Customer Satisfaction and Loyalty: A Critical Review

CUSTOMER SATISFACTION AND LOYALTY 1
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CUSTOMER SATISFACTION AND LOYALTY 2
RESEARCH AND CRITICAL REVIEW: CUSTOMER SATISFACTION AND LOYALTY
Firms whose major objective is to make profits usually rely on their customers, as they provide
market for the firm’s goods and services. Customer satisfaction and loyalty are among the key
issue the firms handle to realize maximum profits. This model of customer satisfaction and
fidelity has become a widely known and recognized in several economic sub-sectors. It has
become a topic of interest to many researchers who come from different fields like: economics,
marketing, economic-psychology, welfare-economics and consumer research. The previous
study conducted on this topic has been both for practical and academic purpose. There is a
constructive effect of customer satisfaction on the profitability of the organization. As the
satisfied customers repeatedly consume the firm’s products and services, they also help to market
the firm further through constructive oral demission of the firm’s goodwill (Galbreath & Shum,
2012, p. 215). This helps the firm to establish a wide loyal customer base.
Customer satisfaction and loyalty have remained to be a fundamental factor for the consumer
marketing community, it is the central focus for any effective marketing program as it is
essentially the combined outcome of the psychological reactions, perceptions and evaluation of
quality of goods and services from experience (Bergman & Klefsjö, 2013, p. 79). It is an
evaluation process of what has been received against the expectations. Other researchers have

CUSTOMER SATISFACTION AND LOYALTY 3
also revealed that customer satisfaction and loyalty are not directly related as it is evident among
the firms operating within the competitive environment.
Firms in competitive market must completely satisfy their customers to gain customer loyalty.
Customer loyalty does not depend on satisfaction alone, as it is also influenced by factors like
convenience, personal relationships, progressive expectations, rewards and community outreach
(Bowen & Chen, 2014, p. 215). There are three basic customers’ characteristics that triggers the
loyalty profiling: emotive, deliberative and inertia. Research reveals that the emotive customers
are the most loyal, hence it is true that customer satisfaction is a necessary program to be
undertaken by firms to maximize their profits but customer loyalty incorporates satisfaction, and
also attitudinal and emotive aspects (Bowen & Chen, 2014, p. 215).
Basic microeconomic theory involves the following key areas demand and supply; an economic
which deals with price determination in a perfectly competitive market, measurements of
elasticity, consumer demand theories, market structures, cost of production and the opportunity
cost (Salemi, 2016, p. 125). The writer of the article I am reviewing have accurately employed
the economic concepts in his work. The ideas are presented in a clear and consistent manner that
makes it easier to formulate microeconomic models. When the customer satisfaction is high then
the demand for the firm’s goods and services also goes up. Also there is information on how
customer satisfaction and loyalty varies across different market structures. The topic of customer
satisfaction analysis includes the study of household consumption behaviors (Hursh, 2014, p.
238). The firms strive to differentiate their products and services within the market so as retain
and attract more customers. Finally the author of the article have admitted that during recession
it is harder for firms to establish customer loyalty as compared to other times when the economy