Insights

Following are a collection of research articles produced by Collaborative for CUBES contributors, as well as suggested further reading.

The Fall and Rise of Strategic Planning
Henry Mintzberg

When strategic planning arrived on the scene in the mid-1960s, corporate leaders embraced it as “the one best way” to devise and implement strategies that would enhance the competitiveness of each business unit. True to the scientific management pioneered by Frederick Taylor, this one best way involved separating thinking from doing and creating a new function staffed by specialists: strategic planners. Planning systems were expected to produce the best strategies as well as step-by-step instructions for carrying out those strategies so that the doers, the managers of businesses, could not get them wrong. As we now know, planning has not exactly worked out that way.

 

Mintzberg, Henry. "The fall and rise of strategic planning." Harvard business review 72, no. 1 (1994): 107-114.

Customer Satisfaction, Loyalty Behaviors, and Firm-Financial Performance: What 30 Years of Research Tells Us
Carly Frennea and Vikas Mittal

The authors synthesize research on the relationship between customer satisfaction (CS) and customer- and firm-level outcomes in a meta-analytic framework. Overall, the results point to positive associations between CS and customer behaviors, financial performance, and shareholder value. However, the magnitude of the relationship between CS and firm-level outcomes is smaller than that between CS and customer-level outcomes. Moderator analysis shows substantial variability in the effect sizes reported across customer-level studies, which can be partially attributed to contextual factors and measurement characteristics. The authors conclude with a discussion of the theoretical and managerial implications of these effects and propose future research directions. Although strength of the association with CS differs across customer behaviors, research has rarely examined multiple customer outcomes simultaneously. In addition, there is an opportunity to specify mechanisms that drive the differences in effect sizes across contexts. Finally, the results reveal that the still-emerging literature on the impact of CS on financial performance would benefit from a systematic investigation of moderators and the means through which CS affects firm performance.

 

Frennea, Carly and Mittal, Vikas, Customer Satisfaction, Loyalty Behaviors, and Firm-Financial Performance: What 30 Years of Research Tells Us (July 2, 2017).

 

Buy American: A User's Guide for Measuring Customer Motivations
Vikas Mittal

Rather than a fad, buying American is a consistent and persistent motivation for many consumers. But which consumers are more likely to buy American and why? How can companies better cater to this need among their current and potential customers? This note reviews how companies can proactively respond to consumers’ buy-American motivations and increase customer satisfaction, loyalty behaviors, and financial outcomes. Four distinct motivations drive people to buy American: country branding, country animosity, consumer ethnocentrism, and local identity. This note identifies specific scales that can be administered via a survey for implementing a buy-American branding strategy based on these four motivations. Specific examples illustrate how companies use these four pillars to support their buy-American branding strategy.

How United Airlines Can Change Course, According To The Latest Research
Vikas Mittal

“As board members, we only meet infrequently and are not engaged with the front line,” confessed United Airlines CEO Oscar Munoz last year during the annual meeting in June. But this spring, when footage of passenger Dr. David Dao being dragged off a United plane swept the internet, it became clear the airline’s leadership needed to engage far better in situations with unhappy passengers. What, exactly, should United Airlines do? Recent research can help school the airline on how to improve.

Measuring customer satisfaction: Fact and artifact
Robert A. Peterson and William R. Wilson

Self-reports of customer satisfaction invariably possess distributions that are negatively skewed and exhibit a positivity bias. Examination of the customer satisfaction literature and empirical investigations reveal that measurements of customer satisfaction exhibit tendencies of confounding and methodological contamination and appear to reflect numerous artifacts. Implications and suggestions for research and practice are discussed.

 

Peterson, Robert A., and William R. Wilson (1992). "Measuring customer satisfaction: fact and artifact." Journal of the Academy of Marketing Science 20 (1), 61.

