Research Paper "Relationship of Customer Satisfaction with Product Variety "

Relationship of Customer Satisfaction with Product Variety

July 2010

Department of Management Sciences 

The Islamia University of Bahawalpur

Trusted by over 1 million members

Try Scribd FREE for 30 days to access over 125 million titles without ads or interruptions! Start Free Trial Cancel Anytime.

Trusted by over 1 million members

Try Scribd FREE for 30 days to access over 125 million titles without ads or interruptions! Start Free Trial Cancel Anytime.

Trusted by over 1 million members

Try Scribd FREE for 30 days to access over 125 million titles without ads or interruptions! Start Free Trial Cancel Anytime.

Trusted by over 1 million members

Try Scribd FREE for 30 days to access over 125 million titles without ads or interruptions! Start Free Trial Cancel Anytime.

Relationship of Customer Satisfaction with Product Variety

Written by:

Wajahat Hussain BBA (Hons) Marketing

Instructed By:

Muhammad Suhail Nazar  Assistant Professor  Department of Management Sciences, IUB

Department of Management Sciences 

The Islamia University of Bahawalpur

Trusted by over 1 million members

Try Scribd FREE for 30 days to access over 125 million titles without ads or interruptions! Start Free Trial Cancel Anytime.

Trusted by over 1 million members

Try Scribd FREE for 30 days to access over 125 million titles without ads or interruptions! Start Free Trial Cancel Anytime.

Trusted by over 1 million members

Try Scribd FREE for 30 days to access over 125 million titles without ads or interruptions! Start Free Trial Cancel Anytime.

Preface In the world of dynamism and competition, companies are striving hard to find ways of profitability. Companies are finding ways to attract, retain and satisfy more and more customers. Trying to get loyalty of the customer by satisfying his/her needs best. Product variety is seen in this regard as one of those tools used to satis satisfy fy custo customer merss and meet meet organi organizat zation ional al goals. goals. Yet its its been been proven proven that that  product variety dose not guarantee profitability in long run and sometimes even worsen the competitive advantage. Consumer really wants multiple options of  choices. Researches say that it is human urge to have new and many options while making choice over a time period. But careful management of product variety is very much crucial to business success. Right blend of varieties at right time can surely satisfy the customer but wrong management can confuse and frustrate the consumer choice. It is not just an easy task. Cost and other limitations- technology harness the effectiveness of product variety. This This pape paperr expl explai ains ns how how prod produc uctt vari variet ety y sati satisf sfie iess cust custom omer er.. What What are are the the limitations? What and how management of product verity is done? We conclude that product variety has a positive effect on customer satisfaction if  in optimal level. Careful management is always crucial to everything so as to  product variety.

Trusted by over 1 million members

Try Scribd FREE for 30 days to access over 125 million titles without ads or interruptions! Start Free Trial Cancel Anytime.

Trusted by over 1 million members

Try Scribd FREE for 30 days to access over 125 million titles without ads or interruptions! Start Free Trial Cancel Anytime.

Trusted by over 1 million members

Try Scribd FREE for 30 days to access over 125 million titles without ads or interruptions! Start Free Trial Cancel Anytime.

Acknowledgement “All gratitude and thanks to almighty “ALLAH” the gracious, the most merciful and beneficent “ ALLAH gave us courage to undertake and complete this task. We are very much

obliged to our ever caring and loving parents whose prayers have enabled to reach this stage. We are gratefu gratefull to almigh almighty ty ALLAH ALLAH who made made us able able to comple complete te the work   presented in this report. It is due to HIS unending mercy that this work moved towards success. Suhail ail Nazar Nazar, Assitant We are highly indebted to Mr. Suh Assitant Professor, Professor, DMS, DMS, for 

 providing us an opportunity to write this research paper, which is vital ingredient to advance studies. We feel great pride and pleasure on the accomplishment of this report.

Regards Team Members

Trusted by over 1 million members

Try Scribd FREE for 30 days to access over 125 million titles without ads or interruptions! Start Free Trial Cancel Anytime.

Trusted by over 1 million members

Try Scribd FREE for 30 days to access over 125 million titles without ads or interruptions! Start Free Trial Cancel Anytime.

Trusted by over 1 million members

Try Scribd FREE for 30 days to access over 125 million titles without ads or interruptions! Start Free Trial Cancel Anytime.

