CHAPTER 2 Understanding Consumer Behavior 2.0/ Web 2.0/ Digital
2.6 Growing Use of Digital Technology
Emergence of technology, particularly information technology and its multi-dimensional applications in improving life-style has intensified the use of this technology around the globe. Rapid growth of users (Shown in table 2.2) refers that no business can afford to avoid the application of this technology in future. Asia is the habitant of almost two-third of the world population and 48.1% of them use Internet, which is highest in number as Internet user, 48.7% of total world users. In compare to the other regions, Asia represents the highest future growth potential of Internet users. Internet use rate has increased rapidly in recent years in Bangladesh and present penetration rate is 48.1% of the total population of 16.6 million (See in the table 2.3). Growing maturity of internet uses and rapid improvement of technology, for instance launching 4G of Mobile technology, will accelerate the growth of technology-driven services in Bangladesh. It offers opportunities in one hand and imposes challenges for marketers to understand rapidly changing consumer behavior.
Table 2.2: World Internet Usage and Population Statistics Dec 31, 2017- Update World
Regions
Population (Million)
Population
% of World
Internet Users 2017 (Mil)
Penetration Rate (%
Pop.)
Growth 2000- 2018
Internet Users%
Africa 1,287.91 19.9% 453.32 35.2% 9,941% 10.9%
Asia 4,207.59 55.1% 2,023.63 48.1% 1,670% 48.7%
Europe 827.51 10.8% 704.83 85.2% 570% 17.0%
Latin America
652.05 8.5% 437.00 67.0% 2,318% 10.5%
17 Middle
East
254.43 3.3% 164.03 64.5% 4,893% 3.9%
North America
363.84 4.8% 345.66 95.0% 219% 8.3%
Oceania 41.27 0.6% 28.44 68.9% 273% 0.7%
Total 7,634.75 100.0% 4,156.93 54.4% 1,052% 100.0%
Source: www.internetworldstats.com Table 2.3: Internet Users in Asia
World Regions
Population (Million)
Internet Users 2000
Internet Users 2017
Penetration Rate (%
Pop.)
Users
% in Asia
Facebook Users%
Afghanistan 36.37 1,000 5,700,905 15.7 % 0.3 % 3,200,000 Bangladesh 166.37 100,000 80,483,000 48.4 % 3.8 % 28,000,000 India 1,354.05 5,000,000 462,124,989 34.1 % 22.8
% 251,000,000
Maldives 0.45 6,000 340,000 76.5 % 0.0 % 320,000
Nepal 29.60 50,000 16,190,000 54.7 % 0.8 % 8,700,000 Pakistan 200.81 133,900 44,608,065 22.2 % 2.2 % 32,000,000 Sri Lanka 20.95 121,500 6,710,160 32.0 % 0.3 % 5,500,000 China* 1,415.04 22,500,000 772,000,000 54.6 % 38.1
% 1,800,000
Source: www.internetworldstats.com 2.6.1 Networked Readiness Index (NRI)
The Networked Readiness Index (NRI) of the World Economic Forum assesses the impact of ICT on the competitiveness of the nations of the world. The four sub-indices of NRI are: Environment (business, innovation, political and regulatory), Readiness (infrastructure, digital contents, affordability, skills), Usage (individuals, businesses and government), and finally the Impact of ICT (economic and social impact). Each sub-index is based on several pillars (a total of 10) and each pillar is calculated out of a number of indicators. Table depicts the NRI status of Bangladesh and its neighboring countries.
Table 2.4: Status of NRI of Bangladesh and its neighboring countries
COUNTRY 2014 2013 2012
Bangladesh 119 (score 3.21) 114 113
Bhutan 94 (score 3.68) N/A N/A
India 83 (score 3.85) 68 69
Nepal 123 (score 3.09) 126 128
Pakistan 111 (score 3.33) 105 102
Sri Lanka 76 (score 3.94) 69 71
18 2.6.2 ICT Development Index (IDI)
The ICT Development Index (IDI) of the International Telecommunication Union (ITU) is a useful tool for the status of Information Society. This index, which is based on eleven indicators, is grouped into three categories: Access, Use and Skills. Table 2 depicts the IDI of Bangladesh and its neighboring countries according to the Information Society Report 2014 of ITU.
