Customer Satisfaction

Customer satisfaction: review of literature and application to the product-service systems

Final report to the Society for Non-Traditional Technology, Japan

Oksana Mont Andrius Plepys Research Associates International Institute for Industrial Environmental Economics at Lund University P. O. Box 196 Tegnersplatsen 4 SE- 221 00 Lund Sweden Phone: +46 46 222 0200 Fax: +46 46 222 0230 [email protected] [email protected]

Lund, February 28 2003

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Acknowledgments

The authors would like to thank the National Institute for Advanced Industrial Science and Technology in Japan and the Ministry of Economy, Trade and Industry (METI) of Japan for financially supporting this study and for useful comments on the drafts. We would like to thank our supervisor, Prof. Thomas Lindhqvist for valuable guidance and challenging comments.

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Executive summary This feasibility study commissioned by the National Institute for Advanced Industrial Science and Technology in Japan (AIST) and supported by the Sustainable Consumption Unit (UNEP) provided an overview of approaches used in different disciplines for evaluating consumer behaviour. The study analysed the applicability of existing research concepts, theories, and tools for evaluating consumer satisfaction with product-service systems (PSS). It included a discussion of their strengths/weaknesses. BACKGROUND It has been recognised that eco-efficiency improvements at production and product design level can be significantly reduced or totally negated by rebound effect from increased consumption levels. In line with this problem factor 10 to 20 material and energy efficiency improvements have been suggested (Factor 10 Club 1994; Schmidt-Bleek 1996; Bolund, Johansson et al. 1998; Ryan 1998). The improvements, however, if not carefully done, may still lead to rebound effects through changes in resource prices. As a potential solution to the factor 10/20 vision, system level improvements have to be made, contrary to redesigning individual products or processes (Weterings and Opschoor 1992; Vergragt and Jansen 1993; von Weizsäcker, Lovins et al. 1997; Ryan 1998; Manzini 1999; Brezet, Bijma et al. 2001; Ehrenfeld and Brezet 2001). The product service system (PSS) concept has been suggested as a way to contribute to this system level improvement (Goedkoop, van Halen et al. 1999; Mont 2000). Here the environmental impacts of products and associated services could be addressed already at the product and service design stage. Special focus should be given to the use phase by providing alternative system solutions to owning products. A number of examples in the business-to-business (B2B) area exist that confirm the potential of PSS for reducing life cycle environmental impact. It is, however, increasingly evident that business examples are difficult to directly apply to the private consumer market. Private consumers, contrary to businesses, prefer product ownership to service substitutes (Schrader 1996; Littig 1998). Even if accepted, the environmental impacts of “servicised products” offers depend to a large extent on consumer behaviour. To address this problem, either behavioural or service system design changes are needed. Changing human behaviour and existing lifestyles contributes to the vision of sustainable development, but at the same time, it is an extremely difficult and time-consuming process. A potentially easier way is changing the design of the product-service system to reduce behavioural pitfalls. In order to change system design, it is necessary to understand how consumer acceptance of more sustainable solutions is formed, influenced or changed, what are the influencing factors and what are the leverage points for best results with lowest costs. Understanding consumer perceptions and behaviour in this context is crucial. CONSUMER RESEARCH IN DIFFERENT DISCIPLINES A considerable body of literature in a range of different discip lines exists on consumption, consumer behaviour, and consumer decision- making process. Research in economics, business, marketing, psychology and sociology domains studies consumer behaviour from different theoretical premises: “for economists, consumption is used to produce utility; for sociologists, it is a means of stratification; for anthropologists – a matter of ritual and symbol;

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for psychologists – the means to satisfy or express physiological and emotional needs; and for business, it is a way of making money”(Fine 1997). For more than a decade now, a range of studies that address environmentally sound consumer behaviour, e.g. car use, waste sorting, minimisation and recycling practices, have been conducted. However, few studies evaluated consumer acceptance of the PSS concept – a consumption based on non-ownership of physical products, see, for example, studies on car sharing schemes (Schrader 1999; Meijkamp 2000), ski rental and washing services (Hirschl, Konrad et al. 2001). One reason explaining the lack of studies in the area could be that, there are still not many PSS schemes in place to serve as test grounds. Another reason could be uniformity of research focus. Most of consumer research focused on adopter categories, habits, attitudes and intentions, rather than on actually measuring the satisfaction level with the service. The reason is probably that PSS ideas have been promoted by researchers from the environmental management, marketing, design, and engineering fields, and to a lesser extent by sociologists, who hold the banner of research in customer satisfaction. CONSUMER SATISFACTION PROCESS The paramount goal of marketing is to understand the consumer and to influence buying behaviour. One of the main perspectives of the consume r behaviour research analyses buying behaviour from the so-called “information processing perspective" (Holbrook and Hirschman 1982). According to the model, customer decision-making process comprises a needsatisfying behaviour and a wide range of motivating and influencing factors. The process can be depicted in the following steps (Engel, Blackwell et al. 1995): •

Need recognition – realisation of the difference between desired situation and the current situation that serves as a trigger for the entire consumption process.

•

Search for information - search for data relevant for the purchasing decision, both from internal sources (one's memory) and/or external sources.

•

Pre-purchase alternative evaluation - assessment of available choices that can fulfil the realised need by evaluating benefits they may deliver and reduction of the number of options to the one (or several) preferred.

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Purchase - acquirement of the chosen option of product or service.

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Consumption - utilisation of the procured option.

•

Post-purchase alternative re-evaluation - assessment of whether or not and to what degree the consumption of the alternative produced satisfaction.

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Divestment - disposal of the unconsumed product or its remnants.

Besides the information processing perspective, marketing analyses consumer behaviour by employing a psychologically grounded concept of attitudes (Balderjahn 1988; Ronis, Yates et al. 1989; Luzar and Cosse 1998). It is consumer attitudes that are usually named as the major factor in shaping consumer behaviour and a wealth of studies is available on the topic of how attitudes can predict behaviour. INTER -DISCIPLINARITY OF CONSUMER RESEARCH Different research disciplines diverge in their presuppositions about human nature, factors influencing consumer behaviour, market response, etc. Therefore, they naturally employ different research approaches. However, despite that seemingly insurmountable abyss between disciplines, we see that many research topics and methods overlap, and that there is

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no clear-cut line between different domains of consumer research. Many consumption-related issues are being increasingly addressed from interdisciplinary or multidisciplinary perspectives. Many interdisciplinary concepts and factors are of interest for research on consumer satisfaction with eco-efficient services and PSS. Contrary to the suggestions from many traditional neoclassical theories, consumption patterns are very flexible and prone to various influences. Today consumer behaviour is increasingly dynamic as the choice of alternatives increases with the growth of global markets. The complexity of the decision- making process and a large number of influencing factors suggest that changing consumer behaviour towards more sustainable consumption is a challenging process, which requires coordination at individual and societal level. The area of PSS and eco-efficient services is still developing. Further efforts are required in order to understand relations between the functional and emotional needs of customers. DIFFERENT LEVELS OF COMPLEXITY When evaluating satisfaction with a product, customers initially assess tangible features of the product. In the service context, the features, though observable, are considerably less tangible and are thus more difficult to assess. A product service system comprises four components (products, services, infrastructures, and networks), rendering the evaluation process of consumer satisfaction even more complex (Mont 2000). Here the part of the system, with which the customer comes into direct contact, is larger than in the case of a pure product or service, which has implications for customer evaluation process. In the case of PSS or eco-services, customers are exposed to both dimensions: product and service. In addition, due to closer relations with the service provider, customers can even become exposed to infrastructure and networks that support PSS delivery. Therefore, in the PSS context, an evaluation of all four PSS components becomes relevant: •

Product evaluation is conducted by assessment of products or technologies.

•

Person-based or other types of services (technical, information and knowledge services) that are included into PSS may be evaluated.

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Infrastructure can be evaluated when the customer comes into contact with enabling supporting technology, or by evaluation of ambient conditions, spatial layout or by evaluating signs and artefacts of the PSS.

•

Networks, are not usually exposed to the customer, but in some cases may be evaluated when they come into contact with customers.

RESEARCH FRAMEWORKS AND METHODS A great variety of methods and frameworks for understanding and evaluating consumer acceptance and satisfaction are used in different disciplines. The study has discussed the following frameworks: Kano model of customer satisfaction, the Innovation diffusion of Rogers, the service quality model of Grönsroos, and SERVQUAL model by Parasuraman. The study has also surveyed a range of tools used for evaluating and measuring consumer satisfaction. These included surveys, in-depth interviews, focus group interviews, observations, mystery shopping, and psychographic portrait of customers. A number of drawbacks and benefits pertaining to the tools have been pointed out and discussed. Both the research models and the tools, while diverse to a different extent, were found to be useful for application in the PSS research area. CONCLUSIONS

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The environmental impacts of ever increasing consumption throughout the world have been recently recognised. Many solutions have been proposed to combat the rising levels of consumption. One of the concepts suggested as a potential solution to reduce consumption levels is the concept of product-service systems (PSS). The concept proved to be viable in the business-to-business context. However, in the private consumer markets, it has been less successful, both in terms of economic viability and environmental impact reduction. User behaviour has been named as the primary reason for this situation. To address this problem, either behavioural or service system design changes are needed. Changing human behaviour and existing lifestyles contribute to the vision of sustainable development, but it proves to be an insurmountable task over a short period of time. Alternatively, changing the design of product-service system to reduce the behavioural pitfalls could be a potentially easier way towards sustainable development. Changing system design requires understanding how consumer acceptance of more sustainable solutions is formed, influenced or changed, what are the influencing factors and what are the leverage points for the best results with lowest costs. Understanding consumer perceptions and behaviour in this context is crucial. However, the consumer decision-making process is much more complex and intricate than just a simple decision about shifting from owning a product towards paying per use of it. Throughout this study we demonstrated that products are not seen purely for their functional features, but rather products are complex combinations of various attributes, which, together with functionality, also bring status, serve as a key to a certain social class, reinforce selfesteem, and much- much more. Therefore, the goal of this study was to take a step towards a better understanding of the complexity of the phenomena we are aiming to change. We did that by looking at how different disciplines perceive the consumption process in general and the consumer decisionmaking process in particular. We saw the wealth of theories and frameworks being developed trying to solve this puzzle. We then looked closer at the potentially most promising models, which could prove useful in understanding the consumer decision- making process in the context of ownerless consumption. We also found some useful tools, which can be employed for collecting information about and from consumers. Ident ified frameworks and tools were then evaluated for suitability in the PSS context. We also provided some suggestions and examples for how several presented models could be operationalised in the PSS context. Some important lessons were learned from this study: •

The consumer is a moody creature – swinging between rationality and emotional behaviour.

•

All disciplines we looked at addressed consumption from some perspective. This perspective may be unique to this discipline, or may share common premises with other disciplines. Cross- fertilisation and learning is the key to success.

•

The challenge is not in the availability of analysis tools, but in analysis frameworks, which would allow us to speak the same language as our system and understand it better.

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We can probably employ just one tool to measure customer satisfaction with our system. But it is multifaceted and thus a combination of tools is more promising.

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PSS is a system, comprised of products, services, infrastructures, and networks. The criteria we want to evaluate this system against should include attributes of each dimension.

•

PSS is a multi-disciplinary area and initiating system level change will require system level effort. Researchers with various backgrounds need to be involved in developing ideas and methods for measuring customer satisfaction with PSS. “Non-social” PSS practitioners should learn methods of social sciences.

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Table of content EXECUTIVE SUMMARY .....................................................................................................3 1

BACKGROUND..............................................................................................................10

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METHODOLOGICAL FRAMEWORK AND GOAL OF THE STUDY.................12 2.1 GOAL...........................................................................................................................12 2.2 METHODOLOGY ...........................................................................................................12 2.3 LIMITATIONS ...............................................................................................................12 2.4 OUTLINE OF THE REPORT .............................................................................................13 CONSUMER RESEARCH IN DIFFERENT DISCIPLINES ....................................14 3.1 BUSINESS AND MARKETING DOMAIN............................................................................14 3.2 ECONOMICS DOMAIN ...................................................................................................19 3.3 SOCIAL STUDIES DOMAIN .............................................................................................21 3.4 PSYCHOLOGY DOMAIN.................................................................................................22 3.5 ENVIRONMENTAL STUDIES ...........................................................................................24 FRAMEWORKS AND TOOLS FOR EVALUATING CUSTOMER SATISFACTION.............................................................................................................27 4.1 FRAMEWORKS FOR EVALUATING CUSTOMER SATISFACTION WITH PRODUCTS .............27 4.1.1 Kano Model of Customer Satisfaction .................................................................27 4.1.2 Innovation framework..........................................................................................28 4.2 FRAMEWORKS FOR EVALUATING CUSTOMER SATISFACTION WITH SERVICES ...............29 4.2.1 Why measure services with different measures? .................................................29 4.2.2 Service Quality Model..........................................................................................30 4.2.3 The SERVQUAL model ........................................................................................31 4.3 TOOLBOX FOR MEASURING CUSTOMER SATISFACTION .................................................32 4.3.1 Surveys .................................................................................................................33 4.3.2 In-depth interviews...............................................................................................34 4.3.3 Focus group interviews........................................................................................35 4.3.4 Observations ........................................................................................................35 4.3.5 Mystery shopping .................................................................................................36 4.3.6 Psychographic portrait of customers...................................................................36 ANALYSIS OF FRAMEWORKS AND THEIR APPLICABILITY FOR PSS .......38 5.1 USEFULNESS OF FRAMEWORKS FOR PSS......................................................................38 5.1.1 Marketing model for creating customer satisfaction...........................................38 5.1.2 Kano Model of Customer Satisfaction .................................................................39 5.1.3 Innovation framework of Rogers .........................................................................40 5.1.4 Service Quality Model..........................................................................................40 5.1.5 SERQUAL model..................................................................................................41 5.2 TOWARDS A FRAMEWORK FOR EVALUATING CUSTOMER SATISFACTION WITH PSS......41 5.2.1 Identifying PSS attributes ....................................................................................42 5.2.2 What tools to use for evaluating PSS?.................................................................45 CONCLUSIONS..............................................................................................................47