Attribute-level performance, satisfaction, and behavioral intentions over time: a consumption-system approach
Vikas Mittal, Pankaj Kumar and Michael Tsiros

Instead of offering products or services alone, increasingly, firms and their partners are offering consumption systems. Consumption systems are offerings characterized by a significant product and service subsystem, as well as a pattern of consumption in which consumption occurs in multiple episodes over time. The authors develop a theoretical model for conceptualizing satisfaction with consumption systems and empirically test it using longitudinal data from 5206 automobile owners. Results show that an intertemporal examination of attribute-level performance, satisfaction, and behavioral intentions can improve an understanding of their relationships because these relationships change as the consumption of the product unfolds. For example, on the basis of their salience, attribute weights in determining satisfaction shift over time. Furthermore, the crossover effect of product and service satisfaction in determining intentions toward the manufacturer and the service provider is asymmetric, and this asymmetry reverses over time. Service satisfaction initially has a much larger impact in determining intentions toward the manufacturer, but later, product satisfaction is more influential in generating intentions toward the service provider and manufacturer. The results show that there is no direct link between satisfaction and behavioral intentions. Rather, satisfaction affects behavioral intentions in the future through a dual-mediation route.

 

Vikas Mittal, Pankaj Kumar, and Michael Tsiros (1999). "Attribute-level performance, satisfaction, and behavioral intentions over time: a consumption-system approach." The Journal of Marketing, April (1), 88-101.

The relationships of customer satisfaction, customer loyalty, and profitability: an empirical study
Roger Hallowell

Presents the findings of a study performed on data from a large bank’s retail?banking operations. Illustrates the relationship of customer satisfaction to customer loyalty, and customer loyalty to profitability, using multiple measures of satisfaction, loyalty, and profitability. An estimate of the effects of increased customer satisfaction on profitability (assuming hypothesized causality) suggests that attainable increases in satisfaction could dramatically improve profitability.

 

Hallowell, R. (1996). The relationships of customer satisfaction, customer loyalty, and profitability: an empirical study. International Journal of Service Industry Management, 7(4), pp.27-42.

A National customer satisfaction barometer: the Swedish experience
C. Fornell

This study explored how Product-related attributes of customers financial performance. Despite ongoing debate regarding the specific dimensions of the customer relationship orientation construct, the link with organizational performance is almost universally recognized. The findings suggest that financial service managers could consider treating consumers as partners in their provision of existing services or their quest to develop successful new services. Reciprocal behavior will foster a positive atmosphere, remove barriers arising from risk, and enable relationships to progress, ultimately improving financial performance. Marketing research has shown that firms are more successful when they focus on their customers’ needs. Although some empirical studies have investigated the relationship between Product-related attributes of customers and financial performance, they have failed to show the mechanism by which Product-related attributes of customers promotes financial performance.

 

Fornell, C. (1992), ‘‘National customer satisfaction barometer: the Swedish experience’’, Journal of Marketing, Vol. 56 (January), pp. 6-21.

Four Fatal Flaws of Strategic Planning
Edward A. Barrows Jr.

Strategy execution is drawing a lot of attention these days, but that in no way means companies have abandoned their time-tested strategic planning processes. In fact, as far as management tools are concerned, strategic planning is as popular as ever, with 88% of large organizations engaging in some form of formal strategic planning, according to Bain & Company’s global 2007 Management Tools and Trends survey. This number may still be on the rise as economic conditions force companies to search for new ways to jump-start business growth.

 

Barrows, Edward. "Four fatal flaws of strategic planning." Harvard Management Update 14, no. 4 (2009): 1-5.

Satisfaction: A Behavioral Perspective on the Consumer
Richard L. Oliver

Designed for advanced MBA and doctoral courses in Consumer Behavior and Customer Satisfaction, this is the definitive text on the meaning, causes, and consequences of customer satisfaction. It covers every psychological aspect of satisfaction formation, and the contents are applicable to all consumables - product or service. Author Richard L. Oliver traces the history of consumer satisfaction from its earliest roots, and brings together the very latest thinking on the consequences of satisfying (or not satisfying) a firm's customers. He describes today's best practices in business, and broadens the determinants of satisfaction to include needs, quality, fairness, and regret ('what might have been'). The book culminates in Oliver's detailed model of consumption processing and his satisfaction measurement scale. The text concludes with a section on the long-term effects of satisfaction, and why an understanding of satisfaction psychology is vitally important to top management.

