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Discuss about Impact of labor costs and carbon pricing on the profitability of the Australian Automotive manufacturing industry.

Background

Customers are the most important part of all businesses, because of which all organizations exists to satisfy customers and thereby earn profits (Izogo & Ogba, 2015). Dealing customers carefully, monitoring their preferences and choices, their past records and new demands and requirements is essential for tracking and understanding customers in order to serve them better. An organization requires fulfilling the needs and requirements of customers to stay competitive in business environment and earn high profits. Innovating their products and services as per the needs of customers in order to provide smart and unique products will create high reputation and brand name for the company.

Customer satisfaction depends upon the ability of providing superior quality products and services at reasonable prices as compared to rivals in the same sector. When customers are happy with the quality of products and services that they receive in exchange of money they tend to be loyal with the company. Customers tend to choose the same organization to purchase products, the next time, and may even refer to friends and family for purchasing the product from that organization (Ennew, Binks & Chiplin, 2015). Word of mouth communication refers to sharing of experience, in which a customer shares his or her experience with other people surrounding him and tend to influence their decision-making and choices. This proposal explores word of mouth communication and customer complaints affect the satisfaction level and the loyalty of customers. Several methods and techniques that will be used for conducting the research is briefly discussed and mentioned below.

Customer satisfaction is a well-known aspect and all organizations understand that if their customers are satisfied with their products and services, only then they can exist in the market and generate large profits. Customers always share their information about a particular product and their experience, often with other customers, friends and family (Kim, Vogt & Knutson, 2015). This does has an impact on their decision making process and future choices. Word of mouth communication is highly effective and believable to people, far more influencing than several polished advertisements and marketing strategies. Several studies and research have already been conducted in the past, briefly describing the impact of word of mouth communication on customer satisfaction. However, all these previously conducted reports and studies fail to highlight the impact of word of mouth communication and customer satisfaction on customer loyalty. This is the primary focus of this research and the research also aims to outline the ideas or facts about how changes can be made in order to foster customer loyalty.

Objectives of the research

The aim of this particular research will be to explore the concept of customer satisfaction. In addition to that, this particular research will explore “explore the impact of complaints and word of mouth communication on customer loyalty and satisfaction”.

The objectives of the research are summarized below-

  • To explore the effectiveness or the usefulness of the concept of “word of mouth communication” in the resolution of the customer complaints and enhancing the satisfaction level of the customers.
  • To explore the impact of customer complaint as well as the “word of mouth communication” in the process of customer satisfaction.
  • To explore the relationship between customer satisfaction and also customer loyalty.

The following are the research questions that have been investigated in order to arrive at the expected outcome:

RQ 1: How word of mouth communication assists to deal with customer complaints and improving customer satisfaction?

RQ 2: What impact does word of mouth communication and customer complaint have on customer satisfaction?

RQ 3: What is the relationship between customer loyalty and customer satisfaction?

Study of customer satisfaction and customer loyalty is essential for improving the organization performance and competitiveness in the market. Organizations can develop better strategies and tactics to improve their brand name and brand value. The research project will guide companies to realize the impact of word of mouth communication on customer satisfaction, pivotal for understanding key concepts and aspects about customers. The project highlights the relationship between two important areas that are customer loyalty and customer satisfaction (Bowen, & Chen McCain, 2015). Happy customers are loyal customers of an organization, they also help to share the word about the company or organization to other possible customers. Customer complaints have an effect on the level of customer satisfaction, therefore require proper attention so that it does not creates negative impact on the organizational performance.

This will enhance the capabilities of organization to serve their customers and attract new ones in a better manner. Word of mouth communication has greater impact on the minds of a customer than various advertising strategies, therefore this report will assist to focus on more important matters. All organizations aim to improve their reach to customers so that they can serve them better, hence this research will aid in this process (Kaura, Durga Prasad, & Sharma, 2015).