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SUGGESTIONS FOR FURTHER WORK ..................................................................49

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APPENDIX ......................................................................................................................51

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REFERENCES ................................................................................................................52

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List of abbreviations B2B

Business-to-business

B2C

Business-to-customer

PSS

Product-service system

TRA

Theory of Reasoned Action

TPB

Theory of Planned Behaviour

SERVQUAL

Service Quality model

QFD

Quality Function Deployment

List of Figures Figure 1 Three levels of approaches for evaluating consumer acceptance of products...........12 Figure 2 Disciplines that study consumption and consumer behaviour ..................................14 Figure 3 Customer satisfaction process (adopted from (Engel, Blackwell et al. 1995), p. 143154, 177) ..........................................................................................................................15 Figure 4 The hierarchy of effects models ................................................................................18 Figure 5 The Kano model (Kano, Seraku et al. 1996) .............................................................27 Figure 6 Adopter categorisation on the basis of relative time of adoption of innovations (Rogers 1995)...................................................................................................................29 Figure 7 The Service Quality Model (Grönroos 1982)............................................................30 Figure 8 The Total Perceived Quality (Grönroos 1988)..........................................................31 Figure 9 Service Quality model (Parasuraman, Berry et al. 1985)..........................................32 Figure 10 Different data collection methods for different type of attributes (Edvardsson, Gustafsson et al. 2000).....................................................................................................40 Figure 11 PSS dimensions that can be exposed to customer judgement .................................43 Figure 12 Service Attribute Dual Importance Grid (Jacobs 1999) ..........................................46

List of Tables Table 1 Some attributes for tool library...................................................................................44 Table 2 Customer satisfaction measures for new products in financial services (Edgett and Snow 1997) ......................................................................................................................51

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A dissatisfied customer will tell seven to 20 people about their negative experience. A satisfied customer will only tell three to five people about their positive experience (Kan 1995).

1 Background It has been recognised that eco-efficiency improvements at production and product design level can be significantly reduced by ever increasing consumption levels (Khazzoom 1980), (Brookes 2000; Binswanger 2001; Haake and Jolivet 2001; OCSC 2001). While companies are struggling to reduce material intensity of each production unit and each product, the total environmental impact of the economy is growing. In order to address this problem, some authors suggest that for long-term sustainability, we need a factor of 10 or even 20 in materials and energy efficiency use improvements (Factor 10 Club 1994; Schmidt-Bleek 1996; Bolund, Johansson et al. 1998; Ryan 1998). As a potentia l solution to the factor 10/20 vision, some authors propose that system level improvements have to be made, instead of just having products redesigned (Weterings and Opschoor 1992; Vergragt and Jansen 1993; von Weizsäcker, Lovins et al. 1997; Ryan 1998; Manzini 1999; Brezet, Bijma et al. 2001; Ehrenfeld and Brezet 2001). Sustainable consumption has been highlighted as an important constituent of sustainable development in Rio de Janeiro, 1992 at the United Nation Conference for Environment and Development and by the World Summit on Sustainable Development in Johannesburg, ten years later in 2002. One of the generally accepted definitions of sustainable consumption is the following: “sustainable consumption is the use of goods and services that satisfy basic needs and improve quality of life while minimizing the usage of irreplaceable natural resources and the by-products of toxic materials, waste, and pollution” (Sierra Club 2002). It highlights the need to provide value to people, while reducing the environmental impact associated with producing and delivering this value. In other words, there is a need to de- link consumption of goods and services from material consumption. Many authors call for simplifying lifestyles and reducing consumption, associating the management of consumption with the so-called sufficiency revolution1 , which considers how much is enough for a good life. Our comprehension of this approach is still in its initial stage (Sachs 1999), but what is clear already is that it is a challenging task to reduce consumption levels, as the entire economic system is based on presumption of economic growth linked to the increased use of material resources and products. What is needed instead is consumption that is based on economic growth, which is decoupled from material resources. We propose the fo llowing definition of sustainable consumption: sustainable consumption is consumption that provides value by decoupling material-based growth from economic growth and environmental impact. Following this definition, more value needs to be provided with fewer materials involved and less environmental impact associated with the production and total delivery of that value. The product service system (PSS) concept has been suggested as a way to contribute to the system level improvement that tries to de- link economic and environmental growth (Goedkoop, van Halen et al. 1999; Mont 2000). The concept proposes that the environmental

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Sufficiency solutions refer to organising activities in more intelligent ways, in which the need for product is eliminated (see Heiskanen, Eva and Mikko Jalas. (2000) Dematerialization Through Services - A Review and Evaluation of the Debate. Ministry of Environment: Helsinki, no. 436, p. 12)

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impacts of products and associated services should be addressed already at the product and service design stage, with special focus on the use phase by providing alternative system solutions to owning products. A number of examples (mainly from the business-to-business area) exist that confirm the potential of PSS for reducing life cycle environmental impact. It is, however, increasingly evident that these examples are difficult to directly apply to the market of private consumers, mainly because business customers often prefer services to product ownership (Alexander 1997), while according to some studies it is a formidable challenge for private customers to adopt “ownerless consumption” (Schrader 1996; Littig 1998). In addition, the environmental impacts of such offers depend to a large extent on user behaviour. To address this problem, changes are needed in consumption behaviour; consumption patterns and levels; and ultimately a change in lifestyles towards more sustainable patterns. Many authors recognise that “the health of our planet is inextricably dependent upon human behaviour” (Geller 1995), and therefore changing human behaviour may foster and maintain sustainability (Gudgion and Thomas 1991; McKenzie-Mohr, Nemiroff et al. 1995; Oskamp 2000). An increasing number of studies have been conducted in search for instruments that can potentially help facilitate the shift toward more sustainable patterns of consumption, e.g., (Goodwin, Ackerman et al. 1997); (OECD 1997); (Stern, Dietz et al. 1997); (Thøgersen and Ölander 2002). In order to initiate the change process, it is necessary to understand how consumer acceptance of more sustainable solutions is formed, influenced, or changed, what the influencing factors are and what the leverage points for best results with lowest costs are. A considerable body of literature exists on consumption, consumer behaviour, and consumer decision-making process. The range of disciplines that address these questions from different points of view is quite broad - economics, business and marketing, social, and psychological studies of consumer behaviour, to name just the major ones. According to Fine (1997), “for economists, consumption is used to produce utility; for sociologists, it is a means of stratification; for anthropologists, it is a matter of ritual and symbol; for psychologists, it is the means by which to satisfy or express physiological and emotional needs; and for business, it is a way of making money”(Fine 1997). There is a range of studies that address consumer acceptance and attitudes towards more environmentally sound consumer behaviour, mostly coming from studies of car use, waste sorting and minimisation practices, recycling and other similar industries, see for example Steg, et al (1995), Aragón-Correa and Llorens-Montes (1996), and Guerin (2001) (Steg, Vlek et al. 1995; Aragón-Correa and Llorens-Montes 1996; Guerin 2001). For more than a decade now, this wealth of literature has also been applied to studies of consumer acceptance of environmentally sound products and services, e.g. Gatersleben (2001) and Rowlands, et al (2002) (Gatersleben 2001), (Rowlands, Parker et al. 2002). However, very few studies evaluated consumer acceptance of the concept of product service systems, i.e. consumption that is not based on ownership of goods, see, for example, studies that investigated consumer acceptance of car sharing schemes (Schrader 1999; Meijkamp 2000), ski rental and washing services (Hirschl, Konrad et al. 2001). The lack of studies that measure customer acceptance of PSS depends on two main reasons. First, there are still not many PSS schemes being developed that could serve as test grounds. Second, some of the research that studied consumer acceptance, focused on adopter categories, habits, attitudes and intentions, rather than on actually measuring the satisfaction level with the service. The reason is probably that eco-services and PSS ideas have been promoted by environmental

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management researchers, engineers and designers, environmental marketing researchers, and to a lesser extent by sociologists, who hold the banner of research in customer satisfaction. This report is a result of the feasibility study that is a part of the project on Life-Cycle Approach to Sustainable Consumption, initiated and funded by the National Institute for Advanced Industrial Science and Technology in Japan (AIST) and supported by UNEP, Sustainable Consumption Unit.

2 Methodological framework and goal of the study 2.1

Goal

The goal of the study is to provide ideas and suggestions for how customer satisfaction with PSS can be evaluated. This goal will be reached in a number of steps. We will first provide an overview of existing concepts and schools of thought from different disciplines that try to explain consumer behaviour and consumption patterns. The overview will be followed by the presentation of frameworks and tools that are used for understanding consumer satisfaction with products and services. These frameworks will then be evaluated as to whether they could be used for estimating customer satisfaction with PSSs and what kinds of adjustments are necessary. Some elaboration on how these tools could be used in the PSS context will be provided. The study results should be treated as indicative for future more in-depth studies in proposed areas. 2.2

Methodology

Based on the presented perspectives that are of importance for understanding and evaluating consumer behaviour, the following framework for this study is suggested. Disciplines

Attitudes Behaviours Acceptance

Methods Techniques

Figure 1 Three levels of approaches for evaluating consumer acceptance of products

This feasibility study is a desk-top study that includes analysis of academic journals with the use of several databases ELIN, Lovisa, Science Direct, Emerald, ABI Inform available at Lund University and through national Swedish library database LIBRIS. A number of interviews with experts in academic circles and in European and Swedish research institutions were conducted with regard to the questions about consumer behaviour and consumer acceptance of eco-efficient services and latest updates in the PSS area. 2.3

Limitations

The study is limited by time and no deep analysis of consumer behaviour from a specific discipline point of view has been performed, as the goal of the study is to evaluate applicability of the most often used methods for understanding and measuring consumer acceptance and satisfaction. No sensory and taste ratings and preferences that do not directly translate into the purchase, consumption, or market success of a product were included into this study.

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The overview of tools for measuring customer satisfaction excluded practical advice on how to develop these tools and how to analyse collected data, due to the general nature of these tools and availability of sources, which can provide help in these respects. 2.4

Outline of the report

An overview of the sections of the report is presented below. Section 1 provides the background and the rationale for engaging in the research of consumer behaviour. Section 2 provides the methodological framework for carrying out the study. Section 3 provides an overview of some concepts and theoretical groundings from different disciplines that study consumer behaviour, such as economics, business and marketing studies, social studies, psychological research, and the environmental field. The section identified differences in studying consumer behaviour and consumption. It also highlights the linkages between the disciplines in their approach towards understanding consumer related decision- making processes and draws attention to the relevant current contributions to the discussion from each discipline. Section 4 provides an overview of the major frameworks and techniques for understanding and evaluating consumer acceptance and satisfaction, which are used in many different disciplines. The described frameworks are Kano Model of Customer Satisfaction, Innovation framework of Rogers, Service Quality Model of Grönsroos, and SERVQUAL model by Parasuraman. The specific tools for evaluating and measuring consumer satisfaction include surveys, in-depth interviews, focus group interviews, observations, mystery shopping, and psychographic portrait of customers. Section 5 analyses presented frameworks and tools for their usefulness for the area of ecoefficient services and PSS. Some suggestions are provided as to how to choose the salient attributes on offer, how to blueprint the service process and provides some hints on how to evaluate customer satisfaction by operationalising the Kano Model of Customer Satisfaction. A relevant example of tool library service attributes is presented. The section discusses whether new tools are needed for evaluating the acceptance of PSS or what kind of adjustments need to be done to suit existing techniques for the new application area. Conclusions are drawn and directions for future research are discussed in section 6.

