Lecture 6: Loyalty & Recovery

Question 1

What are the key determinants of gap 1 (not knowing what customers expect)

Answer 1

• Lack of market segmentation
• Focus on transactions rather than relationships
• Focus on new customers rather than existing customers

Question 2

What are motivations of organizations to apply relationship management?

Answer 2

• Longer relations spend more
• Longer relations cost less: Fixed + Variable
• Longer relations become ambassadors (WOM)
• Longer cust rel = longer employee rel
• Longer relations effect price sensitivity
• Increase in value of shares

Question 3

What are motivations of customers to apply relationship management?

Answer 3

• Higher quality / “gets”
• Lower purchase costs
• Lower search costs
• Lower psychological costs

Question 4

What is loyalty according to (Oliver, 1996)

Answer 4

Deeply held commitment to re-buy preferred service consistently in the future, despite situational influences and marketing efforts having the potential to cause switching behavior

Question 5

What are 3 forms of loyalty?

Answer 5

• Cognitive
• Affective
• Conative

Question 6

What does the effect of incomplete satisfaction on loyalty depend on?

Answer 6

1. Value of Alternatives
2. Switch Costs

Question 7

What are different levels of loyalty management strategies

Answer 7

Level 1: Financial Bonds
Level 2: Financial Bonds, Social Bonds
LEvel 3: Financial, SOcial, Structural Bonds