Expected Research Outcome

The expected outcome of this research project is mentioned below:

  • It will provide better understanding of how organizations can improve the experience of their customers and thereby increase customer satisfaction. The importance of word of mouth communication is illustrated in the entire research project that will guide the organization to create much better advertising strategies.
  • The research project will provide concrete evidence about the impact of word of mouth communication and customer complaints. These two aspects influence customer decision process and their choices. The research project will also help to identify key concepts to about improving customer satisfaction.
  • The research project will provide an analytical framework to identify and analyze the relationship between customer loyalty and customer satisfaction. This will lead to improved organization performance and better capability to attract customers and provide enhanced customer gratification.

 

Figure 1: Conceptual Framework

(Source: Created by learner)

Importance of Word of Mouth in case of Customer Satisfaction and Loyalty 

Customer satisfaction has a significant impact on the organizations present performance and future performance. An organization that is able to provide superior quality products and services will be far capable in gratifying customers than an organization with excellent marketing strategies. Giving valuable service or product to customers at an affordable price will create brand name and loyalty. High customer satisfaction aids to increase the organizations capability to generate revenue, thereby profits, low investment in advertising and marketing strategies (Khan & Fasih, 2014). Satisfied customers will automatically share their experience with their close friends and family and persuade to purchase product or service from the same company from where they did. Thus, it can be concluded that a happy customer of a given company will tend to be highly loyal to that company due to positive reinforcement and encourage other people to do business with that company (Chung, Yu, Choi & Shin, 2015).

Research questions

Word of mouth communication is highly important for a service-oriented organization, which offers customers with intangible and experience based product. In this case, people highly depend on the advice of other customers who have had already experienced the service of a particular organization (Stathopoulou & Balabanis, 2016). People tend to trust the advice of family and friends more than they trust the words of organization spread through various advertisements. According to Radojevic, Stanisic and Stanic (2015), word of mouth communication is seven times more effective than several advertising strategies developed by an organization, this is primarily due to the reason that word of  mouth communication is highly credible. Thus, word of communication exerts a strong influence on customer loyalty. An organization can use this opportunity to enhance their market share by developing improved image among customers (Zakaria et al., 2014).

Role of Consumer Complaint in case of Customer Satisfaction Level 

Consumer complaints are a fundamental consequence of all businesses that sell some kind of product or service to customers (Kandampully, Zhang, & Bilgihan, 2015). Dissatisfied customers tend to voice their problems and issues to inform the firm about their dissatisfaction, this way giving valuable feedback to them. These are essential indicators of unsatisfactory performance of an organization and thereby important to focus and put efforts to address and then rectify them. Without customer complaints, an organization would have no idea about its pitfalls, problems and areas where it needs to improve, thereby losing the ability to satisfy and retain customers (Murali, Pugazhendhi & Muralidharan, 2016). Many unsatisfied customers tend to share the information about their experience with other customers and prefer to change the brand or supplier. An organization with improved methods to gather and address customer feedback will perform better in future and increase the customer satisfaction level.  

Effect of Customer Satisfaction Level on Customer Loyalty 

Several theories and models describe the effect of customer satisfaction on customer loyalty. Two such models are discussed below:

The disconfirmation of expectations model

According to this model, the measure of customer satisfaction depends upon two matters, i.e. performance of products and services and the expectation level of customers. This model describes that, in case, when the performance of a product or service exceeds the expectation level of customers, the satisfaction level of customers also increases. Similarly, in case, when the expectation level of customers is higher than the performance of product, the satisfaction level of customers tends to decrease. The model highlights a negative impact of customer expectation on customer satisfaction. As the satisfaction level of customers decrease, they tend to lose the trust on the firm or organization and try to look for alternatives and better options elsewhere.

Expected outcome of the research project

However, the model is appropriate for product-based company and not for service oriented.  This model provides suggestion that those working in managing customer expectation should aim to lower the expectation level.