Customer Satisfaction and Word of Mouth
Eugene W. Anderson

Do dissatisfied customers engage in more or less word of mouth than satisfied customers? There is theoretical and empirical support for both possibilities. To better understand this issue, the authors developed a utility-based model of the relationship between customer satisfaction and word of mouth. The hypothesized functional form-an asymmetric U-shape-cannot be rejected based on data from the United States and Sweden. In addition, the estimation results based on the two samples are similar, suggesting that the proposed relationship is generalizable. The findings also indicate that although dissatisfied customers do engage in greater word of mouth than satisfied ones, common suppositions concerning the size of this difference appear to be exaggerated.


Customer Satisfaction and Price Tolerance
Eugene W. Anderson

This study investigates the association between customer satisfaction and willingness-to-pay or price tolerance. The goal is not only to determine whether the association between customer satisfaction and price tolerance is positive or negative but also to gauge the degree of association. The Swedish Customer Satisfaction Barometer provides the data. The empirical analysis indicates a negative association between the level of customer satisfaction provided by the firm and the degree of price tolerance exhibited by its customers. However, a positive association is found between year-to-year changes in the levels of customer satisfaction and price tolerance.

 
 
Relating Online, Regional, and National Advertising to Firm Value
Shrihari Sridhar, Frank Germann, Charles Kang and Rajdeep Grewal

Firms spend billions of dollars on advertising every year but remain uncertain about allocation across various advertising vehicles. Allocation decisions are even more complex as online advertising has proliferated and consumers’ media usage patterns have become more fragmented. To determine advertising effectiveness, the authors group firms’ advertising vehicle choices into three theoretically grounded and empirically verified smaller subsets: national, regional, and online advertising. Subsequently, they assess how the three advertising vehicles independently and jointly affect firm performance. Using 12 years of data covering 662 manufacturing firms, the authors find that while national, regional, and online advertising each have a positive and significant main effect on firm performance, each advertising vehicle weakens the effectiveness of the respective other two advertising vehicles (e.g., a 1% increase in online advertising increases firm performance by .32% but also decreases national [.15%] and regional [.03%] advertising effectiveness). A battery of robustness checks triangulates this result. Although all three media vehicles contribute to net increases in performance, the authors discuss the need to strategically integrate them to maximize combined effectiveness.

 
 
Customer-Centric Org Charts Aren’t Right for Every Company
Ju-Yeon Lee, Shrihari Sridhar and Robert W. Palmatier

The new conventional wisdom on corporate structure is that companies can do better by organizing themselves around customer groups. The logic sounds compelling: A customer-centric structure, as the approach is known, can help a company understand its customers better, develop deeper relationships with them, and improve customer satisfaction. Some 30% of Fortune 500 firms, including Intel, Dell, IBM, and American Express, are already on board, and the numbers are growing all the time.

ETF Watch: Customer Satisfaction Fund Debuts
ETF.com Staff

On November 1, 2016 ETF newcomer CSat Investment Advisory, doing business as ACSI Funds, launched its first ETF on the Bats Exchange, which owns ETF.com. The fund will base the selection and weighting of its components on the satisfaction of their customers. The American Customer Satisfaction Core Alpha ETF (ACSI) comes with an expense ratio of 0.65%.

The Satisfaction Profit Chain
Carly Frennea, Vikas Mittal and Robert A.Westbrook

The Satisfaction Profit Chain (SPC) is a theoretical framework that helps link attribute-level perceptions, overall customer satisfaction, customer intentions/behaviors, and financial outcomes. This chapter reviews existing empirical research in this area and provides guidance and recommendations for future research. It is intended to be helpful to managers and academics who are interested in understanding how customer satisfaction -- a focal construct -- is embedded in the context of its antecedents and consequences.

Customer Satisfaction: A Strategic Review and Guidelines for Managers
Vikas Mittal and Carly Frennea

Superior customer satisfaction provides a clear strategic advantage and an inimitable resource for a firm—particularly in today’s complex and often uncertain markets. Two decades of academic research has quantified the impact of customer satisfaction on a number of beneficial customer behaviors and consequent financial performance. It is clear that firms that manage their customers as well as costs realize greater financial returns compared to firms who ignore customer satisfaction.