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3 Consumer research in different disciplines The study of consumption is increasingly enriched by a growing number of contributions. The purpose of this section is to provide a selective sampling of literature that deals with issues or methods, which might be applicable for studying the field of product-service systems. It is far from an overview of how consumption has been studied by different disciplines. Instead, the intention is to select useful sources and draw methodological and theoretical lessons, rather than to provide a thorough literature analysis. This section provides a selective presentation of how consumption and consumer behaviour is studied and explained by economics, business and marketing studies, social, and psychological research. The disciplines differ in their presuppositions about the human nature, influencing factors of consumer behaviour, and market response. They also employ different research methods, some of which will be described in the following sections. Despite that seemingly insurmountable abyss between disciplines, we will see that many research topics overlap, and that obviously there is no clear-cut line between different domains of consumer research. In addition, a lot of consumption related issues have been addressed from an interdisciplinary or multidisciplinary perspective. As Ackerman puts it, “a new interdisciplinary area of research on consumption has emerged in the last 10-15 years, drawing contributions and participants from sociology, anthropology, history, philosophy, literature, and marketing - even, on occasion, from economics” (Ackerman 1997). Consumer behaviour

Business management & marketing

Social studies

Economics

Psychology

Environmental studies Figure 2 Disciplines that study consumption and consumer behaviour

3.1

Business and marketing domain

This section provides a summary of the current understanding of consumer behaviour based on the overview of the existing body of business literature on the subject. Special focus is given to the formation of consumer needs and attitudes, information processing and the decision- making process within the purchasing decision. The ultimate goal of this decisionmaking process is satisfaction of consumer needs. This section helps the reader understand different stages in the consumer decision process and distinguish between the notions of customer acceptance and customer satisfaction. It provides background to the following sections, which analyse consumption and consumer behaviour from the point of view of different disciplines. Business management and marketing are concerned with ways of satisfying and retaining customers for the purpose of generating profits, improving companies’ competitiveness and securing market share. Some of the major themes in the business management domain include studies of customer relationship marketing, which analyses how customer satisfaction

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relates to competitiveness and profits, methods for measuring customer satisfaction (Thomson 1995), and approaches that can help transfer customer satisfaction data into strategies for improvement of customer relations and their retention (Reidenbach and McClung 1998), (Johnson and Gustafsson 2000), (Schellhase, Hardock et al. 2000). The paramount goal of the marketing domain is to understand the consumer and to influence buying behaviour. One of the main perspectives of the consumer behaviour research analyses buying behaviour from the so-called “information processing perspective” (Holbrook and Hirschman 1982). The basic concept is derived from the model of the consumer’s decisionmaking process, suggested by Dewey (1910) and adapted by Simon (1955), that includes the following major steps: problem recognition, search, alternative evaluation, choice and outcomes (Dewey 1910), (Simon 1955). Later this model was expanded to include other steps and add more details. One of the models, which will be used in this study as a basis for understanding the consumer buying behaviour, is the model suggested by Engel et al. (1995), because it combines the consumer decision process with the influencing factors (Figure 3). The need recognition process Desired state

Actual state

Degree of discrepancy Below threshold

At or above threshold

No need recognition

Exposure

Need recognition Internal search

Information search

Variables

• • •

Attention • •

Stimuli Marketer dominated Other

Comprehension

•

Pre-purchase alternative evaluation

Memory

•

Environmental influences Culture Social class Personal influence Family Situation

Individual differences Consumer resources: time, money, information processing • Motivation • Knowledge • Attitudes • Personality, values, and lifestyle •

Acceptance

Purchase

Retention

Consumption

External search

Post-purchase alternative evaluation

Satisfaction

Dissatisfaction Divestment

Figure 3 Customer satisfaction process (adopted from (Engel, Blackwell et al. 1995), p. 143-154, 177)

According to the model, the customer decision-making process comprises a need-satisfying behaviour and a wide range of motivating and influencing factors. Consumer decisionmaking process has the following steps: 1. Need recognition – realisation of the difference between desired situation and the current situation that serves as a trigger for the entire consumption process.

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This process depends on the difference between the desired and the current state of affairs. Several factors can influence this process: changed circumstances, time, new product purchase, and consumption that trigger the need for other products. Once a certain threshold of this discrepancy is exceeded, the need is recognised. However, to trigger the action, the need should be considered as important and the need satisfaction should be within a person’s resources (e.g. time, money, etc.). 2. Search for information - search for data relevant for the decision, both from internal sources (one’s memory) and/or external sources. The search for information usually begins with the internal search for any sort of information, memory, or experience with a product or service. The outcomes of this stage depend on the actual existence of internal knowledge about the subject and on the ability of the individual to retrieve this information. If the internal search does not produce expected results, the individual turns toward external information sources. The external searches differ in scale (how comprehensive the search for information is), in the direction (advertising, brands, instore information, information received from sales people, or social contacts) and in the sequence of the research (brand or attribute processing). The major determinants that influence a search are product determinants, situational determinants, retail, and consumer determinants. The consumer determinants comprise knowledge, involvement, attitudes, beliefs, and demographic features. The extent of the informa tion search depends on the degree of importance of the purchasing decision to the customer. For example, people seek information more actively than in cases of more expensive products (Engel, Blackwell et al. 1995). The relevance of product information presented to consumers also affects the purchasing decision. It has been shown that irrelevant information weakens consumers’ beliefs in the product’s ability to deliver the outcome and satisfy the need (Meyvis and Janiszewski 2002). 3. Pre-purchase alternative evaluation - assessment of available choices that can fulfil the realised need by evaluating benefits they may deliver and reduction of the number of options to the one (or several) preferred. In this step, a number of alternatives are evaluated and the final option, which is believed to be able to satisfy consumer need, better than the other options, is chosen. A number of evaluative criteria, which represent product or service attributes or particular dimensions of their delivery, are used for the evaluation. The criteria can be functional or expressive in nature, for example, price, brand name, colour, smell, environmental attributes, etc., which have different importance to various individuals (Mittal, Ratchford et al. 1990). Ratchford (1975) posits that consumers may often choose products for the status and image attributes and less for their functional features (Ratchford 1975). Differences in product attributes are also reflected in the way the consumer knowledge about a product can be measured. Functional attributes are more likely to be measured objectively, while expressive /status/ and image attributes can primarily be measured through subjective experiences of consumers with products (Park, Mothersbaugh et al. 1994). It has been demonstrated that these image or intangible attributes are important in customer evaluations, especially when their tangible features are difficult to evaluate (Olson 1977). In addition to the choice of criteria, consumers also choose which alternatives they will evaluate. The set of alternatives for the evaluations process is called the consideration or evoked set. Research on the evoked set (number of alternatives that are considered in the evaluation process) has focused on both explaining the process in which close substitutes alternatives sharing the same attributes (usually within the same product category, but of

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different brands) – are being evaluated and on the choice of alternatives from different product categories - noncomparables, so called across-category choice alternatives (Johnson 1989), (Park and Smith 1989). The difference in the choice process between close substitutes and alternatives from different product categories has been shown. The choice process between close substitutes is a top-down process, in which consumers start from comparing general information about product categories, narrowing it down to concrete choices among brands of products (Park and Smith 1989), (Johnson 1988). The choice process between alternatives from different product categories is the opposite. It starts from concrete features of alternatives and widens the comparison to more abstract characteristics, based on which the alternatives are being compared (Johnson 1989). Knowledge from these studies is useful for analysing consumer acceptance of PSS, because in the PSS context, the consumers have to compare service alternatives to products, which resembles comparing non-comparables from different product and service categories. Following Johnson’s logic, the evaluation in this case will also be a bottom- up process. The information processing capabilities about product characteristics are shown to depend on how well individuals are informed about a product, brand and entire product category (Beattie 1982), (Bettman 1979). It is demonstrated that well- informed customers focus more on objective information and particular product attributes, while less informed customers rely on general information about the entire product category (Bettman and Sujan 1987) and use more subjective information and recommendations of social contacts (King and Balasubramanian 1994). Furthermore, studies report that well- informed customers are willing to pay more for the quality brand than were lower-knowledge customers (Cordell 1997). An important part of the pre-purchase alternative evaluation is acceptance - whether the consumer accepts and believes the information provided and trusts the sources of that information. 4. Purchase - acquirement of the chosen option of product or service. The purchase step is associated with a number of decisions that individuals have to make. Even if the alternative is already chosen, the purchasing may still not be made, because motivations and circumstances can change, new information can become available, or there could be no such alternatives available at that particular place. The decision also depends on when and where to buy, and/or how to pay for the purchase. Thus, at the purchasing stage, the final decision can be fully planned, partially planned, or totally unplanned. 5. Consumption - utilisation of the procured option. After the product or service is bought, consumers can use it directly, in a period of time or could even abort the consumption process all together. Research distinguishes between sacred and profane consumption, as well as impulsive consumption. 6. Post-purchase alternative evaluation - assessment of whether or not and to what degree the consumption of the alternative produced satisfaction. The result of this step can be either satisfaction or dissatisfaction. Satisfaction is the result of a post-consumption evaluation if a chosen alternative met or exceeded expectations of the customer. According to Oliver’s expectation-disconfirmation model, consumers have three levels of expectations about the product or service performance: equitable performance (what the customer has to receive in return for money and effort spent), expected performance, and ideal performance (Oliver 1980). The model states that individual’s expectations are either confirmed if a product performs as expected, negatively disconfirmed when the product

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performs more poorly than expected, or positively disconfirmed if a product performs better than expected. A negative disconfirmation results in dis satisfaction, and consumption of the product is likely to be discontinued. Confirmation or positive disconfirmation results in satisfaction and the continued use of the product or service. 7. Divestment - disposal of the unconsumed product or its remnants. Divestment became a focus of customer research relatively recently because of growing environmental concerns. Most of the research has been focusing on final disposal and recycling, but recently the secondary use of a product, such as reuse and remarketing, is gaining more and more attention. Besides “information processing perspective” presented above, marketing analyses buyer behaviour by employing a psychologically grounded concept of attitudes. Attitudes are usually named as the major factor in shaping consumer behaviour and a wealth of studies is available on the topic of how attitudes can be used to predict consumer behaviour (Balderjahn 1988; Ronis, Yates et al. 1989; Luzar and Cosse 1998). Katz’ functional theory of attitudes explains the role of attitudes in shaping social behaviour (Katz 1960). People form attitudes toward products, brands, advertisements, stores, themselves, and other people based on four underlying reasons: utilitarian function (based on rewards and punishments), valueexpressive function (consumer’s central values or self- concept), ego-defensive function (serves to protect the person from internal feelings of threat), and knowledge function (need for order, meaning, and structure). Underlying dimensions of attitude include: affect (feelings), behaviour (do), and cognitions (learning and beliefs). These dimensions can be combined into three hierarchies of effects models, which try to explain a different kind of consumer decision-making process. •

The Standard Hierarchy or High Involvement Hierarchy perceives the consumer as a rational problem solver and suggests the following order of consumer responses: cognition, affect, and behaviour (learn- feel-do).

•

The Low-Involvement Hierarchy applies to low- involvement purchase situations where both motivation and risk are low e.g. trial purchases and suggests the following order of consumer responses: cognition, behaviour, and affect (learn-do-feel).

•

The Experiential Hierarchy highlights the importance of consumers’ emotions (impulse purchases) and situations in which consumer are highly involved with outcome and suggests the following order of consumer responses: affect, behaviour, and cognition (feel-do-learn). Outputs

Marketing Matrix mix Environmental factors

High involvement Beliefs

Attitude based on cognitive information or knowledge

Affect

Behaviour

Behaviour

Affect

Attitude based on behavioural learning

Beliefs

Attitude based on hedonic expereince experience

Low involvement Beliefs Experiential Affect

Behaviour

Figure 4 The hierarchy of effects models

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Sales Customer satisfaction Positive word-of-mouth

Inputs

These models suggest that there are three ways to change attitude: via changing belief, affect or via behavioural change. Theoretical frameworks dealing with beliefs are described in section 3.4. This section described the step-by-step model of the customer satisfaction process stemming from the “information processing perspective” and the hierarchy of effects models, which are based on a psychologically construct of attitudes. These two models in a way provide opposite views of the consumer decision- making process. The next section will explore the economic theory of consumer behaviour in the last decades. 3.2

Economics domain “There was once a man who lived in a Scarcity. After many adventures and the long voyage in the Science of Economics, he encountered the Society of Affluence. They were married and had many needs” (Baudrillard 1988), p. 35.

Consumption plays a central role in economic theory. The most popular theories and models in economic consumer research portray consumers as somewhat passive rational decisionmakers and assume that well-defined and insatiable desires for goods and services drive consumer behaviour in the market. Traditional neoclassical economists posit that these desires are not affected by culture, institutional frameworks, social interactions, or the consumption choices and lifestyles of their social contacts. Furthermore, these desires or preferences for certain goods are stable by nature and consumers maximise their own utility in the world of perfect information and market competition. They identify three major influencing factors that affect consumption - prices, incomes, and personal tastes. As personal tastes fall outside the realm of economics, most often, traditional economists restrict themselves to the role of income and prices in determining consumption choices. Other presuppositions of economic theory of consumer demand are that desires are not diminishing as mo re of them are satisfied and that the origin of desires is in the consumers themselves. In response to these traditional views, Galbraith argued that we need to realise that there are limits to desires and that expressions of these desires in specific want s are created by industrial systems, implying that consumer sovereignty is an empty concept (Galbraith 1958). Here he implies that only physiological needs have limits. He critiques the present consumer societies, which exploit the fact that psychological needs are insatiable, and which employ great amount of resources to discover and create urge for more and more desires, all in order to sustain the growth drive of indus try. After Galbraith, the narrow scenario of reality drawn by neoclassical economists has been heavily criticised on several grounds and a shift towards new foundations in microeconomics has taken place (Lancaster 1966), (Lancaster 1966), (Lancaster 1971), (Michael and Becker 1973). A modern consumer theory regards consumers as full members of the market who create their utility in the context of the household. The fundamental prerequisite of this approach is that goods and services are simply inputs to the consumption process, and their utility is being extracted by consumers, who spend time and other resources, in the household. The notion that needs and outcomes is really what consumers want is at the centre of this new approach. Needs ma y be fulfilled by putting market-provided goods through consumption process, in which time and skills of the consumers are employed. The end result could be a great variety of ways consumers can produce utility. This vast amount of alternatives makes the consumer decision process a complex task, which consumers face every day. Taking into account the concept of bounded rationality with lack of information and cognitive limitations, it is clear that consumers cannot be efficient in their choices and 19

