A study on linking consumer satisfaction to profits


Student thesis: Doctoral Thesis

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  • Yanqun HE

Related Research Unit(s)


Awarding Institution
Award date4 Oct 2004


This dissertation investigates both theoretically and empirically the relationships between consumer satisfaction, productivity and profitability. In the research literature, there has been considerable disagreement regarding the possible combined effects of productivity and consumer satisfaction in achieving profitability. Some researchers believe that raising productivity and improving consumer satisfaction are compatible because improved consumer satisfaction decreases the time and efforts devoted to handling rework, returns etc., thus reducing the total cost. On the other hand, some argue that improved consumer satisfaction would require additional efforts in improving product (including service) attributes and thus increase the total cost. Such contradictory findings in the literature make it difficult for companies to decide which approach they should adopt so that relevant corporate strategies could be formulated. To tackle the problem, this dissertation first examines the theoretical framework regarding the association between consumer satisfaction and repurchase intention, which in turn, determines profitability. Specifically, it investigates the role of consumer satisfaction in forming repurchase intention among other important marketing variables such as perceived quality and assessed value. The dissertation also studies the relationship between consumer satisfaction and price tolerance. In the literature, relevant studies focus much more on price increase tolerance (i.e., the extent to which price can be increased before satisfied consumers switch away) than on price decrease tolerance (i.e., the extent to which price should be decreased to keep dissatisfied consumers from leaving). It is argued, however, that the much neglected price decrease tolerance is equally and sometimes more influential in converting consumer satisfaction/dissatisfaction into repurchase intention, especially in competitive markets where the “next-best” is readily available. As a consequence, the following two questions are raised and examined: (1) what are the relationships between consumer satisfaction and price increase/decrease tolerances when the market is highly competitive? (2) do price increase/decrease tolerances mediate the relationship between consumer satisfaction and repurchase intention? On the basis of the aforementioned discussion on the importance of consumer satisfaction, the dissertation then studies empirically the relationships between consumer satisfaction, productivity and profitability. A distinct perspective is proposed by considering the possible fuzziness of current research problems in this area. In particular, a fuzzy linear regression (FLR) model is applied to investigate the relationships between consumer satisfaction, productivity and profitability. The dissertation contributes to the research on consumer satisfaction in several ways. First, the results indicate that consumer satisfaction acts as a mediator for both assessed value and perceived quality in forming consumer repurchase intention. Second, the study of consumer satisfaction and price decrease tolerance provides a new perspective in evaluating efforts to achieve consumer satisfaction, i.e., to secure price competitiveness through improving consumer satisfaction in a highly competitive market. Third, the fuzzy analytical tool applied in the dissertation also gives a new perspective while examining the satisfaction-profit chain. While applying the fuzzy linear regression (FLR) model, the study further makes a methodological contribution by proposing a new FLR model.

    Research areas

  • Corporate profits, Consumer satisfaction