Abstract In the world of dynamism and competition, companies are striving hard to find ways of profitability. Product variety is one of those tools used to attract, retain and satisfy customer. This paper tries to understand the influence of product variety on customer satisfaction. How it affects customer satisfaction what are the cost associated with it and can it guarantee profitability? First we will explain the product variety, how its management can be done, how it affects the customer satisfaction, satisfaction, what are the costs associated with it? In our research we came to the point that product variety really has affects on customer satisfaction but it does not guarantee the profitability. In the the last last we sugg sugges estt furt furthe herr rese resear arch ch on enha enhanc ncem emen entt of cust custom omer  er  satisfaction.

Trusted by over 1 million members

Try Scribd FREE for 30 days to access over 125 million titles without ads or interruptions! Start Free Trial Cancel Anytime.

Trusted by over 1 million members

Try Scribd FREE for 30 days to access over 125 million titles without ads or interruptions! Start Free Trial Cancel Anytime.

Trusted by over 1 million members

Try Scribd FREE for 30 days to access over 125 million titles without ads or interruptions! Start Free Trial Cancel Anytime.

Introduction In the world of dynamism and competition, companies are striving hard to find ways of profitability. Product variety is one of those tools used to attract, retain and satisfy customer. This paper tries to understand the influence of product vari variet ety y on cust custom omer er sati satisf sfac acti tion on.. And And it can can be an impo import rtan antt in gene genera rati ting ng customer satisfaction. satisfaction. But it does not guarantee profitability in long run in fact can worsen the competitiveness (Ramdas and Sawhney 2001). Prod Pr oduc uctt va vari riet ety y pa pass ss on to th thee nu numb mber er of di diff ffer eren entt pr prod oduc ucts ts (S (SKU KU)) integrated in one product line (e.g., Dixit and Stiglitz 1977). In current years, swiftly swift ly embry embryonic onic techn technologi ologies, es, bruta brutall comp competiti etition on and dema demanding nding cust customer omerss have contributed to a continuous increase of product variety in almost all product categories (Ho and Tang 1998). Howeve Howeverr increa increasin sing g produc productt variet variety y doesn’ doesn’tt guaran guarantee tee the increa increase se in  profitability, as it requires great cost to manage. Thus hurting the profitability. Careful and optimal level of product variety can lead to customer satisfaction and generate profitability. Customer Customer satisfaction satisfaction is a measure measure of how products and services services supplied   by by a comp compan any y meet meet or surp surpas asss cust custom omer er expe expect ctat atio ion n (W (Wik ikip iped edia ia,, the the free free ency encycl clop oped edia ia). ). In the the worl world d of comp compet etit itio ion n wher wheree busi busine ness sses es comp compet etee for  for 

Trusted by over 1 million members

Try Scribd FREE for 30 days to access over 125 million titles without ads or interruptions! Start Free Trial Cancel Anytime.

Trusted by over 1 million members

Try Scribd FREE for 30 days to access over 125 million titles without ads or interruptions! Start Free Trial Cancel Anytime.

Trusted by over 1 million members

Try Scribd FREE for 30 days to access over 125 million titles without ads or interruptions! Start Free Trial Cancel Anytime.

Trusted by over 1 million members

Try Scribd FREE for 30 days to access over 125 million titles without ads or interruptions! Start Free Trial Cancel Anytime.

Measuring customer satisfaction is very necessary. It gives insight that where where the busine business ss stands stands (Wikip (Wikipedi edia, a, the free free encycl encyclope opedi dia). a). To cons consumers umers,, wider variety means better choice thus is habitually desirable. Product variety that matches customer demand let firms charge higher selling price and/or increase sales volume. Increasing product variety has somewhat positive impact over the   produ product ct lin line' e'ss rev revenu enue. e. Ho Howev wever, er, the exa exact ct eff effect ect is usu usuall ally y dif diffic ficult ult to st state ate,, especially when customer demand is stochastic and difficult to understand ( Null ( Null Lifang Wu, 2007). A psychological studies of consumer behavior reveal that urge for newness to satisfy the need best is in genes of the consumer  (Hansen 1972, Raju 1980, Baumgartner and steenKamp 1996)

If customer is getting what it want than surely it get satisfied. In this paper  first we will explain the product variety, how its management can be done, how it affects the customer satisfaction, what are the costs associated with it? In the the last last we sugg sugges estt furt furthe herr rese resear arch ch on enha enhanc ncem emen entt of cust custom omer  er 

Trusted by over 1 million members

Try Scribd FREE for 30 days to access over 125 million titles without ads or interruptions! Start Free Trial Cancel Anytime.

Trusted by over 1 million members

Try Scribd FREE for 30 days to access over 125 million titles without ads or interruptions! Start Free Trial Cancel Anytime.

Trusted by over 1 million members

Try Scribd FREE for 30 days to access over 125 million titles without ads or interruptions! Start Free Trial Cancel Anytime.