that neoclassical economics failed to provide sufficient explanation of consumption processes. A different approach to the consumer decision process comes from the studies by prominent economists who explored the effects of tastes and preferences on consumption choices (Scitovsky 1992), (Becker 1996). It is been argued that life would be impossibly complex if we were to go through the entire decision- making process every time we are faced with a choice. It is suggested instead that our lives are deeply routinised and the decisions about familiar daily situations are made automatically, as a matter of habit. Habits are formed based on changes in tastes, and our preferences depend on experiences in past consumption. This discussion stems from the psychological learning theory, according to which habits are formed in the process of continuous reinforcement of influencing factors. Once people are satisfied with their choice and situation, their behaviour becomes routinised and they do not tend to search for new solutions, until new signals and influences come that can trigger the search for better alternative. These ideas built the foundation for an extensive debate on economic implications of habits (Pollak 1970), (von Weizsäcker 1971). Economists suggested looking at individual costs as an explanation of the habitual behaviour. Stigler and Becker (1977) explain stability of habits with a certain capital, consisting of skills, information and experiences, that was acquired during consumption of a particular object or service. Triggers for change reduce this accumulated capital (Stigler and Becker 1977). This discussion is interesting from environmental point of view as well, as routines and habits often offset sustainable patterns of consumption. Another interesting reason for habit stability comes from Leibenstein (1950), who suggested taking into consideration the desire of people to consume certain goods in order to be accepted by a social group. As a result, people can be trapped by the desire to adopt to the most accepted or prestigious way of living (Leibenstein 1950). This mechanism implies that if the prestigious way of living is unsustainable, it might be difficult to change it, as nonmembers will always struggle for being accepted into the prestigious circle. The contrary is also true: if it is possible to make prestigious life style more sustainable, then it will be easier to solicit more followers into it. The work of Sen brings us closer to the area of product-service systems in that Sen argued that in order to evaluate a person’s well-being it is not sufficient to look at one’s possessions and at the characteristics of these possessions, but at what functioning these possessions provide (Sen 1985). Sen defines functioning as “an achievement of a person: what he or she manages to do or to be. It reflects, as it were, a part of the ‘state’ of that person. It has to be distinguished from the commodities, which are used to achieve those functionings. It has to be distinguished also from the happiness generated by the functioning” (p.10). Later he summarised the conceptualisation of the processes of how utility is realised (Sen 1997): goods (e.g., a bike)àcharacteristics (e.g., transport)àfunctioning (e.g., moving)àutility (e.g., pleasure) (p.10). This conceptualisation reminds very muc h the direction of the current discussion in the environmental filed about product ownership versus buying functions of products. Examples of economic research provided here demonstrate clear links between psychological, social and marketing research. There is a lot to learn from economic research in terms of knowledge and methods, for example, for evaluating consumer willingness-to-pay and willingness-to-accept. Incorporation of economic methods into customer acceptance and satisfaction techniques could greatly contribute to this line of research.

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In the next section, the explanation and construct of consumer behaviour will be built on social and sociological studies. 3.3

Social studies domain

Social institutions, collective behaviour, and constraints of cons umption environments enable and affect consumer behaviour. Social studies focus on identifying and studying parameters of external environments that influence consumption patterns. The major themes that are studied by sociologists with regard to consumption behaviour are culture, social class, personal influence, ethnic influence, family and household, and situational influences. Engel (1995) shows the scope of individual and environmental influences and this distinction is used in this study for the narrowing down and distinguishing between the two research areas: sociology and psychology. There is a substantial body of literature on consumer culture that analyses cultural differences and looks into reasons for consumption in a cultural context (Featherstone 1991); (Cross 1993); (Lury 1998). Culture affects the entire structure of consumption. Sociology studies why people buy products and find various answers to that simple question: products provide function; products should comply with people preferences about the form in which product function could be delivered; products become symbols of meaning in society (Solomon 1983). The importance of values is described by a theory of consumption values (Sheth, Newman et al. 1991). The authors propose that consumer choice is influenced by functional value, conditional value, social value, emotional value, and epistemic value. Changes of values are usually explained from a life-cycle perspective (people grow older and their values change) or from a generational perspective, suggesting that values of all generations are being replaced by values of the “leading” generation. Another line of sociological research on consumption analyses institutional influences on consumption patterns. The main institutions in focus are family, religion, and the education system. Consumption patterns to a large degree are also affected by social class, because people who belong to the same class share similar values, lifestyles, and interests. Sociologists study the role different goods play in distinguishing between different classes and reinforcing identity within a certain class. Marketing segmentation is also often based on marketing products to a specific social class by using special language, symbols, and appeal, which triggers associations of a particular social class (see for example, (Williams 2002), or (Henry 2002). At the heart of the sociological view is the role played by goods in marking the distinction between different social groups and classes and strengthening identity within the group. Several sociologists investigated how people belonging to the same class use the construct of taste to choose particular goods. For example, Pierre Bourdieu (1984) maintains that consumption patterns develop based on taste that is specified by a certain cultural location (habitus), and that people consume in order to distinguish themselves in the social arena. He analysed how consumers classify goods in accordance with their taste and how the taste indicates belonging to a certain social class (Bourdieu 1984). Personal influence on the consumption patterns is studied by investigating the meanings that consumers attach to the process of consumption, as part of the dimension of identify construction. Consumers create themselves and are created by products, services, and experiences. Four different types of meanings can be distinguished: utilitarian meaning (perceived usefulness of a product in its ability to perform functional tasks), hedonic meaning (specific feelings the products evoke or facilitate), sacred products that are very important to people, and social meanings (products and services are seen as “media for interpersonal

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communication” and for statements about people’s positions and statuses in social groups) (Engel, Blackwell et al. 1995). Status is considered as one of the constructs of conspicuous consumption and was studied among many by Torsten Veblen, who pointed out that achieving a certain status in a social group stimulates consumption of so-called “status goods” (Veblen 1902). Baudrillard notes an interesting phenomena – on the one hand, marketing tells us to buy goods to be different, on the other hand, we need to buy because everyone else has already bought it (Baudrillard 1998). There is an important status element in this: we want to be different, but not too different from our social group. The discussion on the formation of habits in section 3.1, can also be enriched by the sociological studies on the topic. The major question raised was how habits are formed and how they can be changed to stimulate habitualisation of more sustainable consumption patterns. Sociology provides several insights about that. First of all, behavioural stability is explained by social interdependence of consumption. Consumers are seen as being embedded into, influenced and enabled by institutions (North 1981), (Hodgson 1988). Secondly, consumers are also part of social groups, from which they can learn through interaction. Again, status and the desire to be accepted and treated as part of the group is an important need (see next section of Maslow’s hierarchy). Social institutions, social groups, ideologies, and behaviours mutually reinforce each other and shape the development of society. Economic instruments and technological innovation alone will not provide desired change. Equally important are accepted norms and moral principles that should go together with cha nging techno-economic framework and should provide new grounds that would shape and determine more sustainable consumer choices. As it will be shown later, sociologists can directly contribute to the development of ecoefficient services and PSS with their knowledge of socio-technical frameworks and processes that shape household and individual consumption. The next section will provide some insights into consumer behaviour from a psychological perspective. 3.4

Psychology domain

The major part of psychological research, besides social psychology, studies individual processes. The domain of psychology research on consumer behaviour focuses on identifying and studying personal human qualities that influence consumer behaviour. Another line of research focuses on studying how various stimuli from the surrounding world affect consumer behaviour. Psychology is interested in learning how the urge of need is created, how different stimulators influence the personal decision- making process, and how the satisfaction sensation is created and confirmed. It seems that the focus is given to four major topics: consumer resources (time, money), motivation, knowledge, attitudes, personality, values, and lifestyle (Figure 3). Alongside these, three major processes are being studied by psychologists: information processing, influencing attitudes and behaviour, and learning processes (Engel, Blackwell et al. 1995). Several schools of thoughts can be distinguished in psychology. Representatives of the operant conditioning view of consumer learning investigate the role of rewards and punishment in consumer decision- making process. Behaviourists are concerned with the role surrounding conditions have on learning and the decision- making process. Behaviourists that support a classical conditioning view study how consumers respond to brand names, scents, 22

colour, and other stimuli when making purchasing decisions based on knowledge they have gained over time. On the other hand, cognitive learning theorists are concerned with studying internal brain processes. Psychological studies analyse the influence of the emotional state of consumers on purchasing decision (see for example (Gardner 1985)). Psychological processes such as attention, comprehension, memory, and cognitive and behavioural theories of learning, persuasion, and behaviour modification constitute an integral part of marketing studies on consumer behaviour and have been outlined in section 3.1. Needs for social appreciation and status that were discussed before are well grounded in the psychological theory of Maslow (1954), who postulates that human behaviour could be explained by the universal motivation to satisfy a hierarchy of needs, and that self-realisation and social acceptance are as important as the basic needs of food and shelter (Maslow 1954). Some needs are pre-potent and need to be satisfied before higher order needs. He argues for a development of a society, which would encourage higher order needs and in such way create a more liberal society that allows its members to reach full potential. He argues that the system of needs must be protected from powerful social forces, as higher order needs may totally disappear as a result of such forces, such as unemployment for instance. The lifestyle concept comprises a formal process of integration of social practices, through which actors express their individual identity. Practices of our society are closely linked to an economic and market system based on the notion of consumption. Therefore, in Bauman’s opinion, “lifestyles boil down almost entirely to styles of consumption” (Bauman 1990). According to him, people’s individual identity expressed in their lifestyles can be read almost entirely from the package of goods and services people surround themselves with. Recently a new field of “psychology of sustainability” or “new ecological psychology” was launched to address theoretical and empirical studies that strive to better understand the psychological processes underlying and triggering the development of environmental awareness and concerns with sustainability issues (Jones 1996), (Bonnes and Bonaiuto 2001). The emphasis of this field is on emotional bonds with our planet, application of environmental issues to psychotherapy, even search for an environmentally acceptable standard of mental health. In the context of sustainable consumption and lifestyles, it is worth looking at what kind of theories the psychology provides to aid in making the shift towards more sustainable consumption patters. At the individual level, the psychology has to offer two theories that aim at explaining cognitive processes behind individual decision making, connecting such constructs as intentions, attitudes, subjective norms, and perceived behavioural control. These theories provide some input to the discussion held above about social relevant actors and the importance of belonging to a group. The Theory of Reasoned Action (TRA) suggests that behaviour depends on the intention to perform the behaviour – the most important determinant of a person’s behaviour is behavioural intent. It is a linear correlation between the strength of a person’s intention, a person’s willingness to try to act accordingly, and the likelihood that such behaviour is actually being performed (Fishbein and Ajzen 1975). The theory defines two independent determinants of intention. The first determinant is the personal factor named “attitude towards the behaviour”, which refers to the individual beliefs that there will be outcomes and evaluation of these outcomes. The second determinant is the so-called subjective norms, which comprise an individual belief that relevant social actors think she should or should not perform a behaviour and an individual’s intention to comply with this behaviour (Ajzen and Fishbein 1980). To conclude, according to the theory, the behaviour is performed as a

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rational decision by the individual, which is in a position to make a decision. It then depends on the situation whether the attitude or the subjective norms takes over in shaping the intention. The Theory of Planned Behaviour is an extension of the Theory of Reasoned Action (Ajzen 1988), (Ajzen 1991). It includes the concept of perceived behavioural control, which is the person’s belief about feasibility of using the provided opportunity. Individual abilities and opportunities can affect control over the intended behaviour. The main idea is that the greater the perceived behavioural control, the stronger a person’s intention is to try to perform the relevant behaviour. However, the perceived behavioural control can also affect behaviour by making it impossible to perform a certain behaviour despite one’s positive intentions towards it. The literature search on psychology, consumption and environment revealed many psychological studies on the general environmental behaviour of people (see for example(von Borgstede and Biel 2002), (Iwata 1996)), social and ethical norms that affect it (von Borgstede, Dahlstrand et al. 1999), or on studying particular behavioural patterns and behaviours, for example recycling behaviour (Guagnano, Stern et al. 1995), waste sorting behaviour, or energy-saving behaviour (Poortinga, Steg et al. 2003). An important line of psychological research is the formation of habits and the environmental consequences of changing everyday behaviours. Summing up the previous sections of chapter 3 Overall, the preceding sections showed that consumption patterns are first of all much more flexible and prone to various influences than was suggested by traditional neoclassical theory. Further, it was shown that current consumption behaviour is not a stable preference of consumers but rather one choice of a great number of alternatives generated by the industrial machine. Economists and psychologists tend to assume and subsequently study consumer behaviour in isolation from other consumers, while sociologists perceive consumption as being socially grounded. The importance of the social context is also recognised and widely used by businesses in their marketing strategies. The complexity of the decision-making process and a large number of influencing factors suggest that changing consumer behaviour towards more sustainable consumption is a challenging process, which requires coordination at individual and societal level. The strength and range of forces that seduce and urge consumers into conspicuous consumption might appear discouraging for sustainability pursuit. Luckily, there are also other considerations that might help to divorce happiness from commodities. Some studies showed that the most valuable things for people have low economic, but high emotional value, such as family photos, memorable events, souvenirs, etc (Grafton 1993). Furthermore, it was also shown that people attach sacred meanings to different products and objects, such as cars, flags, stars, collections, etc. (Belk, Wallendorf et al. 1989). The previous chapters provided a selective overview of concepts and factors of consumer behaviour that are of interest for the following sections, in which an overview of the studies about eco-efficient services and PSS and consumer attitudes towards these schemes will be provided. 3.5

Environmental studies

Environmental studies on consumer acceptance build upon results of aforementioned disciplines in their research on consumption. They apply existing knowledge to a particular case of environmental problems stemming from consumption. The studies are concerned with

