CHAPTER 2: Literature Review
2.3 Service Delivery and New Technologies Usage
Customer experience is a client's involvement when interacting with products and services. The effect encompasses customer’s service quality, service received, and customer satisfaction with consuming a product or getting a service (Manthiou et al. 2020). Customer experience is equally fundamental to business success; it benefits businesses in terms of increased customer loyalty, customer satisfaction, and build brand recognition. Additionally, this routine provides valuable feedback applied to improve products, services, and customer interactions (Kim et al. 2021). In that case, establishments that prioritize customer experience habitually attract new and retain existing customers by applying new technologies since they demonstrate mastering the art of boosting customer gratification. Hoyer et al. (2020) discussed the impact of new technologies on customer experience to designate that customers are expected to experience sufficient change in their experience of products and services because of these advancements. In the same manner, Flavián et al. (2019) agree that advanced technologies, for example augmented reality, pave the way for shaping an environment within which customer experiences are enhanced and now to be reflected as hybrid experiences. This clarification is directly related to the current dissertation; it provides adequate understanding that customer experience and businesses are inseparable more so when advanced technologies is involved.
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The advent and utilization of new technologies impacts the customer experience differently, thus determining customer behaviour. One of the most popular ways that firms utilize innovative technologies to improve customer experience is through artificial intelligence (AI). AI automates customer service tasks, such as responding to routine inquiries or providing personalized product recommendations based on past purchases. Enholm et al. (2021) highlight that AI also analyses customer data to identify areas for improvement, thus ensuring efficiency.
Another way that companies are implementing innovative technologies to improve customer experience is through chatbots, which are computer programs designed to simulate conversations with clients. The management uses these chatbots to answer inquiries quickly and accurately, freeing up customer service agents to focus on complex tasks. Companies also utilize technological gains such as virtual reality (VR) and augmented reality (AR) for immersive customer experience (Wu & Kim 2022). Retailers using VR allow their buyers to assess commodities in virtual showrooms, while the AR component provides an interactive, 3D view of products.
2.3.1 Industry 4.0 and Costumer Behaviour
Industry 4.0 could be understood from the perspective of its application to influence customer behavior. It majorly denotes fourth industrial revolution comprising the blending of conventional industrial manufacturing and cutting-edge digital technologies. Production process automation is a key component of the Industry 4.0 movement and using sensors and data analytics to monitor, track and control the production process from start to end (Javaid et al.
2021). This revolution is driven by technological advances including robots, internet of things (IoT), cloud computing, and artificial intelligence (AI). These advances could influence the industry to become efficient, agile, and responsive to customer needs while reducing costs and
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improving product quality and safety. The potential benefits of Industry 4.0 are numerous, including improved efficiency and productivity, higher quality products, greater flexibility and agility, and improved customer service. Since the revolution is characterized by technological advances, automation, and data exchange, it impacts customer behaviour.
Industry 4.0 has led to the increased availability of data. Customer s can access more data than ever, including product reviews, pricing information, and customer service interactions. This data is used to make informed decisions, allowing customer s to make more informed purchasing decisions. In addition, customers are also benefiting from increased customization and personalization. With Industry 4.0, manufacturers produce products to meet specific customer needs and preferences, increasing customer satisfaction and loyalty (Javaid et al. 2021).
Additionally, Industry 4.0 allows customers to easily connect with brands and services. Through the IoT, customers easily access product information, order products, and track shipments. This increased level of engagement leads to improved customer experience and satisfaction.
Industry 4.0 has led to digitization and automation of operation practices in companies, thus leading to transformation in organizational patterns. Sima et al. (2020) used a systematic review to analyze how the revolution of industry 4.0 has impacted customer behavior and human capital development. The authors suggest that the revolution has significantly impacted the decision- making process, determining human capital development and human behavior. The availability of new technologies has made it easier for companies to exploit the potential of digital marketing, social media and Big Data for better targeting and segmentation of their customer base. Additionally, the study found that this development has led to the emergence of new business models and a shift in the traditional production and supply chain processes (Sima et al.
2020). From the study, implementing new technologies and services affects customer
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satisfaction, and organizations can use these insights to improve their customer service. The research concluded that the Industry 4.0 revolution can revolutionize and optimize how businesses interact with their customers and improve the productivity and efficiency of their operations.
Examining the effects of digital transformation on customer behavior, with a focus on customer service modernization, is an essential step in analyzing the industrial revolution. Giza & Wilk (2021) uses a conceptual approach to analyze the effect of technology, where they find that technological advances have enabled companies to provide better and more efficient customer service. This effect has a positive influence on customer satisfaction, as customers are now able to get their needs addressed quickly and easily. Technological advancements have also enabled companies to provide additional personalized customer service, allowing them to build better customer relationships. Furthermore, customers now have more options when it comes to customer service and can choose from a wide range of channels. Businesses adopt customer service modernization to stay competitive and build a successful customer relationship management system. The study supports the claim that customer service modernization remains with a positive effect on customer satisfaction. Accordingly, the authors demonstrate that technological advancements have improved customer service and enabled companies to build better customer relationships (Giza & Wilk 2021). Furthermore, customers now have more options when it comes to customer service, and companies must adopt modernization if they want to stay competitive. All of these factors have been noted to have direct effect on customer satisfaction, which is positive correlation.
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2.3.2 Customer Behaviour and Internet of Things (IoT)
The IoT is a rapidly growing technological trend creating a transformative shift in how customer s interacts with the world around them. According to Kumar and Iyer (2019), IoT helps businesses monitor, analyse, uncover and track customers' information faster. Therefore, this system ensures the enterprise evaluates its operation quickly, thus reducing workload and costs.
When customer’s data is analysed on time, they feel prioritized and valued by the management, thus posting positive behaviours such as retention and prospecting. Analysis of customer data enables businesses to understand their customers and deliver tailored services that meet their needs. Through IoT, businesses gain insight into customer preferences and buying behaviours, enabling them to develop more effective marketing strategies and increase sales (Makrides et al. 2020). Data analysis through IoT allows businesses to identify areas of improvement, allowing them to make changes in their services to meet customer needs, thus developing a positive attitude. The management identifies the behavioural trends of its clients and informs strategic business decisions. This reliance on technology to meet client’s needs make their lives easier, more convenient, and more enjoyable. In the digital era, customers have access to unprecedented data that they can use to inform decisions and tailor buying experiences.
Furthermore, the IoT has the potential to significantly shape customer behaviour, from how they shop and buy, to how they use their homes and interact with the environment. By connecting everyday objects with the internet, buyers can interact with their environment in previously impossible ways. In today's digital world, buyers need to know their surroundings and make informed decisions about their purchases. Additionally, buyers gain valuable insights about the products and services available to them (Awan et al. 2020). This practice actively boosts better- informed decisions, leading to higher-quality products and a satisfactory trade experience. It is
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also crucial for buyers to build relationships with businesses and vendors in their area, as this can lead to more tailored and cost-effective solutions. Interacting with the environment lets buyers be updated with industry trends, thus making informed decisions when purchasing.
Connected appliances can be programmed to change settings based on user preferences, and connected vehicles can be programmed to make decisions based on real-time traffic data. The IoT also has the potential to inform and empower customers. Companies offer tailored services by collecting data on customer behaviour and preferences. They can use data to customize offers and discounts to certain buyers and provide personalized recommendations based on past purchases.