Table 2.5: Status of IDI of Bangladesh and its neighboring countries
COUNTRY 2013 2012 2011
Afghanistan 155 (score 1.67) 155 N/A
Bangladesh 145 (score 1.97) 146 139
India 129 (score 2.53) 129 120
Nepal 131 (score 2.37) 134 N/A
Pakistan 142 (score 2.05) 141 128
Bhutan 123 (score 2.85) 126 117
Sri Lanka 116 (score 3.24) 113 107
Myanmar 150 (score 1.82) 148 N/A
2.6.3 E-Government Development Index (EGDI)
United Nation's e-Government Development Index (EGDI) evaluates the impact of ICT on the political economy of a country. This index focuses on how governments use ICT to deliver services to the people and opportunities for citizens to participate in the decision- making process. EGDI is measured on the basis of online services, technological infrastructure and human capital. Table 3 shows Bangladesh's ranking (out of a total of 193 countries) in EGDI as wells as those of its neighboring countries.
Table 2.6: EGDI ranking of Bangladesh and its neighboring countries
COUNTRY 2014 2012 2010
Afghanistan 173 (score 0.1900) 184 168
Bangladesh 148 (score 0.2757) 150 134
Bhutan 143 (score 0.2829) 152 152
India 118 (score 0.3834) 125 119
Maldives 94 (score 0.4813) 95 92
Myanmar 175 (score 0.1869) 160 141
Nepal 165 (score 0.2344) 164 153
Pakistan 158 (score 0.2580) 156 146
Sri Lanka 74 (score 0.5418) 115 111
Source: Luthfar Rahman, Daily Star, March 23, 2015
19 2.7 Bangladeshi Culture
Culture influences and shapes consumer behavior. There is a positive correlation between wealth and culture because growing income of people at micro and macro level drives them to material culture i.e., materialism. In last one decade, Bangladesh economy experienced a positive growth (7% growth in GDP) and per capita income of its population reached to US$1605 in 2017 from $350 in 2005. This level of wealth of nations ranks as well as categories them in different leveling of developed, developing, least developed etc.
The evidence shows that as incomes rise beyond a certain level, culture replaces wealth as a predictor variable of behavior (De Mooij, 2011). Historically, the world is divided into east and west or spiritualistic and materialistic and Bangladesh as an Asian nations strongly holds spiritualistic culture and orthodox behavior. But, recent strong wave of some forces such as, globalization, rapid expansion of information technology, emergence of mass Medias and their global reach has been reshaping its cultural behavior along with other nations of the world. Greet Hofstede (2001) has become very famous for his six dimensional model of analyzing and categorizing nations based on their cultural values.
The dimensions are power distance, individualism vs collectivism, masculinity vs femininity, uncertainty avoidance, long term orientation, and indulgence. Srite and Karahanna (2006) performed a study that identifies national cultural values of low masculinity and high uncertainty avoidance as an important set of individual difference moderators in technology acceptance. D Mooij (2011) also posits that people in feminine cultures are less interested in technology than those in masculine cultures, and Lynn and Gelb (1996) reported significant correlations between ownership of several technological devices and individualism. Developing countries typically have higher levels of UA, with 77 percent of them scoring in the upper half of Hofstede’s (2001) UA index compared to only 50 percent of developed countries. Buying brand-new products or services, especially the more costly and sophisticated ones, may constitute a matter of anxiety for individual in high UA countries, who tend to adopt innovation at a lower speed than those in low UA cultures (De Mooij, 2011).
If we explore the Bangladesh culture through the lens of the 6-D Model, we can get a good overview of the deep drivers of its culture relative to other world culture. According to the Hofstede’s national cultural values index, Bangladesh culture scores in all six dimensions are given in the table 2.7.
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Table 2.7: Score of Bangladeshi Cultural Value Dimensions
Values Dimensions Scores (in 100 points)
Power Distance 80 points
Individualism 20 points
Masculinity 55 points
Uncertainty avoidance 60 points
Long term orientation 47 points
Indulgence 20 points
2.7.1 Power Distance
Bangladesh scores high on this dimension (score 80) which means that people accept a hierarchical order in which everybody has a place and which needs no further justification.
Hierarchy in an organization is seen as reflecting inherent inequalities, centralization is popular, subordinates expect to be hold what to do and the ideal boss is a benevolent autocrat.
2.7.2 Individualism
Bangladesh, with a score of 20 is considered a collectivistic society. This is manifest in a close long-term commitment to the member ‘group’, be that a family, extended family, or extended relationships. Loyalty in a collectivist culture is paramount, and over-rides most other societal rules and regulations. The society fosters strong relationships where everyone takes responsibility for fellow members of their group. In collectivist societies offence leads to shame and loss of face, employer/employee relationships are perceived in moral terms (like a family link), hiring and promotion decisions take account of the employees in group, management is the management of groups.