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what the environmental consequences of consumer purchasing decision could be, how they can be influenced to reduce the associated impact with economic methods, or by changing social and psychological contexts, technological solutions and political frameworks. Beside individual- level research of environmental behaviour, problems with and solutions to environmentally damaging consumption patterns are also studied at a more aggregate level. This field is broadly called sustainable consumption and is an interdisciplinary area that builds upon economic research, socio-technical and socio-psychological explanations, and policy studies. Consumer behaviour models are being developed (Hansen and Schrader 1997) and the environmental impacts of various scenarios of consumption have been modelled (Jager 2000). Material- and energy- intensive consumption patterns have been analysed and suggestions for addressing over-consumption have been provided (Røpke 1998), (Røpke 1999), (Brown and Cameron 2000). An important part of the sustainability discourse focuses on the ways of involving various stakeholders in the process towards more sustainable lifestyles, including consumers, see for example Jenkinson (1997) (Jenkinson 1997). The role of raising environmental awareness of consumers and the importance of streamlining environmental communication and information provision has also been addressed by a vast number of studies (Zimmer, Stafford et al. 1994), (Palm and Windahl 1998), (Björner, Gårn Hansen et al. 2002), (Palm and Windahl 1998), (Niva, Heiskanen et al. 1997), (Imkamp 2000). Another important development step towards sustainable consumption is the recent acceleration of work on product-related environmental policies (Niva and Timonen 2001), including extensive work on Integrated Product Policy, and especially the application of life-cycle thinking to product policies (Dalhammar 2002). One of the approaches for dealing with ever increasing consumption is the so-called dematerialised consumption that is based on the utilisation value of products. Consumers can extract the utilisation value during the product use and do not necessarily have to own the material product. However, studies in the area of eco-efficient service and PSS conducted so far, show that this utilitaristic idea is not that simple to implement in practice, as consumer behaviour is a much more complex process. One of the first studies that analysed acceptance of car sharing and apartment launderettes was conducted by Schrader (1999) (Schrader 1999). Schrader applied the innovation diffusion concept of Rogers to evaluate relative advantage of the services. He also created a portrait of potential users of these services, looking particularly at the level of education, gender influences, apartment size, and household size. As a result, the study provided insights into potential factors that can stimulate acceptance of eco-efficient services. As crucial success factors he identified: increase knowledge about the services; guarantee and communicate the advantages, avoid or reduce disadvantages, and address the target group of customers. Following the preliminary study, a comprehensive research into customer acceptance of eco-efficient services was conducted, which resulted in comprehensive empirical work and theoretical developments (Schrader 2001). The research of Rens Meijkamp offers a comprehensive analysis of reasons for people to become members of car-sharing organisations, provided potential user profile, and investigated factors that stimulate decision- making process towards adoption of the new service (Meijkamp 2000). He used the innovation diffusion framework of Rogers (1995) for conceptualising and structuring the research and specifically for identifying the main steps of car-sharing adoption. The purpose of the study was to test the feasibility of the eco-efficient services with regards to acceptance by customers, employment by producers and

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environmental potential. He concludes the eco-efficient services have a potential to directly and in a more passive way stimulate consumer behaviour change. Hirschl, et.al. studied acceptance of ski rental services and washing services with the help of a questionnaire with two major themes: extension of product use and consumption without ownership (Hirschl, Konrad et al. 2001). The majority of respondents replied that they do not replace functioning products by new ones. Also, the majority of respondents expressed that they knew where repair facilities were, but noted that they would prefer buying a new product if the cost of repair is as high as the price of the new product. The study revealed that fashion and comfort were important determinants of the behaviour, but not as important as the economic factor. Comfort was seen as the amount of time spent on renting/sharing and bringing back the product, but loss of flexibility was perceived as even more problematic. The study revealed that consumption through renting or sharing is not a deeply rooted practice, but no direct rejection to the idea was reported either. Therefore, opportunities for renting or sharing were seen for seldom- used produc ts and for products with high maintenance costs. Against renting or sharing, were concerns about improper use and revealed emotional attachments to some material objects. The study classified the respondents into four different groups depending on their stances toward ownership and renting/sharing. Two of these groups are potential customers of such services. These results have implications for the marketing of eco-efficient services, which have to be segment specific. Littig (2000) criticises the validity of the basic premise of eco-efficient services and PSS that customers need product or service utility, not as much ownership of the material object (Littig 2000). She stresses the symbolic and social functions of purchase and ownership, and the strong connection to the idea of property. The author further suggests looking at the studies of collective use as opposed to commercial leasing and renting. The article provides the results of a household survey that investigated why people prefer to buy a product instead of leasing it or sharing. The mains reasons to this behaviour are the desire to own things and to have the possibility to use them anytime. When it comes to reasons for collective use, two main rationales are offered: financial reasons and the frequency of product use. In conclusion, Littig calls for appropriate attention to the sociological pillar of sustainability in studies of eco-efficient services. All these examples show the importance of psychological and individual factors, as well as social frameworks for accepting eco-efficient services in private markets. The area of PSS and eco-efficient services still lacks theoretical groundings. As the importance of social factors in PSS design and delivery has been realised, it is therefore important to develop PSS models, which would allow and ensure economic viability, environmental superiority, and social acceptance of the new approaches to sustainable consumption. The first step for developing PSS models that would ensure social acceptability, is to learn from other domains and analyse what can be applied directly, what needs to be adjusted, and what new approaches are required because of the specifics of PSS. The first selective overview of the existing models and tools will be done in the following section.

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4 Frameworks and tools for evaluating customer satisfaction As the previous section showed, different disciplines approach consumer research from different standpoints, however they are all interested in identifying how an innovation - a new product or a service - is accepted by the consumers. Some disciplines use techniques for evaluating market response, others measure social influences on creating market acceptance, while yet others study personal characteristics of consumers and how these affect purchasing decision of each individual consumer. Each discipline also develops and uses specific methods as well. However, there are also general tools that are employed in many disciplines. 4.1 4.1.1

Frameworks for evaluating customer satisfaction with products Kano Model of Customer Satisfaction

The Kano et al. (1996) model of customer satisfaction classifies product attrib utes based on how they are perceived by customers and their effect on customer satisfaction (Kano, Seraku et al. 1996). According to the model, there are three types of product attributes that fulfil customer satisfaction to a different degree: 1) basic or expected attributes, 2) performance or spoken attributes, and 3) surprise and delight attributes. A competitive product meets basic expected attributes, maximises performances attributes, and includes as many “excitement” attributes as financially feasible. In the model, the customer strives to move away from having unfulfilled requirements and being dissatisfied (Figure 5). Customer satisfaction Very satisfied Performance or spoken attributes

Surprise and delight attributes (unspoken)

Not at all

Fully

Degree of achievement

Basic or expected attributes (unspoken) Very dissatisfied

Figure 5 The Kano model (Kano, Seraku et al. 1996)

The performance or spoken attributes (the central line of the model) are those expressed by customers when asked what they want from the product. Depending on the level of their fulfilment by a product or a service these requirements can satisfy or dissatisfy consumers. The basic or expected attributes (lower curve in the model) are basic attributes, which customers take for granted and they are so obvious that they are not worth mentioning. While the presence of these attributes is not taken into account, their absence is very dissatisfying.

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The surprise and delight attributes (upper curve in the model) lay beyond customer’s expectations. If they are present they excite the customer, but their absence does not dissatisfy, as customers do not expect them. A successful combination of expected and exciting attributes provides a company with an opportunity to achieve competitive advantage. A successful company will correctly identify the requirements and attributes and use them to document raw data, user characteristics, and important service or product attributes. To make information about the identified requirements about attributes understandable and useful for designers, a so-called Quality Function Deployment (QFD) approach is often being used. The goal of QFD is to assure that the product development process meets and exceeds customer needs and wants and that customer requirements are propagated throughout the life cycle of the product. The approach uses a number of matrices, which help translating customer requirements into engineering or design parameters, specifying product features, manufacturing operations and specific instructions and cont rols. QFD allows for the minimising of errors and the maximising of product quality for customers. The approach is probably the only existing quality system with such strong orientation to customer satisfaction. 4.1.2

Innovation framework

The process of adopting new products has also been studied within innovation adoption literature, and in particular the Rogers’ (1995) innovation framework. The framework suggests five steps, through which an adopter goes to the adoption of a new product or a service (Rogers 1995: 36): first knowledge of an innovation à forming an attitude toward the innovation à decision to adopt or reject à implementation of the new idea à confirmation of this decision Rogers’ model closely resembles the customer satisfaction model by Engel et al. (1995), see (Figure 3). The first knowledge is acquired when an individual is provided with the information about the innovation. The attitude is formed evaluating the features of innovation and a resolution on accepting or rejecting the product follows. Implementation corresponds to the consumption and confirmation refers to the need to reaffirm the decision about the innovation adoption. Rogers also maintained that people accept innovation differently, depending on their personality, their innovativeness, and interpersonal communication, and according to this could be classified into innovators, early adopters, early majority, late majority, and laggards (Figure 6). Innovators seek newness and value the time period that is passed since the product launch. Laggards seek reassurance and confirmation about product or service qualities through interpersonal communication and word-of-mouth. A large number of studies have analysed the differences between earlier and later adopters based on socio-economic, demographic, cultural, or psychological criteria (Tornatsky, Eveland et al. 1983), (Gatignon and Robertson 1985), (Frank, Sundqvist et al. 2001), (McMeekin and Tomlinson 1998), (Cestre and Darmon 1998).

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% of adopters

34% Early majority 2% innovators

13,5 % Early adopters

34% Late majority 16 % laggards

Time of adoption of innovation

Figure 6 Adopter categorisation on the basis of relative time of adoption of innovations (Rogers 1995)

Economists, for example, suggest that for social innovation to take place, innovators should first accept innovation and then create institutional framework that would trigger the acceptance of new practices. For the laggards to join in another mechanism – the desire not to be left out of the group – can be used to speed up dissemination of more sustainable practices. Besides adopter categories, Rogers also identified a range of factors affecting the rate of adoption: • Perceived attributes of the innovation • Type of innovation-decision • Relative advantage • Communication channels • Compatibility • Nature of the social system • Trialability • Extent of change agents’ promotion efforts • Complexity • Observability These factors are often used in many innovation studies as evaluation criteria, based on which questionnaires for consumer surveys are developed. 4.2 4.2.1

Frameworks for evaluating customer satisfaction with services Why measure services with different measures?

Many studies suggest that there is a fundamental difference between products and services, namely it is the way they are produced and consumed (Grönroos 1990; Grönroos 1998), (Edvardsson 1997; Edvardsson 2000), (Bateson and Hoffman 1999). The time period between service production and consumption is considerably shorter than for products. Most of the services are produced “on a spot” in an interactive process, in which customers and company employees meet. Satisfaction with service quality depends on a large number of dimensions - both tangible and intangible attributes of the product-service offer. The impact of intangible dimensions on consumer satisfaction is of particular interest at this point. Many psychological studies even show that non-verbal behaviour by the service provider greatly affects service evaluation (Gabbott Mark 2000). For example, the quality of interaction between customer and service provider influences customers’ perception of service quality. In services, a single employee may affect service efficiency and consequent customer satisfaction with the service (Barnard 2002). Even customers own involvement and participation in the service delivery affect customer satisfaction (Kelly, Skinner et al. 1982). Due to the differences in production and provision of products and services, customers evaluate quality and attributes of material goods and services in different ways (Mathe and 29

Shapiro 1993). This realisation has initiated a discussion on the need for special tools for evaluating more diverse and less tangible services (de Brentani 1989). Responding to the growing demands for developing specific and reliable ways to measure customer satisfaction in service industries, a number of studies have been conducted that suggested methodological frameworks for measuring customer satisfaction (Markovic and Horvat 1999). Other studies looked at what measures are used by service companies for measuring customer satisfaction. Studying how financial sector measures customer satisfaction Edgett and Snow (1997) showed that even though it is mostly traditional (financial) measures that are being used by the sector, they do not provide a sufficient basis for innovation in services and multidimensional approaches need to be devised. The two most often used types of measures in service companies are the increase in the number of customers and increase in portfolio dollars. However, the most useful types were direct personal interviews with customers and measure of customer expectations and perceptions. Surprisingly, companies use traditional quantitative measures, but perceive qualitative measures as the most useful. Authors concluded that financial institutions are not satisfied that the traditional accounting-type measures are presenting the full performance picture for new products (Edgett and Snow 1997). 4.2.2

Service Quality Model

According to Grönroos (1982), the quality of a service perceived by customers will differ depending on what strategy the company chooses to deliver and promote that service. The service quality model by Grönroos holds that the quality of a service, as it is perceived by the customer, can be divided into technical quality and functional quality dimensions (see Figure 7). The former denotes what the customer receives as the output of a service production process and the latter how the technical quality is produced and transferred to the customer during buyer-seller interactions. Expected service Traditional Marketing Activities

Perceived service quality

Corporate image

Attitudes

Technical solutions

Technical solutions

Perceived service

Customer contacts

Mashines

Technical quality Computerised systems

International relations Behavior

Functional quality Servicemindedness

Accessibility

Employees’ technical ability

Appearance

WHAT?

HOW?

