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Effects of Customer Experience on Customers’ Recommendation and Repeat Purchases in Chinese Electronics IndustryEffects of Customer Experience on Customers’ Recommendation and Repeat Purchases in Chinese Electronics Industry
Effects of Customer Experience on Customers’ Recommendation and Repeat Purchases in Chinese Electronics Industry
Dissertation Sample
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Abstract
The modern business environment is dynamic and characterised by intense competition forcing businesses to formulate strategies geared towards customer satisfaction, retention, repeated purchasing and loyalty. This research paper aimed at investing the impacts of customer experience on customer’s recommendation and repeat purchasing in the Chinese electronic industry. Based on the literature review regarding the customer experience, a good customer experience is vital in determining the company’s profitability. The four key theories of consumer behaviour discussed under the literature review in relation to customer experience includes the theory of buyer behaviour, theory of reasoned action, theory of planned action and the theory of trying. According to the theory of buyer behaviour, environmental factors that influence consumer choice include marketing environment, social environment and the psychological environment. According to the theory of reasoned action, individuals’ behaviours are approximated to be equal to the behavioural intentions derived from consumers’ attitudes towards the purchase of the product. Based on the theory of planned behaviour, the creation of a perceived behavioural control depends on the combination of perceived present components that influence consumer behaviour. The theory of trying that consumer’s intention to try is determined by the subjective norm, expectation of success and attitude towards the service or product. However, the existing literature does not conclusively cover the variables of customer experience. To achieve the core objective of this research, the researcher tested the formulated hypotheses based on the literature using descriptive statistics. Based on the research findings, a good customer experience on customer’s recommendation and repeat purchase increases brand reliability, increases the endowment effect and reduces the customer switching.
Contents
1.1.1 Theoretical Rationale. 3
2.2.1 Customers’ Recommendation and Repeat Purchases. 7
2.3 Theories on Customers’ Behaviour. 8
2.3.1 The Theory of Buyer Behaviour (TCB) 9
2.3.2 The Theory of Reasoned Action (TRA) 10
2.3.3 The Theory of Planned Behaviour (TPB) 11
2.3.4 Theory of Trying (TT) 12
2.4.1 Impacts of customers’ experience on customer’s recommendation. 14
2.4.2 Impacts of customers’ experience with repeat purchases. 16
3.2 The Formulation of Hypotheses. 19
iii
3.8 Data Collection Methods. 25
Data Analysis and Presentation. 29
4.2 Description of the Sample. 29
4.3 Profile of Respondents. 30
4.3.7 Customer Experience on Recommendation and Repeat Purchase. 36
iv
Conclusion and Recommendation. 46
5.3.1 Recommendations for Further Research. 50
v
Chapter
1
Introduction
1. Research Background
The modern business environment is dynamic and characterised by intense competition forcing businesses to formulate strategies geared towards customer satisfaction, retention, repeated purchasing and loyalty (Podolny, 2010). Failure to retain customers can lead to reduced business revenue and in some instances it can result in the collapse of the enterprise. According to Hosseini, Maleki & Gholamian (2010), improving customer experience can result in recommendations and repeated purchasing which impact positively on the company’s profitability. Alrubaiee & Al-Nazer (2010) postulate that in the Chinese electronic market, customers have a preference to high quality and affordability. However, quality and affordable prices are not the only factors determining customer retention, loyalty and repeated purchasing. Zhang, Dixit & Friedmann (2010) further argue that more research should be conducted to determine the critical elements of customer experience. According to Prentice (2013), customer retention and repeated purchasing result from customer satisfaction. Mandhachitara & Poolthong (2011) provide six critical reasons why customer satisfaction is vital to the business growth. Firstly, consumer satisfaction is a significant indicator of the customer’s loyalty, repurchase intentions and recommendations. Secondly, customer satisfaction is critical in reducing the customers’ churn. Thirdly, customer satisfaction is essential for the business in realising the customer’s lifetime value. Fourthly, customer satisfaction is vital in reducing the negative word of mouth which can be very destructive to the business’s reputation. Fifthly, customer satisfaction is essential because it is easier to retain the existing customers than the new ones. Lastly, customer satisfaction is an important pointer of differentiation. Based on the Mandhachitara & Poolthong (2011)’s arguments regarding customer satisfaction, it implies that customer experience plays a critical role in repeated purchasing and recommendations.