The performance model

According to this model, the way customers perceive the performance of a product and service and the expectation of that performance play a positive impact on the level of customer satisfaction. Customers evaluate the performance of a product or a service based on the quality of the product relative to the price they have paid. This perceived performance of products by customers can be described as value that customers have received in exchange of the money invested. The greater value of a product or service in comparison to the price, the higher the satisfaction level of customers will be. The model shows that there is a direct and positive impact of expectations on satisfaction level. The stronger a customer has expectation from a product or service, as compared to its performance information, the greater is the impact of expectation on the level of satisfaction. This in turn increases customer loyalty, as customers view the company to be highly valued and trustworthy.

Relationship between Customer Satisfaction and Customer Loyalty 

Customer satisfaction is a necessary area of concern for all organizations that is trying to build customer loyalty and therefore foster better business performance. Customer loyalty can be described as the relationship or bond between the organization and customers. This is developed as through positive experiences with customers (Hannan, Suharjo & Nurmalina, 2016). This creates trust and goodwill in the minds of customers that persuades them to choose the same organization the nest time as well.  Customer satisfaction has a direct impact on the customer loyalty, as happy customers tend to visit the same place for fulfilling their needs and wants in future as well (Nguyen et al., 2014). Thus, it can be said that the customer loyalty and customer satisfaction have a direct relationship with each other. If customers are satisfied with the goods and services, they tend to be loyal and the revenue of the organization shows inclined slope whereas, if customers are dissatisfied they tend to look for alternate organization offering similar kind of product (Rahimi & Kozak, 2017). This creates a decline in sales and revenue of the organization.

Hypothesis 1

H0: Null Hypothesis: Word of mouth communication has no impact on the level of customer satisfaction.

Two models describing the effect of customer satisfaction on customer loyalty

H1: Alternative Hypothesis: Word of mouth communication has an impact on customer gratification and influences their choices and preferences.

Hypothesis 2

H0: Null Hypothesis: Customer complaint does have affect on the satisfaction level of customers.

H1: Alternative Hypothesis: Customer complaints do not influence the satisfaction level of customers.

Hypothesis 3

H0: Null Hypothesis: There is no relationship between customer loyalty and customer satisfaction.

H1: Alternative Hypothesis: There is a profound relationship between customer satisfaction and customer loyalty.

Research Philosophy  

The research philosophy refers to the way information or data is gathered, analyzed and used. The research strategy deployed to obtain the necessary goal or objective of the research is necessary for successfully accomplishing them (Mackey, & Gass, 2015). Three research philosophies that can be implemented are interpretivism, positivism and realism. Positivism refers to systematic approach and can be characterized by having a detached approach to gather facts and information about the research project. In research philosophy realism, the method to collect data is independent of reality from human mind. Interpretivism research philosophy requires researchers to interpret data and thus involves integration of human interest into the study. In this research project, positivism research philosophy will be implemented.

Research Design 

Research design refers to the overall strategy that the researcher chooses in order to integrate the several components of the study in comprehensive and logical manner. This ensures that the entire project is dealt in an effective and efficient way (Lewis, 2015). There are three types of research design that are often used that are explanatory, exploratory and descriptive. In Explanatory design, the researcher tries to explain the current situation and the entire subject. In exploratory design, the researcher puts effort to explore the subject and gain insights about the topic. In descriptive research design, describes various answers about the research topic, variables, and conditions. In this research, exploratory research design will be utilized for accomplishing the necessary objectives.  

Research Approach

The research approach describes the pattern in which the data and facts are gathered about the research project and the way that information is analyzed and presented. This includes two methods that are deductive and inductive. In inductive research approach, the researcher puts effort to gather new data and investigate the matter to its core so that new findings and analysis can be performed (Taylor, Bogdan & DeVault, 2015). This gives an opportunity to the researcher to find facts and information that has never been discovered before. In deductive approach, the researcher uses data and facts previously gathered and analyzed. The researcher tries to collect and analyze the information and present according to his or her subject respectively. In this project, deductive research approach will be implemented.  

