THE REPURCHASE DECISION PROCESS

The Impact of

Performance, Cost & Competitive Considerations

on the Relationship Between

Satisfaction and Repurchase Intent

in Business Markets

A Whitepaper by -

Piyush Kumar

Vanderbilt University

MBA-2012 | COHORT-7

Asian Institute of Management

Hypothesis• Supplier’s Dilemma• Satisfaction

Modeling• Topics of Modeling

• Evaluation Criteria

• Data Collection

• Empirical Findings

Conclusion• Limitations• Future Research

Presentation Flow

Hypothesis

Performance criteria

influences customer overall

satisfaction

Customer experiences

with competing supplier affect

their repurchase intention

Effective Customer retention strategy

Supplier’s Dilemma

Customer management

Program

Profitability

Even after having effective Customer management program still Customer tends to have multiple supplier for 2/3rd of their requirements

What is Satisfaction?

Prior expectation

Performance level

Satisfaction level

Overall Satisfaction Model

◦ Overall satisfaction is a customer’s judgment regarding a fulfillment from product/service/firm

◦ Evaluation Process

◦ Use a set of Performance & Cost Criteria

◦ Aggregate multiple judgments to form global judgment

◦ Process Model of Satisfaction

◦ Evaluation Criteria based on –

◦ Competitive Norms

◦ Expectations & Performance

◦ Equity & Desires

Repurchase Intent Model

◦ Repurchase Decision Process in B2B is complex

◦ Performance | Cost | Competitive Considerations

◦ Overall Satisfaction & Repurchase Intent are different

◦ Service is less important in Repurchase Decision

◦ Market share has marginal correlation w/satisfaction

◦ Not evaluated in isolation; w.r.t. alternate supplier

◦ Implications for Suppliers of B2B Customers

◦ Benchmark for evaluation varies across customer base

Repurchase Intent Model

Satisfaction Gain/Loss

Cost Gain/Loss

Focal Supplier

Repurchase Intent

Satisfaction Gain/Loss

Cost Gain/Loss

Alternate Supplier

Relevant Criteria for Evaluation

Performance Criteria Product Quality Quality of product offering

Assistance in developing solutions

Customer Service Quality of Sales Team Leader

Delivery Processes

Cost Criteria Acquisition Cost

Maintenance Cost

Evaluation of Suppliers

◦ Core product

◦ Business Solution Development

◦ Sales team performance

◦ Delivery process

◦ Total Cost of Ownership = Acquisition Cost +

Maintenance Cost

◦ Increase in the satisfaction of these criteria will

increase the chances of Repurchase

Data Collection & Estimation

◦ Key representatives from major organizations

◦ Overall satisfaction with the supplier firm

◦ Based on people, products and services

◦ Likelihood of buying services to meet future needs

◦ Reduction of TCO is main criteria for all Buying Centers

Empirical finding of the research

Driving force for Overall Satisfaction

Problem solver not just product offering

Enhance satisfaction by post purchase service by sale force

Cost doesn’t have significant impact

Offer complete package

Driving force for Repurchase Intent

Level of customer satisfaction may not result in repurchase intent.

Customer’s perception of the overall competitiveness of the supplier

Both overall and relative satisfaction

Quality of product offering and ability to solve customer’s problems

Service offering part has greater impact than product offering part

Conclusion

◦ Relation b/w Satisfaction & Repurchase Intent is non-linear and content-based approach shows that

◦ Effect of Cost & Competitive Considerations on Repurchase

◦ Weight of Performance Criteria varies in OSat & RepInt

◦ Repurchase Intent is a measure of future purchases

◦ Recent alternate suppliers impact Repurchase Decisions

Limitations & Future Research

◦ Limitations

◦ Focus was on the firm and not on product/service

◦ Intent is not a perfect predictor of future purchase

◦ Future Research

◦ Bolster the Theory of Post-Purchase Behavior

◦ Impact of multiple suppliers on Repurchase Decisions

Thank You!Deepak Damodaran

Indrani Basu

Madhuranath R

Sahil Shah

Sandeep Kumar

Surendra Kumar