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MANAGING SATISFACTION IN THE EVOLVING BANKING MARKET: QUESTIONS OF OPTIMAL CO-CREATION

MANAGING SATISFACTION IN THE EVOLVING BANKING MARKET: QUESTIONS OF OPTIMAL CO-CREATION. Kenneth C. Gehrt San Jose State University San Jose, California, USA Matthew O’Brien Bradley University Peoria, Illinois, USA. SERVICE DOMINANT LOGIC (SDL)/ CO-CREATION (CC).

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MANAGING SATISFACTION IN THE EVOLVING BANKING MARKET: QUESTIONS OF OPTIMAL CO-CREATION

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  1. MANAGING SATISFACTION IN THE EVOLVING BANKING MARKET: QUESTIONS OF OPTIMAL CO-CREATION • Kenneth C. Gehrt • San Jose State University • San Jose, California, USA • Matthew O’Brien • Bradley University • Peoria, Illinois, USA

  2. SERVICE DOMINANT LOGIC (SDL)/CO-CREATION (CC) • Theoretical framework recognizes how sellers and buyers jointly create value in transaction and consumption activities (Bendapudi and Leone 2003; Lusch, Vargo, and O’Brien 2007; Vargo and Lusch 2008).

  3. CONSUMER LOGISTICS (CL) • Theoretical framework recognizes that sellers and buyers may perform the same logistics activities to support the movement and handling of products from the point of acquisition to the point of consumption (intra-household and household-retail) (Granzin and Bahn 1989; Painter and Granzin 1996; Gehrt et al. 2007).

  4. CL Theory • CL Theory formally recognizes the consumer as an active part of the distribution channel (Granzin 1988; Granzin and Bahn 1989; Granzin and Painter 1996) : • Location • Transportation • Inventory • Handling and Storage • Communication • Only “manufacturing” or “form utility” aspect of CC overlooked by CL Theory.

  5. …CL Theory • CL Theory has traditionally been applied to product-based markets and not service-based markets. • The relationship between performance of CL functions, customer value, and satisfaction has not been assessed (Channel Theory).

  6. CC and CL • Evaluate the applicability of SDL/CC and CL Theory to the consumer financial services market. • Understand how financial services marketers can enhance customer satisfaction via CC and CL conceptualization.

  7. As you will see: • The study provides a surprising answer and… • The study raises a new, important question.

  8. Purpose of Study • Purpose 1: Develop CL/CC scale applied to consumer services (banking). • Purpose 2: Explore how CC via performance of CL functions affects perceptions of value (consisting of efficiency and effectiveness) and satisfaction.

  9. Scale Development (Purpose 1) • Develop CL/CC scale applied to consumer financial services (banking). • Methods Utilized: • Review past research • Focus Groups • Sample • Data Analysis: • Confirmatory Factor Analysis

  10. …Scale Development (Purpose 1) • Scale Findings: CL Functions Reliability= 0.81 Inventory Transport. Reliability = 0.73 Communication Reliability = 0.74

  11. Scale Development (Purpose 1) • INV1 I save my payment/withdrawal receipts to help reconcile my bank statements. • INV2 I carefully manage the amount of my savings/checking account balances. • INV3 I am very thorough with my financial record keeping. • INV4 I tend to keep my records for a long time. • INV5 I prefer a combination of methods to store banking records. • INV6 I make careful decisions about how to store my bank records. • TRAN1 Getting to a destination in as little time as possible is important to me. • TRAN2 I try to minimize the distance that I travel to the bank. • TRAN3 Getting to the bank easily (brick + mortar, ATM, online) is important to me. • COM1 When I consult with the bank, I spend a lot of time. • COM2 The bank helps me to determine which banking accounts to use. • COM3 The bank helps me to determine which banking services are important. • EFFIC1 The way I go about my banking allows me to minimize the amount of running around I must do. • EFFIC2 The way that I go about my banking allows me to minimize my banking costs. • EFFIC3 The way that I go about my banking is efficient. • EFFEC1 The way that I go about my banking has given me desired results. • EFFEC2 The way that I go about my banking allows me to achieve optimal outcomes. • EFFEC3 The way that I go about my banking is effective. • SAT1 I am pleased with my banking experience. • SAT2 I am satisfied with the way that my bank helps me to meet my banking needs. • SAT3 I am pleased with the benefits that have resulted from my banking activities.

  12. CL/CC --Value—Satisfaction (Purpose 2:) • Explore how co-creation via performance of consumer logistics functions influences perceptions of consumer value, and satisfaction. • Data Analysis: • Structural Equations Modeling

  13. CL/CC —Value—Satisfaction (Purpose 2) Findings (standardized loadings, significant): CL Functions Value Dimensions Inventory .51 Efficiency -.18 .52 Satisfaction Transport. .15 Effectiveness .81 .21 Communication X square = 435.25 df = 214 GFI = 0.81 CFI = 0.88 RMSEA = 0.076

  14. Theory Inventory Location Transportation Handling and Storage Communication Sample Inventory Transportation Communication DiscussionMeasurement model provides empirical support for the applicability of CL/CC Theory to services marketing in the context of consumer banking.

  15. …DiscussionStructural model provides empirical support for relationship between:CL/CC—Value (Efficiency/Effectiveness)—Satisfaction. • Perform. of CL functions affects effectiveness (+). • Perform. of CL functions affects efficiency (+). • Effectiveness affects satisfaction (+). • Efficiency affects satisfaction ( - )!

  16. …DiscussionRegarding the negative relationship between efficiency and satisfaction. • Although effectiveness of technology and changes in the service encounter have improved satisfaction in consumer banking… • Efficiency of technology and changes in the service encounter have decreased satisfaction in consumer banking. • Technology has made it possible to co-create by passing CL functions back to the consumer--CL functions that were previously performed by the bank are now performed by the consumer (co-creation) • There is a point at which this shift in co-creation will lead to decreased satisfaction (Broderick and Vachirapornpuk 2002).

  17. Future Research • Study raises important questions. • How can CL and CC concepts be used to improve customer effectiveness and efficiency in a manner that leads to increased satisfaction … • Determine the optimal manner of allocating CL functions (co-creation) to consumer, without negatively affecting satisfaction vis-a-vis efficiency (Chan, Yim, Lam 2010) • Allocate too much/High Participation/Dissatisfaction • Allocate too little/Low Control/Dissatisfaction • Does optimal co-creation level vary per consumer segment?

  18. Managing CC via Optimal CL Allocation Low Consumer CC High Consumer CC • Low Consumer Control (-) • Low Consumer Effort (+) • High Consumer Control (+) • High Consumer Effort (-) Satisfaction Optimization

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