An Analysis of Customer Value, Satisfaction, and Loyalty in Marketing

This report provides an overview of marketing and management principles, focusing on customer value, satisfaction, and loyalty within the service industry. It defines customer value as the benefit derived from a product in exchange for payment, influenced by price, service, and quality. Customer sati...Read More

Running head: MARKETING AND MANAGEMENT
Marketing and Management
Name of the Student:
Name of the University:
Author Note:

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Executive Summary:
The report gives an overview of marketing and management of service industry. The report
commences with a definition of customer value, satisfaction and loyalty. The report also
discusses about the association of customer value and satisfaction and customer satisfaction
and loyalty. There are also discussions on how the customer satisfaction plays a mediating
role between the customer value and the loyalty.

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Table of Contents
Introduction:...............................................................................................................................3
1. Customer Value, Satisfaction and Loyalty.............................................................................3
2. Relationship between Customer Value and Satisfaction and Customer Satisfaction and
Loyalty.......................................................................................................................................4
3. Mediating Role of Customer Satisfaction between Customer Value and Loyalty................5
Conclusion:................................................................................................................................5
References:.................................................................................................................................6

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Introduction:
The report aims at providing an overview on marketing and management. The report
commences with a brief description of value, satisfaction and loyalty. The report further goes
on to discuss customer satisfaction and value and the customer satisfaction and loyalty. The
report also puts forward a discussion on the intervening role played in satisfying the
customers and providing a definition for the relationship existing between the customer
loyalty and value.
1. Customer Value, Satisfaction and Loyalty
Customer Value refers to the incremental benefit derived by the consumer from
consuming the product in exchange of a payment. The term value refers to the benefit
received from the product (Lam, Shankar & Murthy, 2004). In other words, value represents
the difference between benefits and cost. The customer value however depends on three
factors that includes, price, service and quality.
Customer satisfaction refers to a critical concept that holds importance for the
customer success professionals and has value more than the money back guarantee (Hill &
Brierley, 2017). The customer satisfaction is achieved through various means. This includes
asking the customers for feedback, conduction of focus groups, studying the complaints and
the compliments, setting up customer hotline, visiting the customer website and going online
for seeking for feedback.
Customer loyalty refers to using a particular shop or buying a particular product instea
d of relying on other shops and buying products made by the other companies (Caruana,
2000). Customers exhibits a customer loyalty when they consistently purchase a brand or
product over extended time period. The conceptualization of loyalty construct had an

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evolution over years. In earlier times, the focus of loyalty remained in the brand loyalty with
respect to the tangible goods. Enhanceed customer loyalty in the service firms leads to an
increase in revenue, reduce aquisition cost of the customers, lowers the cost of the repititive
purchasers and greater profitability.
2. Relationship between Customer Value and Satisfaction and Customer Satisfaction
and Loyalty
Customer Value and Satisfaction
According to the literature of service management, customer satisfaction results in the
perception of value received either as a part of the relationship or transaction. Examples of
Amex Travel Services and Southwest Airlines deliver higher service value to the customers
while satisfying the needs of the customers. In a theoretical sense, customer value represents
a construct based on cognition that captures the discrepancy between the sacrifice and the
benefits. Customer satisfaction on the other hand is an evaluative and affective response. As
per the literature put forward by social science it is found that the cognitive processes triggers
the perceptions of the satisfaction.
Customer Satisfaction and Loyalty
Customer satisfaction acts as the one of the crucial drivers in determining a long-term
relationship between the buyers and the suppliers and buyers. Various studies put forward
proofs regarding how the customer satisfaction influences acting variable representing the
indicators of the customer orientation or loyalty. Thus, customer loyalty bears a reciprocal
influence on satisfying the customers.

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3. Mediating Role of Customer Satisfaction between Customer Value and Loyalty
According to Saeidi et al. (2015), the theoretical justification of a mediating role of the
satisfaction of the customers is attributed to a framework of the attitudinal literature. The
framework has the following representation:
Cognition Affect Behaviour or the behavioural intent
The framework when applied in the context of service management helps one in the
identification of mediating effect of the customer satisfaction. Customer value represents the
rational of the customers in trading off between benefits and costs while using a service or
product thereby ensuring the representation of cognition variable whereas the customer
satisfaction represents the concerned variable. Customer loyalty refers to the disposition or
behaviour of behaving positively to service provider.
Conclusion:
On a concluding note, it can said that it is vital for the service firms for establishing
benchmarks for the constructs under discussion and systematically and regularly monitor the
performance amongst the customers in a similar manner that a firm adopts in monitoring the
management accounts.

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References:
Caruana, A. (2000). The effects of service quality and the mediating role of customer
satisfaction. European Journal of Marketing, 7(8), pp.811-825.
Hill, N., & Brierley, J. (2017). How to measure customer satisfaction. Routledge.
Lam, S., Shankar, V. & Murthy, M. (2004). Customer Value, Satisfaction, Loyalty, and
Switching Costs: An Illustration From a Business-to-Business Service
Context. Academy of Marketiag Science, 32(3), pp.293-311.
Saeidi, S. P., Sofian, S., Saeidi, P., Saeidi, S. P., & Saaeidi, S. A. (2015). How does corporate
social responsibility contribute to firm financial performance? The mediating role of
competitive advantage, reputation, and customer satisfaction. Journal of business
research, 68(2), 341-350.