2.7.3 Masculinity
A high score on this dimension indicates that the society will be driven by competition, achievement and success, with success being defined by the winner/best in field – a value system that starts in school and continues throughout the life. A feminine society is one where quality of life is the sign of success and standing out from the crowd is not admirable. Bangladesh scores 55 on this dimension and can be considered a Masculine society. In Masculine societies people “live in order to work”, managers are expected to
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be decisive and assertive, the emphasis is on equity, competition and performance and conflicts are resolved by fighting them out.
2.7.4 Uncertainty Avoidance
Bangladesh scores 60 on this dimension and it is a high score. Countries exhibiting high scores in UA maintain rigid codes of belief and behavior and are intolerant of unorthodox behavior and ideas. In these cultures, there is an emotional need for rules, time is money, people have an inner urge to be busy and work hard, precision and punctuality are the norm, innovation may be resisted, security is an important element in individual motivation.
2.7.5 Long Term Orientation
Normative societies, which score low on this dimension, for example, prefer to maintain time-honored traditions and norms while viewing societal change with suspicion. Those with a culture, which scores high, on the other hand, take a more pragmatic approach: they encourage thrift and efforts in modern education as a way to prepare for the future.
Bangladesh has an intermediate score at 47, this does not indicate a strong preference in either direction.
2.7.6 Indulgence
Culture can be described as Indulgent or Restrained based on the way the children of society are raised. Relatively weak control is called “Indulgence” and relatively strong control is called “Restraint”. Bangladesh has a very low indulgence score of 20. This makes it a Restrained-country. Societies with a low score in this dimension have a tendency to cynicism and pessimism. Also, in contrast to Indulgent societies, Restrained- societies do not put much emphasis on leisure time and control the gratification of their desires. People with this orientation have the perception that their actions are Restrained by social norms and feel that indulging themselves is somewhat wrong.
2.8 Asian Consumer Behavior
Asia is considered as a growth engine of the global economy, therefore companies all over the world are looking toward Asia for their future. According to Prof. Schmitt, “Asia is undergoing a massive transformation. And Asian consumers are going to have new hopes and dreams. Their values are changing and there are growing tensions between tradition and modernity; saving versus spending, fitting in versus standing out from the crowd.”To
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build a strong brand in Asia, companies need to understand the marketplace very well and offer more than just functional superiority because Asian consumers are more emotional and expressive (Schmitt, 2016). A new study by the Institute on Asian Consumer Insight (ACI) at Nanyang Technological University (NTU) revealed that Asian consumers value the family, believe in hard work, and are financially conservative. They desire respect for the tremendous progress they made, and yet shun flashy expressions of wealth. Proper behavior, fun and enjoyment, and nature are also highly regarded (Batra, 2016). Instead of substantial amount of variation among Asian consumer values, this study identified four distinct segments of consumer:
Inner-Directed Traditionalists (19% of population), who value religion and tradition, tend to be thrifty and less materialistic;
Outer-Directed Strivers (29% of population) tend to have lower education and incomes. They value work success highly, seeking endorsement in the form of fame and material wealth;
Survivor Oriented (13% of population) consumers tend to be older, less educated, with lower incomes, and are financially less optimistic; and
Mainstream Asian Values (39% of population)
The study also found that consumers under 25 and those above 45 have little difference in attitudes towards the importance of education; hard work; high savings and debt-aversion;
value-seeking; consuming inconspicuously; fun, enjoyment and leisure; and the importance of one’s larger social groups.
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CHAPTER 3 Literature Review
3. Literature Review
The literature relevant to key concepts underlying the development of the conceptual model and hypotheses for this study is divided into four main sections: (1) customer satisfaction; (2) customer brand loyalty; (3) technology and customers; and (4) a conceptual model.
1. Customer Satisfaction
a. Customer satisfaction versus service quality b. Customer satisfaction with service encounters
c. Customer satisfaction with Interpersonal service encounters d. Customer satisfaction with technology-based service encounters 2. Customer Loyalty
a. Brand loyalty versus Service loyalty b. Customer loyalty drivers
c. Customer satisfaction-customer loyalty relationships 3. Technology and the Customer
a. Customer perception of technology b. Technology readiness of customers 4. Conceptual Model
a. The impact of technology readiness of customers on service encounter satisfaction
b. Service encounter satisfaction-loyalty relationships c. Moderating effects of technology readiness
d. Definitions
e. Hypothesis for the study
3.1. Customer Satisfaction
Customer satisfaction is one of the important outcomes of marketing activity (Oliver, 1980;; Spreng et al, 1996; Mick and Fournier, 1999). It serves to link processes
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culminating purchase and consumption with post purchase phenomenon such attitude change, repeat purchase, and brand loyalty (Surprenant and Churchill, 1982). This opinion has been supported by Jamal and Naser (2003) and Mishra (2009). Customer satisfaction has been considered the essence of success in today’s highly competitive service industry.