Product Variety Prod Pr oduc uctt va vari riet ety y pa pass ss on to th thee nu numb mber er of di diff ffer eren entt pr prod oduc ucts ts (S (SKU KU)) integrated in one product line (e.g., Dixit and Stiglitz 1977). Product variety decisions decis ions have both opera operations tions and marke marketing ting implications implications (  Null Null Lifang Lifang Wu, Wu, 2007). Product variety tries to meet the demand and needs of the customers. But it does not guarantee profit. Cost for providing product variety and management is high (Kevin Lancaster).

♦ Product Variety Management

How firm choose to create variety in their products and how functions and supply chain are managed to foster variety are key factors for successful strategy, thus requiring excellent management an become concern for the competitive advantage (Ramdas and Kamalini 2003, Meyer and Lehnerd 1997) Produc Productt

iet

nt

min

the

sisten sistentt

ble

bet

the

Trusted by over 1 million members

Try Scribd FREE for 30 days to access over 125 million titles without ads or interruptions! Start Free Trial Cancel Anytime.

Trusted by over 1 million members

Try Scribd FREE for 30 days to access over 125 million titles without ads or interruptions! Start Free Trial Cancel Anytime.

Trusted by over 1 million members

Try Scribd FREE for 30 days to access over 125 million titles without ads or interruptions! Start Free Trial Cancel Anytime.

organizational boundaries, before and after product launch (Ramdas and Kamalini 2003) ♦ Cost and limitations

For the best fit of product variety management and firm’s objectives, objectives, firm should strive to balance the revenue and cost impact of variety decisions (Lancaster 1990) Following are the areas challenging product variety •

Economies of Scales/ Manufacturing

•

Distribution

•

Lead-time

•

Responsiveness

•

Supply and Demand

Cost of product variety is high due to economies of scales and distribution cost. It also incurs many indirect costs that are not easily traceable. For example, higher  the product variety more the complexity would be of manufacturing and in supply

Trusted by over 1 million members

Try Scribd FREE for 30 days to access over 125 million titles without ads or interruptions! Start Free Trial Cancel Anytime.

Trusted by over 1 million members

Try Scribd FREE for 30 days to access over 125 million titles without ads or interruptions! Start Free Trial Cancel Anytime.

Trusted by over 1 million members

Try Scribd FREE for 30 days to access over 125 million titles without ads or interruptions! Start Free Trial Cancel Anytime.

In addition, offering higher variety extends the product introduction lead-time and thu thuss inf influe luence ncess a fir firm's m's res respon ponsiv sivene eness ss to emb embry ryoni onicc cus custom tomer er dem demand and.. Overall, product variety decision influences supply costs in a difficult manner, which is not well understood by researchers ( Null Lifang Wu, 2007). From the above discussion, it is clear that revenue and cost implications of    produ product ct var variet iety y is hig highly hly com comple plex x in nat nature ure.. Mak Makee var variet iety y man manage ageme ment nt so challenging ( Null  Null Lifang Wu, 2007).

♦ Variety and information seeking

Managemen Managementt of product product variety variety requires requires informati information on about consumer’ consumer’ss  preferences and choices in order to meet their demand. But it’s not an easy task. It’s really very difficult to gather information about consumer preferences. Even with best marketing research it is not easy to predict consumer preferences Two major sources of information for multi-product firms are •

Information is obtained by acquiring single-product or small multi-product

Trusted by over 1 million members

Try Scribd FREE for 30 days to access over 125 million titles without ads or interruptions! Start Free Trial Cancel Anytime.

Trusted by over 1 million members

Try Scribd FREE for 30 days to access over 125 million titles without ads or interruptions! Start Free Trial Cancel Anytime.

Trusted by over 1 million members

Try Scribd FREE for 30 days to access over 125 million titles without ads or interruptions! Start Free Trial Cancel Anytime.

Variety and Customer Satisfaction “Satisfying the customer is a race without finish." (Vernon finish." (Vernon Zelmer) “Variety is one of the consumer’s greatest concerns (fortune magazine, 1991)”

Variet Variety y seeki seeking ng in purcha purchase se behavi behavior or is the tende tendenc ncy y of indivi individua duall to seek  seek  differentiation or diversity in their choices over time (Givon 1985).

For consumer variety in an assortment can offer two advantages.

•

First if the consumer is making many choices overtime than variety in assortment allow them to choose different options overtime to satisfy their  needs.