Figure 7 The Service Quality Model (Grönroos 1982)

Grönroos posits that the technical quality is the “basic condition for a positively perceived total quality, but the functional quality is the one that adds competitive edge” (Gummesson and Grönroos 1987). Furthermore, in the relationship marketing, the growth of the

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importance of functional quality in comparison to technical quality become a strategic one (Grönroos 1993). The distinction is also made in the model between perceived and expected service quality and it is suggested that the quality is perceived subjectively. Grönroos (1988) further develops the model by positing that in the case of a company, which extends product offer with services, it is more appropriate to talk about total perceived quality. According to him, a high perceived quality is obtained when the experienced quality meets customer expectations, i.e. the expected quality. However, if the expectations are unrealistic, the total perceived quality will be low, even if high quality was experienced (Grönroos 1988). Expected quality

Total Perceived Quality

Experienced quality

Image Market communication Image Word-of-mouth

Functional quality

Technical quality

Customer needs

Figure 8 The Total Perceived Quality (Grönroos 1988)

The expected quality is heavily influenced by market communication (advertising, sales campaigns, PR and direct mail), word-of- mouth, company image, and customers needs. While a company directly controls market communication, the word-of- mouth and company image are outside its immediate reach. Grönroos conclusion is that the total perceived quality is not only defined by the level of technical and functional dimensions, but also by the gap between the expected and the experienced quality. 4.2.3

The SERVQUAL model

Given the growth of services in the last decades, many researchers have recognised the need to develop measures of service quality. One of the most often used measures is the SERVQUAL based on extensive research in generic determinants of perceived service quality (Parasuraman, Berry et al. 1985; Parasuraman, Berry et al. 1988; Zeithaml, Parasuraman et al. 1990; Parasuraman, Berry et al. 1991; Parasuraman, Berry et al. 1993; Parasuraman, Berry et al. 1994). The model measures the difference between customers’ expectations about general quality of a certain group of service providers and their perceptions about the actual performance of a service provider from that group. It uses a set of service quality determinants (explained in Box 1) measured by a 22- item scale. The model defines customer satisfaction as perceived service quality, which is the gap between expected service and perception of service actually received (Figure 9). Many studies in different service industries use the model as a basis for developing surveys to evaluate customer satisfaction, which was the ambition of the authors.

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• • • • • • • • • •

Determinants of service quality: Access Communication Competence Courtesy Credibility Reliability Responsiveness Security Tangibles Understanding the customer

Word of mouth

Personal needs

Past experiences

Expected service Perceived service quality Perceived service

Figure 9 Service Quality model (Parasuraman, Berry et al. 1985) Box 1. The determinants of service quality used in the model. • •

• • • • • • • •

Access means approachability and ease of contact; Communication means informing the customers in an understandable way and listening to them. It may imply that companies need to use different languages to talk to different customer groups (i.e. professional and private customers) in i.e. explaining what the service comprises, how much various service elements and offers cost, and other features of the service; Competence means possession of required skills (i.e. organisational and personal) and knowledge to perform the service; Courtesy comprises politeness, respect, friendliness of the service provider personnel; Credibility includes trustworthiness and honesty; Reliability means that the service is performed with high accuracy and thoroughness every time; Responsiveness concerns the willingness of employees to provide the service and how fast the service is provided. Security comprises physical and financial safety and confidentiality; Tangibles include all physical products that are involved in service delivery, and even other customers; Understanding the customer means taking steps to know customer better, learning their specific requirements, providing individual attention, recognising regular customers.

While being widely applied, the SERVQUAL model has also received criticism for not including prices in the assessment or for the inclusion of expectations as a variable in measuring service quality (Boulding, Kalra et al. 1993). Perhaps the most often heard criticism pertains to the lack of a clear link between satisfaction and perceived service quality identified by some research (Duffy and Ketchard 1998). An alternative model (SERVPERF) was later developed for these reasons, based on the findings that service quality does not depend on expectations and can be directly measured by simple performance based measures of service quality (Cronin and Taylor 1994). 4.3

Toolbox for measuring customer satisfaction

In spite of various standpoints and theories of consumerism, different disciplines generally employ similar sets of approaches and tools for studying consumer satisfaction. The approaches can be exploratory, descriptive, comparative or interpretative, and the most common tools are consumer surveys/polls, intervie ws and focus group discussions. 32

•

Exploratory and descriptive approaches are usually employed for evaluating attitudes, opinions, and public understanding of various issues, i.e. health and environment, consumer attitudes towards specific instruments or coercive measures.

•

Comparative and explanatory approaches are involved in studying particular consumer behaviours, i.e. recycling; and for development of predictions of specific factors that may affect values and attitudes, which in their turn may lead to cha nges in behaviour.

•

Interpretative methods and envisioning are used for predicting the consequences of particular consumption patterns, i.e. dematerialised lifestyles.

4.3.1

Surveys

Customer satisfaction surveys are a questionnaire based information collection tool to determine the level of satisfaction with various product or service features. Developing a good questionnaire is the key to collecting good quality information. Questions must be short and concise, well formulated, easy to interpret and answer, and facilitate unbiased responses. Survey techniques and questionnaire designs are well known to research community and multiple guidance from different disciplines exist (see, for example, (Hayes 1998), (Kessler 1996), (Chakrapani 1998), (Gerson 1994), (Hill, Brierley et al. 1999), (Reidenbach and McClung 1998)). Many methods are being used for gathering survey information. Telephone surveys are generally used to collect data from a large group of customers and to target segment markets. They are more effective in obtaining data than mail or e-mail questionnaires and can potentially provide a higher depth of data (Fetz 1996). Online surveys offer an economical and fast alternative form of surveying. They can be utilised with current customers, or the entire on-line population to provide fast feedback on satisfaction and allow quick automatic information processing. Mail surveys are the least expensive approach, but they often have a low response rate (2030%), which becomes problematic for the statistical reliability of the data. These surveys also do not permit follow-up questions and do not offer the depth of a telephone survey (Dickey 1998). Return cards allow getting customer response and certain possibility for measuring customer satisfaction. They proved to be especially useful if they are used in after-sale interaction with consumers, e.g. repair or service activity or warranty registration (Dickey 1998). Customer intercepts and exit surveys are two types of in-store information collection methods. They are especially useful in probing customer in their shopping environment. These surveys aim to intercept consumers in retail places and deliver a short structured questionnaire on their satisfaction with the delivered service, preferences, or behaviour. The intercept surveys can also incorporate limited product testing, which provides opportunity to appraise consumer opinion immediately after sampling a product. Consumer intercepts are usually employed to gain a fast or first overview of the phenomena studied. They are relatively cheap and can result in a considerable sample. Their major disadvantage is that samples may not randomly chosen leading to stratified sampling and reducing the representativeness of the results. Measurement scales in surveys Along with the development of consumer research, the number of measurement scales used in customer satisfaction surveys is growing (Devlin, Dong et al. 1993), which complicates

33

data analysis. Some studies, for example, may list over 40 different scales (Haddrell 1994). Two broad types of scales, however, could be distinguished: single- and multi-item scales. The single- item scales are simple, for example, many studies have used simple single- item scales such as “very dissatisfied” to “very satisfied” responses. The problem is that these scales are hardly able to capture different nuances related to products and services, which reduces their reliability and the only possibility for assessment is a test-retest format (Yi 1989). The multi- item measures in this case a much offer a better capture of customer satisfaction. Here survey respondents are asked not only to provide an overall evaluation of their satisfaction with the product or service, but are also required to evaluate the key components or dimensions of the offer. The reliability of the result, therefore, is higher than when using single- item scales. The multi- item scales can be presented in a number of different ways: Likert 2 , verbal, graphic, semantic differential3 , and inferential scales. Some authors suggest that the semantic differentia l scale is probably most reliable (Westbrook and Oliver 1981). Even though the survey techniques are well developed and have a long history, they have benefits and drawbacks. The main ones are outlined below: Benefits: • Access to many customers - broad sample; • Opportunity to see and describe variations and distributions of variables in population; • Possibility to gain general information about consumers’ attitudes, intentions, and perceptions; • Amount of collected data allows use of statistical analysis for explaining and predicting certain behaviours. Drawbacks: • Problematic to make consumers understand and interpret questions in the same way; • People tend to provide socially acceptable answers; • Reliance on consumer self- reporting and some argue that it is inconsistent with actual behaviour of people (Zelezny 1999); • Time consuming and difficult to develop good questionnaire; • Difficult to get access to needed population/sample; • Questionnaires require testing, but once at use corrections are difficult to make. 4.3.2

In-depth interviews

Sometimes, companies complement surveys with in-depth personal interviews. Such interviews can serve as a test bed for questionnaires and be an effective when the number of respondent is small. Personal interviews are often used when companies are creating specific “customer profiles” or “satisfaction improvement plans” (Dickey 1998). The participants in 2

The Likert technique presents a set of attitude statements. Respondents are asked to express agreement or disagreement on a multi-point scale. Thus, a total numerical value can be calculated from all the responses. 3

Charles E. Osgood developed the “semantic differential” method Osgood, C. E., G. Suci, et al. (1957). The Measurement of Meaning. Urbana, University of Illinois Press.. He devised a method to plot the differences between individuals' associations with words and in that way map the psychological distance between words. Osgood's method is a development of the Likert scale in that Osgood adds in three major factors or dimensions of judgement: evaluative factor (good - bad), potency factor (strong - weak), and activity factor (active passive).

34

in-depth interviews are chosen based on their willingness to participate, their value as a customer, and their ability to articulate issues (Kessler 1996). The strength of in-depth interviews is that they provide possibilities to get access to consumer perceptions of the offer, discover new variables and new needs of consumers and test and correct instrument. However, several weaknesses could be noted. For example, when interviewees are not randomly chosen, the conclusions need be confirmed with a broad, stratified random sampling. It is also difficult to have a large number of interviews and thus the sample is rarely representative. The personal interviews also require certain flexibility and interpersonal communication skills, which may not be always at hand. 4.3.3

Focus group interviews

Focus groups interviews is a direct questioning of a group of usually 8-12 people that provides fast feedback on service issues and customer satisfaction. It is a qualitative data gathering technique, in which the interviewer directs the interaction and inquiry in a very structured or unstructured manner, depending on the interview’s purpose (Denzin and Lincoln 1994). In consumer research, this method is used extensively for eliciting opinions, which explain consumer behaviour in shopping centres. It is also applied to pre-test and post-test advertisements and commercials. Focus groups may be the most cost-effective means of measuring product acceptance and may help define how the product should be adapted to a particular market or group of customers. Depending on the researched area, groups are recruited based on specified and varied criteria, such as age, gender, or other important characteristics. The respondents are recruited among the customers of a given shopping centre or supermarket. The strengths of the focus groups interviews are the possibility to assess how people themselves perceive or conceptualise issues and the possibility to test new issues or new dimensions of customer satisfaction. The weakness is that it is difficult to distinguish between personal and group perceptions. Group dynamics can also prevent certain issues or perceptions from being tackled. In addition, the size of a sample is rarely representative. 4.3.4

Observations

Participant observation is “research that involves social interaction between the researcher and informants in the milieu of the latter, during which data are systematically and unobtrusively collected” (Taylor and Bogdan 1984). Observations provide the possibility to observe product or service at a system level – during interaction with the user and during interaction with the environment. A source of data in the observation is everything that goes around the setting. This includes the physical environment and activities as well as social environment, such as patterns of interaction, frequency of interactions, direction of communication patterns, decision-making patterns, verbal and non-verbal communication patterns. Observations are unobtrusive and do not require direct interaction with participants, thus, observation can be conducted inconspicuously. It will always have an advantage whenever it is necessary to observe behaviour in their natural context. However, observa tions are topically limited to a small sample of activities with the focus on only external behaviour. The danger for the ‘complete observer’ is to fail to understand the perspective of participants. Conclusions have to be inferred from what can be observed

35

without any possibility of checking these interpretations against what participants say in response. Hence, with a less engaged research role there is a greater risk of missing out on an important aspect, or more seriously completely misunderstanding the behaviour (Hammersley and Atkinson 1995). One of the main criticisms of observation research is that it lacks reliability. Since data is collected in a non-standardised way, it is not generally useful for statistical treatment. Without a statistical analysis to confirm the significance of observation patterns or trends, researchers often find it hard to ensure that their findings are real and not merely the effects of chance. 4.3.5

Mystery shopping

This type of research is based on the information collected at points-of sale. Mystery shopping consists of natural observation conducted by specially trained persons sent by a company, who pretend to be customers or bus iness partners. These persons visit selected retail points to gather information and observations about staff responsiveness, attitudes towards customers or products, staff quality and competence, their appearance (and other related behavioural attributes), the aesthetics and functionality of inspected site, i.e. overall perception of the shopping experience. Some researchers use SERQUAL model for identifying attributes of the service to be evaluated by mystery shopping (Lowndes 2000). Mystery shopping helps to raise customer service standards and identify weak points from the customer perspective. It allows evaluation of services from the customer side and unbiased representation of the weak point of the service. The direct involvement in the process allows a better understanding of customer and service provider behaviour and the important moments of their interaction that in the end might affect customers’ perception of the service. Mystery shopping is, however, a time consuming procedure and requires significant effort to find and train mystery shoppers. Hiring professional mystery shoppers can be also costly. 4.3.6

Psychographic portrait of customers

A psychographic portrait of customers is part of psychographic research, which analyses the consumer’s activities, interests, and opinions about products, services, and shopping experiences. The method is a descriptive research method identifying the detailed characteristics of potential or existing clients. It combines sociological methods of gathering consumer information (social and demographic characteristic, information on consumption patterns, etc.) with the methods originating from personality psychology. The development of an exhaustive and accurate customer portrait requires extensive quantitative research. For example, the portrait of the shopping centre’s customer will entail a description of the “lifestyle” of the surveyed population. The typical variables included here are: type of work, income, size of family, place of residence, interests and hobbies, identification with cultural or behavioural patterns, expectations and requirements regarding the quality/brand of merchandise, quality of service, etc. Customers’ purchasing habits would include such issues as: who do they usually go shopping with, how often, how long do they spend in a shop, etc. Psychographic portraits of many customers allow customer segmentation in terms of purchase frequency, respondents’ experience of various shopping centres or service organisations, as well as benchmarking against competitors. The strength of a psychographic portrait is that by collecting information about consumption patterns and perceptions it combines both qualitative and quantitative data and thus provides

36

extensive background information for market segmentation and potential customisation of products or services. The weaknesses are that the method is time consuming and relies on very extensive information. The reliability is likely to be medium as it relies on self-reporting of customers. An extensive experience is required to create a reliable psychographic portrait of customers.