Prabhakaran and Satya (2003) mentioned that customer is the king. Heskett et al. (1997) argued that profit and growth are stimulated primarily by customer loyalty. Satisfied customers tend to be less influenced by competitors, less price sensitive, and stay loyal longer (Dimitriades, 2006; Sit et al., 2009). Ndubisi (2005), Gee et al. (2008) and Pfeifer (2005) pointed out that cost of serving a loyal customer is five or six times less than a new customer. Several researchers including Tariq and Moussaoui (2009), Han et al. (2008) and Ehigie (2006) and other researchers (see table 1) found that loyalty is a direct outcome of customer satisfaction. The importance of customer satisfaction can be realized with statement of Sangwan (2009). If a satisfied customer has potential to influence and bring in 100 new customers, a dissatisfied customers can potentially influence 1000 customers.
Nasserzadeh et al. (2008) mentioned that dissatisfied customers will most probably switch to a different brand; this will lead to negative advertising. The significance of satisfying and keeping a customer in establishing strategies for a market and customer oriented organization cannot be ignored (Kohli and Jaworski, 1990).
Customer satisfaction has been conceptualized differently based on a variety of product/service settings (Erevelles and Leavitt 1992). Customer satisfaction is generally viewed as a measure of how well a product or service supplied by a firm meets customer expectations (Saleem and Rashid, 2011). The marketing and consumer behavior literature has traditionally suggested that customer satisfaction is a relative concept, and is always judged in relation to a standard (Olander, 1977). Consequently, in the course of its development, a number, a number of different competing theories and models based on various standards have been postulated for explaining customer satisfaction. Table 3.1 lists a few of them including two models (Fig: 3.1). Early researchers, including Engel, Kollat
& Blackwell (1968), Howard and Sheth (1969), Cardozzo (1965), relied on the dissonance theory developed by Festinger (1957). Subsequent studies (Anderson, 1973; Olshavsky &
Miller, 1972) drew on the assimilation- contrast theory proposed by Sheriff & Hovland, (1961). Later, Oliver (1977), drawing on the adaptation level theory (Helson, 1964), developed the Expectancy-Disconfirmation model for the study of consumer satisfaction.
Among the customer satisfaction models that have been widely applied since the early
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1980s are the expectancy disconfirmation model (e.g., Oliver 1980), the perceived performance model (Churchill and Suprenant 1982), the multiple process model that investigates the influence and relationship of different comparison standards on customer satisfaction judgment (Tse and Wilton 1988), and the equity model which examines the relationship between customer satisfaction and the concept of fairness (Oliver and Swan 1989). However, the disconfirmation of expectation model has been the dominant one used by both researchers and practitioners, according to Patterson (2000).
Table 3.1: A list of Satisfaction Theories and Models
Theories / Models Contributor(s) Year
The Dissonance Theory The Contrast Theory
The Expectancy Disconfirmation Paradigm The Comparison Level Theory
The Value-Percept Theory
The Importance –Performance Model The Expectancy- Value Model The Attribution Theory
The Equity Theory
The Evaluative Congruity Theory The Pearson Situation-Fit-Concept
Festinger
Sheriff & Hovland Oliver
Yi
Westbrook and Reilly Barsky
Fishbein and Ajzen Weiner, Frieze and Kuklas
Swan & Oliver Sirgy
Pearce & Mascardo
1957 1961 1977, 1980 1990 1983 1992 1975 1971 1989 1984 1984
26 Perceived
Performance
Perceived Disconfirmation
Comparison Standard(s
Satisfaction
Fallings Outcome
Traditional Macro-Model Woodruff & Gardial, 1996
Other Data Inputs
Expected Service
Perceived Service
Technical Service Quality Contact
Personal
Traditional Macro-Model Woodruff & Gardial, 1996 Fig 3.1: Models of Customer Satisfaction
[Source: Adopted from: Woodruff & Gardial (1990)]
In recent satisfaction literature, the customer satisfaction concept still frequently follows the disconfirmation of expectations paradigm (e.g., McCollough, Berry, and Yadav 2000;
McQuitty, Finn and Wiley 2000; Spreng, Mackenzie, and Olshavsky 1996). Customers form expectations then compare these to the perceived products/service performance.