•

Seco Second nd if sing single le choi choice ce is bein being g made made than than vari variet ety y and and brea breadt dth h in assor assortme tment nt allow allow them them to choos choosee custom customize ized d option optionss that that they they desire desire.. (Barbra Kahn)

Trusted by over 1 million members

Try Scribd FREE for 30 days to access over 125 million titles without ads or interruptions! Start Free Trial Cancel Anytime.

Trusted by over 1 million members

Try Scribd FREE for 30 days to access over 125 million titles without ads or interruptions! Start Free Trial Cancel Anytime.

Trusted by over 1 million members

Try Scribd FREE for 30 days to access over 125 million titles without ads or interruptions! Start Free Trial Cancel Anytime.

Trusted by over 1 million members

Try Scribd FREE for 30 days to access over 125 million titles without ads or interruptions! Start Free Trial Cancel Anytime.

variety could confuse the consumer and frustrate the choices (Barbra Kahn). More in this regard is that consumer wants something new when gets bored with its current choice. When a consumer reaches the optimal level of consumptions the satiation sets in and desire for something new sets in for the next choice (Jeuland 1978, McAlister 1982). Different researches on consumer psychology reveals that it’s in genes of the consumer to explore something neew even there is no satiation (Hansen 1972, Raju 1980, Baumgartner and steenKamp 1996). Consumers are not same in psyche so as in needs thus consumers in need of high stimulation require more variety products (Zukerman 1979 and Barbra Kahn).

♦ Assortment of options; why consumer demand?

Trusted by over 1 million members

Try Scribd FREE for 30 days to access over 125 million titles without ads or interruptions! Start Free Trial Cancel Anytime.

Trusted by over 1 million members

Try Scribd FREE for 30 days to access over 125 million titles without ads or interruptions! Start Free Trial Cancel Anytime.

Trusted by over 1 million members

Try Scribd FREE for 30 days to access over 125 million titles without ads or interruptions! Start Free Trial Cancel Anytime.

Conclusion In the world of dynamism and competition, companies are striving hard to find ways of profitability. Companies are finding ways to attract, retain and satisfy more and more customers. Trying to get loyalty of the customer by satisfying his/her needs best. Product variety is seen in this regard as one of those tools used to satis satisfy fy custo customer merss and meet meet organi organizat zation ional al goals. goals. Yet its its been been proven proven that that  product variety dose not guarantee profitability in long run and sometimes even worsen the competitive advantage. Consumer really wants multiple options of  choices. Researches say that it is human urge to have new and many options while making choice over a time period. But careful management of product variety is

Trusted by over 1 million members

Try Scribd FREE for 30 days to access over 125 million titles without ads or interruptions! Start Free Trial Cancel Anytime.

Trusted by over 1 million members

Try Scribd FREE for 30 days to access over 125 million titles without ads or interruptions! Start Free Trial Cancel Anytime.

Trusted by over 1 million members

Try Scribd FREE for 30 days to access over 125 million titles without ads or interruptions! Start Free Trial Cancel Anytime.

as when consumer is making single choice and is not much aware of the options offered here offering to much variety could confuse the consumer and frustrate the choices (Barbra Kahn). Thus with careful management and providing optimal level of product variety satisfaction of customer can be achieved.

Trusted by over 1 million members

Try Scribd FREE for 30 days to access over 125 million titles without ads or interruptions! Start Free Trial Cancel Anytime.

Trusted by over 1 million members

Try Scribd FREE for 30 days to access over 125 million titles without ads or interruptions! Start Free Trial Cancel Anytime.

Trusted by over 1 million members

Try Scribd FREE for 30 days to access over 125 million titles without ads or interruptions! Start Free Trial Cancel Anytime.

References •

MacDuffie, J.P., Sethuraman, K., and Fisher, M.L. (1996), ‘Product Variety and Manufacturing

•

Performance’, Management Science, Science, Vol 42, No 3

•

Wu, L. 2007. Toward an Understanding of the Product Variety Decision: Decision: An Integrative Model.

•

International Journal of Management , 24(3): 499-506.

•

Lancaster, K. 1990. The Economics of Product Variety: A Survey. Marketing Science , 9(3): 189- 206

Trusted by over 1 million members

Try Scribd FREE for 30 days to access over 125 million titles without ads or interruptions! Start Free Trial Cancel Anytime.

Trusted by over 1 million members

Try Scribd FREE for 30 days to access over 125 million titles without ads or interruptions! Start Free Trial Cancel Anytime.

Trusted by over 1 million members

Try Scribd FREE for 30 days to access over 125 million titles without ads or interruptions! Start Free Trial Cancel Anytime.

•

Tek-Hua Ho, Christopher S. Tang, 1998, product variety management, research advances

•

Barbra Kahan, Product variety management, research advances: Variety; from the customers perspective