Data Collection Method  

Data collection method refers to the method used by researcher to collect various data and information related to the topic. The two kinds of data collection methods are primary and secondary data collection method (Silverman, 2016). In this scenario, secondary data collection method will be used. In this method, the researcher utilizes already published journals, magazines and newspapers relevant for the subject he is conducting the research. In this project, peer reviewed journal, citation will referred for appropriate findings and analysis.

Data Analysis Technique 

The data collection method that will be used is secondary data collection method. The data that will be collected will be analyzed by referring to the relevant case study and observations. This allows analyzing the collected data in a concise and detailed manner. The relevant case study plays the role of foundation for documenting the research project and thereby providing necessary assistance to study the entire research project. This data analysis technique is useful, effective and provides proper guidance for developing improved research project.   

Sampling Technique  

Sampling technique is an important part of a research project as it has significant impact on the quality of the result or finding of the research project. The two types of sampling techniques are probability and non-probability sampling techniques. In this research project, non-probability sampling technique will be used for conducting the research (Csikszentmihalyi & Larson, 2014). In non-probability technique, samples are selected based on the subjective judgement of the researcher. The main advantage of this technique is that is cost effective and less time consuming. In order to complete the give project, about ten peer reviewed journal will be used.  

This report is organized in the following manner:

Chapter One: This discusses a brief introduction about the subject, an overall context and research objectives and aims.

Chapter Two: This chapter illustrates the literature review and provides information about the subject.

Chapter Three: This includes the research design that will be utilized and implemented by the researcher while conducting the research project.

Chapter Four: This chapter describes the results, analysis and findings of the research project.  

Chapter Five: This includes conclusions and recommendations so gathered in the research project.  

 

Figure 2: Organisation of the Study

(Source: Created by learner)

To complete the above mentioned research project within the stipulated time, the budget or financial capital required is about $5000. The justification for the budget is as follows:

The literature review that need to be undertaken requires peer reviewed journals and various books, therefore cost of $500 has been estimated for this research project.

Secondary data collection method requires lot of capital and time for completing the project and therefore, cost of about $3000 has been estimated for it.

Data analysis process requires referring to several case studies and observations and utilizing the most relevant for the research project. $1000 has been estimated for this process.

The summary of the expenses is given below:

S.N

Purpose

Estimated Budget

1.

Literature Review

$500

2.

Secondary Data Collection Method

$3000

3.

Data Analysis

$1000

Total Estimated Budget

$4500

Table 1: Budget of the Research Study

(Source: Created by the learner)

Activities

1st week

3rd week

5th week

9th week

12tt week

Selecting the Research topic

ü   

Information gathering from secondary data sources

ü   

ü   

Research layout

ü   

Literature review

ü   

ü   

ü   

Research plan development

ü   

ü   

Selecting appropriate techniques for the research

ü   

ü   

Gathering information from the primary research data

ü   

Findings and interpretation

ü   

Conclusion

Creating a Rough draft

Submission of Final study

Table 2: Gantt Chart

(Source: Created by the learner)

Activity Name

Star date

Duration (days)

End Date

Selecting the Research topic

01-06-18

15

16-06-18

Information gathering from secondary data sources

16-06-18

15

01-07-18

Research layout

01-07-18

12

13-07-18

Literature review

13-07-18

20

02-08-18

Research plan development

02-08-18

14

16-08-18

Selecting appropriate techniques for the research

16-08-18

15

31-08-18

Gathering information from the primary research data

31-08-18

15

15-09-18

Findings and interpretation

15-09-18

15

30-09-18

Conclusion

30-09-18

15

15-10-18

Creating a Rough draft

15-10-18

5

20-10-18

Submission of Final study

20-10-18

3

23-10-18

Table 3: Milestone of the Research Study

(Source: Created by the learner)

 


Figure 3: Gantt Chart

(Source: Created by the learner)

Reference List

Bowen, J. T., & Chen McCain, S. L. (2015). Transitioning loyalty programs: a commentary on “the relationship between customer loyalty and customer satisfaction”. International Journal of Contemporary Hospitality Management, 27(3), 415-430.