Deng et al. (2010) note that the Chinese electronic industry is a competitive marketplace where enterprises are competing for customers. Liu, Guo & Lee (2011) further argue that customer satisfaction is considered as a significant differentiator. Therefore, to succeed in the competitive marketplace, a business must consider the positive customer experience as the key element in its strategies. As noted earlier, quality and affordable prices will not necessarily lead to repurchase intentions and recommendations if the customer experience is detrimental (Kassim & Asiah Abdullah, 2010). In the industry where businesses produce similar high-quality products, good customer experience is the major factor that can lead to high sales. Hanif, Hafeez & Riaz (2010) expound that offering an amazing customer experience can create a great customer advocacy and satisfaction. Customer advocacy is an essential ingredient of repurchasing intentions and customer recommendations (Williams & Naumann, 2011).
The research conducted by Eid (2011) highlights three key steps that can lead to customer satisfaction, retention, repeated purchasing and recommendations. Firstly, firms should adopt the customer loyalty programmes in which customers are awarded for their repeated purchasing. The rewards are also awarded to those customers who recommend one or more new customers to the company (Eid, 2011). Secondly, some firms regularly send newsletter emails to their customers to keep them updated. Thirdly, a firm can surprise and delight its customers by giving unexpected offers. Majorly, this is aimed at creating a good customer experience that can lead to customer loyalty, repeated purchasing intentions and recommendations. Ideally, organisations must create a conducive environment for customers to feel the value of their money (Fang, Chiu & Wang, 2011).
Zhang, Agarwal & Lucas (2011) note that the Chinese Electronic Industry has experienced tremendous growth in the past decade. For instance, the electronic market has grown three times faster compared to the country’s GDP (Lee, Xiang & Kim, 2011). The rapid growth in the Chinese electronic industry has resulted from the economic liberalisation policies (Breznitz & Murphree, 2011). For instance, in the years 2005, the Chinese electronic sector contributed about 7% of the total gross domestic product (GDP), which represented 16.60% of the country’s total economic growth (Berger & Martin, 2011). The literature review further indicates that in the year 2011, China was ranked as the world’s leading market for the personal computers (PCs) (Lee, Xiang & Kim, 2011). Some of the leading electronic firms in the Chinese market includes Lenovo, Huawei, Panda Electronics, TCL and Haier to name but a few. The leading electronic products in the Chinese market include computer-related goods, electronic parts and the software industry (Yang, Lin & Ma, 2010). However, the success of the electrical industry is majorly reliant on the willingness of the customers to consume its products. The increased willingness to purchase the electronic products is based on customer satisfaction, loyalty, repurchase intentions and customer recommendations (Har Lee, Cyril Eze & Oly Ndubisi, 2011). This research project, therefore, undertakes to investigate the effects of customer experience on customers’ recommendation and repeat purchases in the Chinese electronics industry based on specifically attributable components such as endowment effect, customer switching and loyalty. Based on the existing literature, little has been established regarding the effect of customer experience on customer’s recommendation and repeat purchases. To address the existing gap, this dissertation captures the impact of customer experience on customers’ recommendation and repeat purchases on customer endowment, customer switching, brand reliability and loyalty.
1.1 Research Rationale
1.1.1 Theoretical Rationale
In the recent years, numerous studies have been conducted to investigate ways of promoting customer experience in organisations (Van Vaerenbergh et al., 2012). However, the current literature fails to show the specific effects of customer experience on customers’ recommendation and repeat purchases. Many studies have majorly focused on how the customers’ experience on customers’ recommendation and repeat purchases affect sales revenue, profitability and the company’s reputation (Zhang et al., 2012). However, factors such as customer endowment, customer switching and brand reliability have not be dealt with conclusively. To bridge the existing gap, this research paper focuses on the customer endowment effect, brand reliability and customer switching in the Chinese electronic industry.
