global competition, particularly with Japanese firms. The effects were brutal. U.S. firms found that the quality of their products was woefully deficient relative to their Japanese competitors.