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5 Analysis of frameworks and their applicability for PSS This section analyses what concepts and methods that were described in the previous two sections can potentially be employed for evaluating consumer acceptance of product service systems. The important contributions from different disciplines are applied to the PSS concept, most commonly used methods analysing consumer acceptance are evaluated and their potential is discussed here. The section also discusses whether new tools are needed for evaluating PSS acceptance or what kind of adjustments of the existing techniques may be need. 5.1 5.1.1

Usefulness of frameworks for PSS Marketing model for creating customer satisfaction

The basic model for creating customer satisfaction, which was described in section 4.1, is not always very useful when it comes to service customers. These customers do not often go through the process in a linear manner and a lot of services happen after the encounter with the service organisation takes place. In these cases, much of the evaluation process occurs after service purchase and during or even after its consumption. It was shown, that when evaluating service alternatives before purchase, consumers seek and rely more on information from personal sources than from non-personal sources (advertising), which is the case with products (Murray and Schlacter 1990). Thus, an external stimulus is not so often the marketer, but can be a family member, a neighbour, or a friend. The basic model is often criticised for reflecting consumer decision and satisfaction as a very extensive processes when buying products. In reality people are often faced with situations when they do not have time for extensive information seeking (Erasmus, Boshoff et al. 2001). However, it was demonstrated that when buying services customers perceive greater risks than when buying goods and, therefore, they are usually engaged in an extensive decisionmaking process. This is even more likely in the case of PSS, since here customers, who are used to buying and owning products, are offered a new way of consuming, which involves closer relation with providers or sometimes less comfort than owning a product. Thus in this respect the model is useful for PSS context. The basic model is sometimes also criticised for being built on quantitative information and more qualitative approaches are suggested as a source of deeper knowledge of processes leading to customer satisfaction (Rassuli and Harrel 1990). That is why quantitative and qualitative measures are described here section 4.3. It was noted that the consumer’s evoked set of alternatives is smaller with services than with goods. In case of some services, the only alternative can be self-service (Zeithaml and Bitner 1996). In case of PSS, the evoked set comprises a combination of goods and services and, therefore, the number of alternative increases, which affects consumer decision-making process. Therefore, additional aid is needed at the point of service provision or sale. Services are based on the interactions of service provider employees with customers and therefore, customer’s satisfaction with services is more influenced by moods and emotions than in case of purchasing a product. This issue is confirmed by a number of researchers who criticise the model for being too pragmatic and depicting customers as totally rational beings (Rassuli and Harrel 1990). It is suggested that the model should allow for non-rational

38

consumer behaviour and to include data from qualitative studies, which focus on emotional and psychological determinants of human behaviour (Lofman 1991). To sum up, the model of the satisfaction formation process based on the decision-making flow of consumers can serve as a starting point for understanding how decisions are made for PSS options. Availability of information about weaknesses of the model provides potential possibility for its improvement and adjustment for specific features of PSS. 5.1.2

Kano Model of Customer Satisfaction

The Kano model measures product satisfaction against consumer perceptions of attribute performance. Although originally developed for product attributes, the model can be adopted for services too (see for example, (Edvardsson, Gustafsson et al. 2000)). Kano’s model is useful for understanding how PSS evaluations can be organised and it also affirms the important role of attributes in creating a satisfied customer. The combination of product and services in the PSS could also be classified into the three types of customer requirements or product-service attributes. To demonstrate the applicability of Kano model for PSS, let us take an example of a so-called “tool library” idea based on PSS concept. The tool library is a hobby tool renting service for households, which provides reliable access to professional quality tools at a moderate price. Consumer expectations about product attribute are that the rented tools should function well (product attribute) and that customers should have a possibility to rent them for various periods of time (service attribute). Both attributes are essential for the performance of such a tool library – something that customers expect. Neither of them however offers any real opportunity for product differentiation, they are part of the very basic attributes of the service, without which customers would be very dissatisfied, complain and most probably leave to another provider. The performance or spoken requirements have a linear relationship between perceptions of attribute performance and customer satisfaction, meaning that the strong position of these attributes enhances satisfaction with the product or service, while weak performance reduces it. In the case of PSS, these attributes would, for example, be the duration of the battery life of a cordless drill and extended opening hours of the tool library. Extending, improving, or adding more similar attributes to the product-service system will also raise customer satisfaction. The surprise characteristics are unexpected attributes, which, when provided, generate very high levels of customer satisfaction. Examples of these include the possibility to rent a tool for a longer period of time for the standard rate (service) or the existence of a possibility to rent multifunctional products. When these attributes are not available, this does not lead to customer dissatisfaction, because the customer does not expect them. The model can also be used as a background for identifying what data collection methods can be used for compiling data about each type of the attributes of a product or a service (Edvardsson, Gustafsson et al. 2000).

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Unspoken

Spoken

Dissatisfies • Fundamental national factors • Critical incident techniques

Delighters • User groups • Customer

• Defection studies

partnerships • Comparing the noncomparables

Core Benefits • Interviews

Differentiators • Interviews

• Focus groups

• Focus groups • Benchmarking • Surveys

Basic

Performance/Delight

Figure 10 Different data collection methods for different type of attributes (Edvardsson, Gustafsson et al. 2000).

5.1.3

Innovation framework of Rogers

The innovation framework is a useful construction, since it identifies factors influencing the adoption of innovation. It suggests that the perceived relative advantage of an innovation is one of the best predictors of the rate of its adoption. The perceived innovation compatibility with existing values, past experiences and needs of potential adopters is positively related to adoption (Tornatzky and Klein 1982). The perceived observability and trialability of an innovation also positively affects its adoption. The interaction between social actors can also positively affect the speed of adoption, while perceived complexity of the innovation affects it negatively (Cooper and Zmud 1990). The innovation framework proved to be useful in the study that explored success factors for car sharing in Europe (Jakobsson 2002). Adopter categories provided by Rogers were helpful when classifying customers of eco-services or PSS, especially the special characteristics or portraits of innovators, earlier adopters, and laggards. This provides hints at who potential customers might be and what strategies need to be developed to solicit them. The framework may also help identifying dimensions of PSS, based on which further development of specific tools for measuring consumer satisfaction could be based. 5.1.4

Service Quality Model

The depiction of service quality as a combination of technical and functional qualities is appealing to the PSS context, where technical quality is comprised of products, infrastructures, and the functional quality – of services and networks of service providers. The model becomes even more appealing in the context of the above example of a tool library. In this context, the technical component – products and infrastructure - can hardly become the influencing factor on the competitiveness. Instead, functional quality – the

40

intangibles that accompany material part of the system – gains vital importance, which confirms the suggestion of Grönroos (1993). The model has been criticised for being static, looking at quality perceptions at a given point in time (Stiernstrand 1997). However, other authors argue that the image part of the model makes it more dynamic, because it captures the relationship between corporate image and service delivery (Anselmsson 2001). An important consideration for the topic of this study is the actual relationships between satisfaction and service quality. Grönroos did not specifically distinguish between the two concepts. The current understanding is that satisfaction and service quality are two different, although very closely related concepts (Taylor and Baker 1994). It is worthwhile looking at these differences: •

the dimensions underlying quality judgements are rather specific, whereas satisfaction can result from any dimension;

•

expectations of quality are based on ideas or perceptions of excellence, while a number of non-quality issues can help form satisfaction judgements;

•

quality perceptions do not require experience with the service or provider, but satisfaction judgements do;

•

quality is believed to have fewer conceptual antecedents than does satisfaction (Taylor & Baker, 1994: 165).

Overall, both the Service Quality model and the Total Perceived Quality model may be of value for further research on customer satisfaction and perceived quality of PSS as they combine both tangible and intangible attributes and can be developed to represent the quality model of PSS as a first step in evaluating customer satisfaction. 5.1.5

SERQUAL model

The SERQUAL model of Parasuraman, described in section 4.2.3, was criticised for being too general and many studies that used the model adjusted it to specific requirements of a particular service sector. The same could be said about applicability of the SERQUAL model to PSS – service components in various PSSs are different and, therefore, the basic model will need to be customised for each case. The model customised for a particular PSS example could employ case-specific evaluation tools. The main focus of the SERQUAL model is on capturing the competence or behaviour of personnel (17 out of 22 items), and only 2 address products. The performance of products is not addressed, only visual and aesthetic aspects are noted. The model presents a good classification of service attribute that could be part of a PSS. As was shown before in section 4.2.3, the model needs adjustment even if applied in different service sectors. It might as well be possible to follow the logic of the model and to add product attributes. The model has already been successfully used, for example, developing questionnaires for evaluating acceptance of car-sharing services and proved to be useful after certain adjustments (Schrader 2003). 5.2

Towards a framework for evaluating customer satisfaction with PSS

The evaluation of eco-efficient services can be performed based on described frameworks and with existing approaches of consumer research that were presented in this study. The presented approaches are not perfect, and the main problems and difficulties with measuring

41

customer satisfaction were outlined. Also, recommendations from academicians for how these tools and frameworks could be made more useful or closer to reality were provided. The overview of contributions from different disciplines should allow for a better understanding of the processes behind the formation of customer satisfaction. This is a sufficient starting point for developing specific instruments to measure customer satisfaction with PSS. Using this as a starting point, some suggestions for PSS attributes that correspond to customer requirements will be provided. These are the attrib utes, based on which the PSS can be evaluated by consumers. 5.2.1

Identifying PSS attributes

The main components of any PSS or eco-services are products, services, infrastructures, and networks (Mont 2000). Here the part of the system, with which customer comes into direct contact, is larger than in the case of a pure product or service, which has implications for customer evaluation process. In the case of evaluating customer satisfaction with a product, customers are usually asked to assess mainly tangible features of the product and here the delivery of the product - shop visit and product purchase experience is done by other actors than the producer. In the service context, however, consumers are exposed to service purchasing and service delivery processes. They either observe the actual service process (e.g. cleaning services), or actively participate in the consumption of the service (e.g. tourism). The main focus in service evaluation is on intangible dimensions. In the case of PSS or ecoservices, customers are exposed to both dimensions: product and service. In addition, due to closer relations with the service provider customers can even become exposed to infrastructure and networks that support PSS delivery. Therefore, in the PSS context an evaluation of all four PSS components becomes relevant (Figure 11): §

Product evaluation is conducted by assessment of products or technologies.

§

Person-based or other types of services (technical, information and knowledge services) that are included into PSS may be evaluated.

§

Infrastructure can be evaluated when the customer comes into contact with enabling supporting technology, or by the evaluation of ambient conditions, spatial layout and functionality or by evaluating signs and artefacts of the PSS.

§

Networks, are not usually exposed to the eyes of the customer, but in some cases may be evaluated when they come into contact with the customers.

Customers can evaluate how effectively the provider is managing suppliers and partners. For example, if additional tools are needed in a tool library, customer will know how long it takes the provider to get additional items delivered. This possibility is appreciated by the customers of tool rental companies at times of high season, when tools are being heavily used and rented. At the time of low season, absence of required tools is considered unacceptable and becomes the reason for dissatisfaction. Thus, perceptions about each dimension of this system can potentially affect customer satisfaction with the total offer. This should be taken into consideration when mapping the process of delivering the eco-service or PSS.

42

Product

Service Person-based services technical, knowledge, information services

Products Technologies

Infrastructure

Networks

Support technology Ambient conditions Spatial layout Signs, artefacts

Partners and suppliers of service provider

Figure 11 PSS dimensions that can be exposed to customer judgement

There are some tools available for mapping out the service process, such as service blueprinting or service mapping (Norling 1993). A service blueprint is “a picture or map that accurately portrays the service system so that the different people involved in providing it can understand and deal with it objectively regardless of their roles or their individual points of view” (Zeithaml and Bitner 1996). It depicts the process of service delivery, roles of customers, roles of service employees, and visible elements of service. Zeithaml and Bitner (1996) call the consumer contact with the service system a “line of visibility or line of interaction”. According to them the main components of a service blueprint are: •

line of interaction: customer actions;

•

line of visibility: “on-stage” contact and employee actions;

•

line of internal interaction: “backstage” contact and employee actions;

•

support processes.