Based on the information provided in the existing literature, the concept of brand reliability is merely speculative and inadequate (Kim et al. 2012). It is essential to justify and assess the contribution of customers’ recommendation and repeat purchase on brand reliability that the previous research has ignored. The existing literature has focused more on linking the company’s reputation with branding. However, it fails to justify that brand reliability is closely associated with good customer experience, recommendation and repeat purchase. In the bid to bridge this gap, this dissertation assesses the contribution of the customers’ experience on recommendation and repeat purchase on brand reliability. Additionally, the contribution of customers’ experience on recommendation and repeat purchases on the endowment effect has been neglected in the existing literature (Alrubaiee & Al-Nazer, 2010). Zhang, Dixit & Friedmann (2010) define customer endowment effect as a hypothetical believe that ind
ividuals value more what they have compared to what is new. Further, Prentice (2013) argues that loyal customers will value what they have more compared to what is new to the market. However, the existing studies have not adequately addressed the impact of the customers’ experience on recommendation and repeat purchase on the endowment effect. To address this existing gap, this dissertation will investigate the impact of customer’s experience on recommendation and repeat purchase on the endowment effect. Similarly, much research has been done on customer loyalty but the studies have not been linked it to customer switching. Most of the past researchers have concentrated on product quality, affordability and discounts as the key components of customer loyalty (Mandhachitara & Poolthong, 2011). However, the impact of customers’ experience and repeated purchasing on customer switching has not been conclusively researched. This research will bridge gap by showing the contribution of customers’ experience and repeated purchasing on loyalty. More significantly, this dissertation will provide essential highlights to the future researchers on how to fill similar existing gaps.
1.1.2 Practical Rationale
Practically, failure to maintain good customer experience can be very detrimental to the organisation (Kassim & Asiah Abdullah, 2010). This can possibly result in the reduction in the total sales, poor customer relations and no referrals. Based on this argument, it is essential for the company to align its strategies towards customer satisfaction that will result in positive customer experience, repeated purchasing and recommendations (Hanif, Hafeez & Riaz, 2010). This dissertation, therefore, endeavours to investigate the effects of customers’ experience on recommendations and repeated purchasing on the Chinese electronic industry. The information provided will help management to align their strategies towards customer satisfaction to improve customer experience. International marketers will also benefit from the information provided by this dissertation to make informed decisions concerning positive customer experience.
1.2 Research Objectives
Foremost, customer experience is enhanced through satisfaction techniques such as product quality, availability, affordability, discount offers and loyalty programs (Williams & Naumann, 2011). The common effects of positive customers’ experience in the existing literature are increased sales as a result repeated purchasing and recommendations. Therefore, the existing literature has put more emphasis on how to attract more customers through the mentioned customer satisfaction techniques, and little has been done on investigating the effects of customers’ experience on repeated purchasing and recommendations. There are several effects of customers’ experience in organisations, but this dissertation will concentrate on endowment effect, brand reliability and customer switching. The mentioned effects resulting from customers’ experience on recommendations and repeated purchasing have not been conclusively researched in the existing research. Firstly, brand reliance is critical in locking the potential competitors within the industry. Eid (2011) notes that having customers’ confidence in a specific brand can help a company achieve a competitive edge in the market. Secondly, the endowment effect gives customers a sense of ownership which ties them to a specific brand, and this is essential in gaining a larger market share for the company. Customer loyalty has also been identified as the key factor preventing the customers from switching to the other products (Williams & Naumann, 2011). This study, therefore, has a considerable influence on the effects of consumers’ experience on recommendations and repeated purchasing because it has captured the endowment effect, brand reliance and customer switching. Therefore, this research project has obtained three specific objectives namely:
- To examine impacts of customers’ experience on customer’s recommendation in Chinese electronics industry
- To examine impacts of customers’ experience on repeat purchases in Chinese electronics industry
- To recommend ways through which company’s operating in Chinese electronics industry can optimize on customer’s experience to enhance customers’ recommendation and repeat purchases
1.3 Research Structure
The core aim of this research is to investigate the effects of customer experience on customers’ recommendation and repeat purchase in the Chinese electronic industry. To achieve the targeted objectives, this study has been structured into five key chapters. The first chapter provides an exclusive research background, the research rationale, objectives and the research structure. Chapter two provides a review of the past literature in the similar field done by other researchers. The third chapter provides a detailed methodology on how the objectives of this study are achieved. The fourth chapter presents the key findings and results while the last chapter provides an overall conclusion and recommendations.