Chung, K. H., Yu, J. E., Choi, M. G., & Shin, J. I. (2015). The effects of CSR on customer satisfaction and loyalty in China: the moderating role of corporate image. Journal of Economics, Business and Management, 3(5), 542-547.

Csikszentmihalyi, M., & Larson, R. (2014). Validity and reliability of the experience-sampling method. In Flow and the foundations of positive psychology (pp. 35-54). Springer Netherlands.

Ennew, C. T., Binks, M. R., & Chiplin, B. (2015). Customer satisfaction and customer retention: An examination of small businesses and their banks in the UK. In Proceedings of the 1994 Academy of Marketing Science (AMS) Annual Conference (pp. 188-192). Springer, Cham.

Hannan, S., Suharjo, B., & Nurmalina, R. (2016). The Influence of Customer Satisfaction, Trust and Information Sharing on Customer Loyalty of Professional Services Company: An Empirical Study on Independent Surveyor Services Industry in Indonesia. Abstract of Economic, Finance and Management Outlook, 5, 1-9.

Izogo, E. E., & Ogba, I. E. (2015). Service quality, customer satisfaction and loyalty in automobile repair services sector. International Journal of Quality & Reliability Management, 32(3), 250-269.

Kandampully, J., Zhang, T., & Bilgihan, A. (2015). Customer loyalty: a review and future directions with a special focus on the hospitality industry. International Journal of Contemporary Hospitality Management, 27(3), 379-414.

Kaura, V., Durga Prasad, C. S., & Sharma, S. (2015). Service quality, service convenience, price and fairness, customer loyalty, and the mediating role of customer satisfaction. International Journal of Bank Marketing, 33(4), 404-422.

Khan, M. M., & Fasih, M. (2014). Impact of Service Quality on Customer Satisfaction and Customer Loyalty: Evidence from Banking Sector. Pakistan Journal of Commerce & Social Sciences, 8(2).

Kim, M., Vogt, C. A., & Knutson, B. J. (2015). Relationships among customer satisfaction, delight, and loyalty in the hospitality industry. Journal of Hospitality & Tourism Research, 39(2), 170-197.

Lewis, S. (2015). Qualitative inquiry and research design: Choosing among five approaches. Health promotion practice, 16(4), 473-475.

Mackey, A., & Gass, S. M. (2015). Second language research: Methodology and design. Routledge.

Murali, S., Pugazhendhi, S., & Muralidharan, C. (2016). Modelling and investigating the relationship of after sales service quality with customer satisfaction, retention and loyalty–a case study of home appliances business. Journal of Retailing and Consumer Services, 30, 67-83.

Nguyen, H., Groth, M., Walsh, G., & Hennig?Thurau, T. (2014). The impact of service scripts on customer citizenship behavior and the moderating role of employee customer orientation. Psychology & Marketing, 31(12), 1096-1109.

Radojevic, T., Stanisic, N., & Stanic, N. (2015). Ensuring positive feedback: Factors that influence customer satisfaction in the contemporary hospitality industry. Tourism Management, 51, 13-21.

Rahimi, R., & Kozak, M. (2017). Impact of customer relationship management on customer satisfaction: The case of a budget hotel chain. Journal of Travel & Tourism Marketing, 34(1), 40-51.

Silverman, D. (Ed.). (2016). Qualitative research. Sage.

Stathopoulou, A., & Balabanis, G. (2016). The effects of loyalty programs on customer satisfaction, trust, and loyalty toward high-and low-end fashion retailers. Journal of Business Research, 69(12), 5801-5808.

Taylor, S. J., Bogdan, R., & DeVault, M. (2015). Introduction to qualitative research methods: A guidebook and resource. John Wiley & Sons.

Zakaria, I., Rahman, B. A., Othman, A. K., Yunus, N. A. M., Dzulkipli, M. R., & Osman, M. A. F. (2014). The relationship between loyalty program, customer satisfaction and customer loyalty in retail industry: A case study. Procedia-Social and Behavioral Sciences, 129, 23-30. 

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