The components of the service blueprint can identify and prioritise potential problematic areas in the service delivery process from the customer point of view. Some ideas from the tool and equipme nt renting companies are provided below. Line of interaction: customer actions Several life cycle stages of the product are evaluated by customers in a PSS. In the servicing/renting/leasing phase, it is important to learn the decision- making process of consumers who evaluate products, which they do not need to buy. What are the differences and similarities with the purchasing situation? Is there any difference in information seeking behaviour? Could emotions affect the result to the same extent? Rental companies state that consumers express less interest in brands when choosing a product, because the service provider ensures the function. Thus, independent service providers have to rely on other marketing strategies than soliciting consumers by a brand name. Line of visibility: “onstage” contact and employee actions

43

The onstage contact occurs when the customer comes to the service provider. Here, the relationship with the service employee and the first impression of the service facility are important. With raising consumer awareness about life cycle cost of ownership, it appears to be important to provide concrete figures about life cycle cost of product ownership. The relevance of information is very high in the case of PSS, where the total costs of ownership presented to consumer is likely to strongly influence the choice of alternatives and the final decision. Line of internal interaction: “backstage” contact and employee actions Backstage contact with the customer is extended in case the provider manages the consumption phase of a product, as in the case of maintenance and upgrading services. Since product performance heavily depends on customers to use it, it is important for the representative of the service provider to learn the actual process of utilising a product. Here it is important to consider that blue-collar employees perform the maintenance and on-site upgrading and that the backstage employees suddenly become the front stage contact for customers, who may judge the service quality and be either satisfied or dissatisfied with it. Table 1 Some attributes for tool library

Product Significant range of tools Access to professional tools Availability of tools Ergonomic, silent, amortisation Tools are well ma intained (e.g. cleaned, oiled, charged) Service conditions Convenient opening hours List of available tools with accessories handing out Minimum rental time (several hours, 1 day) Need for reservation (yes/no) Reservation period (1 to several days in high season) Booking system (telephone, internet, drop-by) Neat appearing employees Prompt and personal service Assistance of service provider with the choice of tools and use instructions Location How far from household is the service How customers get there Clean location Space capacity

Financial issues Pricelist available at a website Cost structure (cleaning costs, deposit fee, use price) Moment of payment (before the use or after) Choices of payment (cash-credit card, per hour/per day/included in house rent, discounts for 2nd and 3rd days, or discounts for working days during summer) Organisation Core business (renting, selling) Type (renting, leasing, sharing) Ownership (rental company, tenant association, members of the service, neighbours, users) Who provides the service (commercial organisation, tenant association, independent entrepreneur, neighbours, independent entrepreneur, who is a neighbour, commune) Maintenance of products (rental company, tenant association, members of the service, outsourced in case of repair to a third party) Additional services Workshop with all basic tools and stationary facilities Home delivery service (on-time delivery)

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Support processes Support processes would include organisation of repair and maintenance of tools and their final disposal at the end of their life. For the example of the tool library, the following attributes could be suggested in the above context (Table 1). 5.2.2

What tools to use for evaluating PSS?

A combination of approaches for evaluating customer satisfaction with PSS may be beneficial. All tools presented in section 4.3 can potentially be employed in studying customer satisfaction. Questionnaires are used to directly ask customers about their experiences, habits, preferences, and opinions. It often recommended that dimensions of service or offer should be identified by customers. This could be done in focus groups, by individual in-depth interviews or by questioning customers when collecting information for the psychographic portrait. These tools also allow the development of questionnaires for specific customer groups, if the demographic data are collected during the communication. A profiling of potential users was done in a study of eco-services (Behrendt, Jasch et al. 2003), which confirms potential usefulness of tools similar to the psychographic portrait. Another study within the PSS area heavily relied on data generated during the focus group interviews (Vergragt 2000). Observations can provide more information about natural environment, in which shopping or service encounter occurs without imposition or interference. Mystery shopping can provide insights about the service or product directly from the customer place. Contingent valuation can offer useful perspectives into potential future situations regarding consumer willingness-to-pay. Incorporation of economic evaluation into a customer satisfaction tool could provide the possibility for correlation analysis between willingness to pay and different attributes of the system. Thus, each tool can contribute with specific information to the overall picture about the service or a product. The combination of tools would provide a more comprehensive picture. The first decision should focus on what do we want to know and only after we have identified the purpose, should we decide on the most effective way of obtaining required data. The first step is to formulate what do we want to know in the consumer research. With the purpose identified, the most effective ways of obtaining required data can be determined. The major decision to be taken is about the framework for evaluation: how the satisfaction formation process suits our context and our products, and what the attributes are of the ecoservice or the PSS (some ideas were presented in section 4.1). The next decision is more instrumental: how to translate these attributes into tools, which could be used for collection and analysis of data. Translating the identified PSS attributes into information collection tools is an important step. Many researchers, however, have expressed concerns even with the way multi-attribute scales are being used. Often in consumer satisfaction research the measurement of quality/performance is done as if these concepts were uni-dimensional, measured either as a single attribute (e.g. using a single total performance evaluation question) or as summed scores across several evaluation questions ending up with a single index, which is then presented as a measure of overall satisfaction. Some researchers have argued for the need to distinguish the relative significance of specific product performance attributes, because they have different levels of importance to customers (see Kano model). Therefore, it is necessary that customers should evaluate the attributes and weight them (Fetz 1996). This will allow the identification of the most important attributes

45

and the making of adjustments when analysing data to account for different weightings of the attributes. Making a thorough analysis of attributes by operationalising the Kano model is possible (Jacobs 1999). The following steps should be undertaken. Once the attributes are weighted by their importance (e.g. “very important”=4, “not at all important”=1), the customers could evaluate the performance of each attribute of a product or a service (4=“excellent”, 1=“poor”) and evaluate overall satisfaction with the product or service (4=“very satisfied”, 1=“very dissatisfied”). After that, by correlating the attribute performance ratings with the measure of overall satisfaction (Pearson correlation) it is possible to measure motivational importance. The comparison of direct and motivational importance in the Dual Importance Grid provides a better understanding of what drives customer satisfaction with services (Figure 12). These parameters could then be plotted onto the Service Attribute Dual Importance Grid and analysis could result in a typology of the analysed attributes (existing, revealed, or expected) The expected attributes have high direct importance and low motivational importance. Their presence does not greatly improve overall satisfaction, because they are expected to be part of the service in any case, but their absence or poor performance is very dissatisfying for the customer. Performance or revealed attributes, high in both direct and motivational importance, can both satisfy and dissatisfy customer depending on how well they are fulfilled by the product or a service. Motivational importance

Surprise and delight attributes

Other attributes

Personal assistance

Service reliability

Billing accuracy

Performance attributes

Basic or expected attributes

(low influence) Direct importance

Figure 12 Service Attribute Dual Importance Grid (Jacobs 1999)

Surprise attributes, low in direct importance, but high in motivational importance, excite the customer when present, but their absence does not dissatisfy. This example illustrates how abstract models and fr ameworks could be operationalised and, at the same time, used to interpret the primary data from theoretical perspective. This is relatively easy technique, which can be employed when evaluating customer satisfaction with product-service systems.

46

6 Conclusions The environmental impacts of ever increasing consumption throughout the world have been recently recognised. Many solutions have been proposed to combat the rising levels of consumption. One of the concepts suggested as a potential solution to reduce consumption levels is the concept of product-service systems (PSS). The concept proved to be viable in the business-to-business context. However, in the private consumer markets, it has been less successful, both in terms of economic viability and environmental impact reduction. User behaviour has been named as the primary reason for this situation. To address this problem, either behavioural or service system design changes are needed. Changing human behaviour and existing lifestyles contributes to the vision of sustainable development, but it proves to be an insurmountable task over a short period of time. Instead, changing the design of product-service system to reduce the behavioural pitfalls may potentially be an easier way towards sustainable development. Changing system design requires understanding how consumer acceptance of more sustainable solutions is formed, influenced or changed, what the influencing factors are and what the leverage points for best results with lowest costs are. Understanding consumer perceptions and behaviour in this context is crucial. However, the consumer decision-making process is much more complex and intricate than just a simple decision about shifting from owning a product towards paying per its use. Throughout this study we demonstrated that products are not seen purely for their functional features, but rather products are complex combinations of various attributes, which, together with functionality, also bring status, serve as a key to a certain social class, reinforce one’s self-esteem, and much-much more. Therefore, the goal of this study was to make a step toward better understanding the complexity of the phenomena we intend to change. We looked at how different disciplines perceive the consumption process in general and consumer decision- making process in particular. We saw the wealth of theories and frameworks being developed trying to solve this puzzle. We than looked closer at potentially most promising models, which could prove valuable for understanding the consumer decision- making process in the context of ownerless consumption. We also found some useful tools, which can be employed for collecting information about consumers. Identified frameworks and tools were then evaluated for suitability for the PSS context. We also provided some suggestions and examples for how some of the presented models could be operationalised in the PSS context. Some important lessons were learned from this study: •

The consumer is a moody creature – swinging between rationality and emotional behaviour.

•

All disciplines we looked at address consumption from some perspective. This perspective may be unique to this discipline, or may share common premises with another. Cross- fertilisation and learning is the key to success.

47

•

The challenge is not in the availability of analysis tools, but in analysis frameworks, which would allow us to speak the same language with our system and understand it better.

•

We can probably employ just one tool to measure customer satisfaction with our system. But it is a multifaceted system and thus a combination of tools is more promising.

•

PSS is a system, comprised of products, services, infrastructures, and networks. The criteria we want to evaluate this system against should include attributes of each dimension.

•

PSS is a multi-disciplinary area and initiating system level change will require system level effort. Researchers with various backgrounds need to be involved in developing ideas and methods for measuring customer satisfaction with PSS. “Non-social” PSS practitioners should learn methods of social sciences.

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7 Suggestions for further work The identified gaps in specific tools for evaluating customer satisfaction with PSS and the existence of a vast amount of methods for evaluating customer satisfaction with products and services suggests clear direction for adjusting the present techniques to the specificity of PSS. In order to also improve current techniques of evaluating customer satisfaction, identification of best practices in measuring customer satisfaction in both manufacturing and service companies is needed. As the results of the study show, a range of data collecting techniques exist dominated by surveys and questionnaires employed by both academia and businesses. What is needed is a guideline for what techniques are better suited for collecting specific data from customers. As was exemplified with the Kano model, various techniques are suitable for evaluating the spoken and unspoken attributes of products and services. This direction needs to be further explored and tested in real case studies. The overview of the existing company practices of measuring customer satisfaction can be conducted through a survey and interviews with companies. This will allow evaluation of business approaches to measure consumer PSS satisfaction in B2B and B2C markets. Comparing the techniques will provide a good starting point or basis for improving specific PSS-directed customer evaluation methods. The indicators, which companies use for measuring customer satisfaction, is another important area to explore. The study has shown that there is a mismatch between measures and indicators that are used and the ones companies think are useful. Identification of methods and indicators that reduce the mismatch would allow for the improvement and streamlining of the measurements. As the study concluded, it is the absence of frameworks, tools and data collection methods tailored for PSS, which is the main concern Developing a framework that would identify major attributes and elements, based on which a PSS can be evaluated, and linking these attributes to specific data-collection techniques will greatly simplify and foster measuring customer satisfaction with PSS and eco-efficient services. According to the IIIEE definition, PSS is a system of products, services, supporting networks (actors) and infrastructure that is developed to be: competitive, satisfy customer needs and have a lower environmental impact than traditional business models. The difference between eco-efficient services and PSS has not been distinguished in this study. Currently, there is a tendency that any combination of products and services is automatically called a PSS without evaluating their environmental profile. A range of services is labelled as eco-efficient without systematic evaluation of their environmental performance. In order to foster the development towards sustainable production and consumption systems, the development of new market offers that would be designed as environmentally sound and tested for customer acceptance prior to market launch is needed. Therefore, the support to the pilot projects and attempt to develop new PSS is vital. Development of new offers is a time consuming matter that requires involvement of a number of actors, often of those who are usually considered to be outside of the traditional product chain. The development of scenarios that can be tested with real life actors and evaluated from environmental and customer acceptance perspective may provide a good illustration of expected outcomes. Some attempts were already made to develop scenarios of more

49

sustainable consumption practices, such as SUSHOUSE project; however, the scenarios were the final outcome of the project, and did not lead to new viable offers on the market. The IIIEE is currently conducting a project that aims to develop a PSS scenario for a socalled hobby-tool library in close cooperation with the producers, rental and housing companies, as well as households. The scenarios are planned to be followed by a pilot project where a PSS will be developed. This could potentially provide a ground for evaluating customer satisfaction with PSS, which are designed with environmental consideration and with customer requirements incorporated into the PSS. To promote sustainable production and consumption, new, behaviour-changing PSS are needed. It is not enough to learn about existing ways of providing products and services, because as we see, they are not sustainable. Developing new solutions that are well evalua ted is the way forward. Existing PSS and eco-services can be evaluated from environmental and customer acceptance perspectives, but the next step should be to analyse whether expressed customer requirements could be matched with less environmental harmful solution, while still be accepted by customers. Undoubtedly, the efforts of academy and business, should be supported by policy actions, which should be directed towards involving new actors, disseminating information about more sustainable ways of living and supported by economic instruments (Mont 2002). As was already stressed, various instruments (policy, economic, etc.) have different time frames for implementation. Reducing environmental impact from the consumption side requires changing the behavioural patterns of people. However, this cannot be achieved by policy measures alone, since personal values are influenced by institutional frameworks and values in society. By changing societal values, the best outcomes can be achieved, but this requires a concerted effort of all layers and players in society - political agendas, market system, and social frameworks.

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8 Appendix Table 2 Customer satisfaction measures for new products in financial services (Edgett and Snow 1997)

Frequency of use

Helpfulness of each measure

1. Increase in the number of customers

3

2. Increase in portfolio dollars

9

3. Complaint measurements

8

4. Market share

15

5. Direct personal interview

1

6. Employee attitude measures

12

7. Measure of customer expectations and perceptions

2

8. Reasons why customers discontinue with product or service

10

9. Focus groups

4

10. Repeat customer rates

6

11. Customer survey – mail

11

12. Comparison of customer attitudes with other companies

13

13. Number of new customer referrals

7

14. Customer survey – telephone

5

15. Refunding of service charges or fee adjustments

20

16. Customer comment cards

19

17. Customer audits

16

18. Frequency of customer interaction

17

19. Customer hotline tracking

14

20. Quality circles

18

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