Chapter 2
Literature Review
2.1 Introduction
According to Palmer (2010), an excellent customer experience is critical to the success of any organisation. Lemke, Clark & Wilson (2011) define customer experience as an outcome of the interaction between the business and customers in a specified period. The result of the interaction between the organisation and the business can be either positive or negative. A positive customer experience is not only beneficial to the client, but also to the organisation as a whole. Further, Biedenbach & Marell (2010) expound that a positive customer experience is essential for customer’s recommendation and repurchasing. Based on Lemke, Clark & Wilson (2011)’s definition, it is vital for all firms to prioritise customer satisfaction. The study’s aim was to investigate the effects of customer experience on customer’s recommendation and repeated purchase in the Chinese electronic industry. This chapter presents the literature review from the work of the past authors related to this topic. The chapter is divided into five sections. The first section introduces this chapter while the second section provides an overview of the customer experience. Under the client experience section, the researcher reviewed the past literature on the customer’ recommendation and repeat purchase. The third section provides the theories of consumer behaviour while the fourth section provides a review of the empirical studies on the effects of customer experience on customer’s recommendation and repeated purchasing. The last section provides a comprehensive summary of the whole chapter.
2.2 Customer Experience
According to Maklan & Klaus (2011), a good customer experience can significantly increase consumer spending, loyalty and customer’s recommendation. However, to achieve an excellent customer experience, Kamaladevi (2010) provides four distinct critical disciplines. Firstly, the company must align its strategic approach to customer satisfaction. Secondly, the company must understand customer needs and address them appropriately. Thirdly, the business needs to design its products and services to match customer’s expectations. Fourthly, it is essential for the organisation to measure customer satisfaction through the analysis of customer feedback. As noted earlier, the success of any business is reliant on the willingness of the customer to buy, repurchase and recommend. The Chinese electronic market is not an exception. Good customer experience is
necessary in the Chinese electronic industry for various reasons. For instance, several firms are offering similar electronic products and they compete for customers. It implies that those companies with a good customer experience will have a competitive edge. Shaw, Dibeehi & Walden (2010) argue that more than 80% of the customers can prefer to pay more for a product as long as they are served well. The first importance of a good customer experience is that it improves satisfaction. Additionally, a positive customer experience fosters customer loyalty, repurchase, increased sales revenue, customer referrals and churn reduction. Ling, Chai & Piew (2010) also note that an enhanced customer experience is important because it builds a positive customer relationship. The Chinese electronic industry has evolved over the past decade to emerge as the best electronic market in the world (Conitzer, Taylor & Wagman 2012). Innovations made in China are the key contributors to the tremendous growth of the electronic industry. Therefore, customer experience is a significant factor in the determination of organisational success.
2.2.1 Customers’ Recommendation and Repeat Purchases
As noted by Clottey, Collier & Stodnick (2011), customer satisfaction leads to customer’s recommendation and repeat purchases. A satisfied customer can recommend a prospective customer to buy and repurchase a certain good or product. Kim & Lee (2010) defines customer’s recommendation as a written or oral recommendation to a prospective client to go ahead and purchase a good or service. Further, Solomon et al. (2014) expound that a satisfied customer endorses a product or service because his expectations are met or exceeded. More importantly, customer’s recommendation and loyalty are driven by product quality, good customer service and a good experience. The same aspects of customer loyalty and satisfaction result to repeat purchasing. According to Maklan & Klaus (2011), repeat purchase behaviour and customer’s recommendation are influenced by three determinants namely brand loyalty, perceived quality and emotional satisfaction. Kamaladevi (2010) claims that increasing the customer loyalty by 5% can increase profitability by 20-80%. Profitability is a result of increased repeat purchases and customer referrals. The consumer’s judgement regarding the superiority of a service or product is influenced by the perceived service quality (Shaw, Dibeehi & Walden, 2010). The client compares the product’s perceived quality with his expectations. Palmer (2010) notes that customer loyalty, customer recommendation and repeat purchasing are achieved