Expectations are defined as predictions of future performance (e.g., Oliver 1980). Thus, the outcome measured against expectations suggests that products/services fulfilling high expectations are predicted to generate greater satisfaction than product /services that meet low expectations. Some prior research has also investigated a perceived performance when studying the customer satisfaction concept. For instance, Churchill and Surprenant (1982) suggest that customer satisfaction with tangible products could be affected by the actual performance and could be measured by a summation of satisfactions with various attributes. Other previous research has used disconfirmation of various comparison
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standards (i.e., customers’ perceived discrepancy between prior expectations and the actual performance) as the antecedent of satisfaction (Tse and Wilton 1988).
Oliver (1989) supports that customers compare performance with their standards, then form confirmation or disconfirmation perceptions, and then form summary satisfaction judgments. Thus, in the expectations-disconfirmation paradigm, a comparison of expectations and perceptions of performance will result in either confirmation or disconfirmation. Confirmation is when service perceptions exactly meet expectations.
Disconfirmation, when there is a discrepancy, may be either positive or negative.
Customer satisfaction is the result of either confirmation or positive disconfirmation, when service performance exceeds prior expectations. In general, the more positive the disconfirmation, the greater the satisfaction, thus, simple confirmation may have less impact on customer satisfaction than positive disconfirmation. When expectations exceed service performance, negative disconfirmation leads to dissatisfaction, and the more negative, the greater the dissatisfaction.
Customer assesses customer satisfaction based on either disconfirmation or perceived performance (Halstead, Hartman, and Schmidt 1994). Some research, however, found that only the perceived performance had direct impact, or that it had a strong direct effect on customer satisfaction than the disconfirmation, particularly in the high-involvement situation (Churchill and Surprenant 1982; Patterson 1993). Other research presents some conflicting findings that both disconfirmation and perceived performance had impact on customer satisfaction of goods/services (Anderson and Sullivan 1993; Patterson 2000).
Thus, customer satisfaction has been defined various ways, though some ways are more widely accepted than others. However, Giese and Cote (2000) reviewed the definitions of customer satisfaction published during 1969 to 1997 and suggested that some of the definitions have overlapping components. Particular, customer satisfaction is the response to either emotional or cognitive cues. It is the response to a particular focus such as expectations or perceived product/service performance, which occurs at a particular time.
The particular time could be after consumption, after choice, and based on either accumulative experience or a singular time of interaction between customer and service provider. For example, Oliver (1997) defined customer satisfaction as the consumer’s pleasurable fulfillment response during consumption, whereas Westbrook and Oliver
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(1991) tie the specific time of customer satisfaction to a post choice evaluative judgment concerning a specific purchase selection.
Simintiras, Diamantopoulos, and Ferriday (1997) conceptualized customer satisfaction of pre-purchases as the emotional outcome of anticipated satisfaction in order to investigate the relationship with the purchase behavior of first-time buyers. Anticipated satisfaction is the anticipatory cognitive evaluation concerning the extent to which a planned purchase will result in satisfaction (e.g., Oliver 1980). Thus, anticipated satisfaction relates to a future period, whereas pre-purchase satisfaction reflects the feelings of satisfaction that occur in the present time (i.e. before a purchase has been occurred). Nevertheless, customer satisfactions have been extensively conceptualized as the post-purchase evaluation of product/service performance and as the combination of either cognitive (i.e., the expectancy disconfirmation) or affective components (e.g., Oliver 1980; Roest and Pieters 1997).
Oliver (1980) suggests that customer satisfaction can be classified into five affective prototypes (e.g., contentment, pleasure, relief, novelty, and surprise). Additionally, Stauss and Neuhaus (1997) propose the qualitative satisfaction model, which takes the emotional, cognitive, and intentional dimension of the satisfaction into account. Bodker et.al.,(2009), presents five consumption values to technology use – functional, social, emotional, epistemic, and conditional values- that jointly influence consumer choice behavior and make differential contributions in a given choice situation. Thus, customer satisfaction includes both affective (emotional) and cognitive components and is evaluated from a summary attribute phenomenon coexisting with other consumption emotions (Liljander and Strandvik 1997; Oliver 1993). For instance, Dube and Menon (2000) suggested that emotions are one of the core components of post-purchase satisfaction, especially with extended service transactions.
However, recent research continues to debate whether satisfaction is a cognitive construct which includes an emotional component or is itself an emotional construct (Babin and Griffin 1998; Bagozzi, Gopinath, Nyer 1999; True loyalty antecedents 2010?). Recently, some research has focused on the affective component to compare the role of emotions and cognitive evaluation in satisfaction and in the relationship with customer loyalty. It found that both emotional and cognitive components correlate with customer loyalty (Yu and Daen 2001). However, it has been argued that the traditional cognitive disconfirmation