when an organisation exceeds customers’ expectation. According to Maklan & Klaus (2011), emotional satisfaction plays a significant role in influencing customer’s recommendation and repeat purchases. He further notes that emotional satisfaction creates a strong link between the company’s products and customers which result in loyalty, customer’s recommendation and repeated purchasing. The assertions of Maklan & Klaus (2011) are supported by Shaw, Dibeehi & Walden (2010) who argue that emotional satisfaction differs from the general customer satisfaction. Based on Shaw, Dibeehi & Walden (2010) arguments, there are two types of customers; a satisfied customer and an emotionally satisfied customer. An emotionally satisfied customer has a stronger attachment and connection to the company’s products. However, a satisfied customer only gets satisfaction from the company’s products and services but lacks the strong emotion, commitment and connection to the company. As noted earlier, the Chinese Electronic industry has grown in leaps pounds and its success is entirely reliant on the customers’ willingness to purchase the products. Those companies that exceed customers’ expectation have a competitive edge. Profitability in the industry is significantly determined by customer’s recommendations and repeated purchasing. As expounded by Clottey, Collier & Stodnick (2011), in the Chinese electronics industry, consumers are greatly influenced by the word-of-mouth and in-store marketing. This differs from other markets such as the US where consumers are typically captive to particular electronic brands. Clottey, Collier & Stodnick (2011)’s arguments are supported by Kim & Lee (2010) who note that most of the electronic consumers in the Chinese cities purchase products based on emotional aspirations and customer’s recommendations. Therefore, most of the Chinese electronic firms tend to leverage on in-store and the word-of-mouth marketing techniques when conveying product’s information to the consumers. However, to succeed in the in-store and word-of-mouth marketing, a company must ensure that its existing customers are emotionally satisfied to increase customer’s recommendations and repeated purchasing.
2.3 Theories on Customers’ Behaviour
Solomon, Russell-Bennett & Previte (2012) note that the existing literature has put more focus on consumer behaviour and consumer decision-making approaches. However, before the early 1950s, most researchers approached consumer behaviour only from the economic perspective (Young et al., 2010). The most common approach that was used to evaluate consumer behaviour was the utility theory model (UTM) which solely focused on the act of purchasing (Foxall, 2014). According to the UTM, a customer makes a choice based on his expectations regarding the product or service. Based on the assumptions of the UTM, a customer is regarded as a rational decision-maker whose major concern is self-interest (Foxall, 2014). However, later studies on consumer behaviour disagreed with the UTM’s assumption that a customer is rational economic being. According to the contemporary studies, customer behaviour is not only influenced by the purchasing act, but also customer recognition, purchase intentions, customer’s recommendation and the evaluation of the available alternatives (Sheth, 2011). The four core theories of consumer behaviour forwarded by the contemporary studies include: theory of buyer behaviour, theory of reasoned action, theory of planned behaviour and the theory of trying
2.3.1 The Theory of Buyer Behaviour (TCB)
The first consumer decision-making model was developed by Howard in the year 1963 to explain customer behaviour (Solomon, Russell-Bennett & Previte, 2012). Later in the year 1969, Howard and Sheth improvised the consumer decision-making model into the theory of consumer behaviour (TCB) (Sheth, 2011). According to TCB, environmental factors that influence consumer choice include marketing environment, social environment and the psychological environment (Sheth, 2011). The TCB integrates the factors that influence consumer choice into an interpretable information process. The major aim of the TCB was to help businesses interpret and analyse various purchasing scenarios. The theory of buyer behaviour is made up of three basic exogenous variables that determine the consumer behaviour as shown in Figure 1.
Figure 1: The Main Components of the Buyer Behaviour Theory.
Source: Sheth (2011).
The input variables entail various environmental stimuli such as significative stimuli, symbolic stimuli and the social stimuli that the customer is exposed to. For instance, the significative stimuli comprise of the actual components of brands, products and services confronted by the consumers. The symbolic stimuli refer to the manner in which marketers and advertisers represent products and brands to the consumer. On the other hand, the social stimuli refer to the influence of friends, family members or reference groups. The consumer decision-making process is influenced by the mentioned stimuli.
The two categories of the intervening variables include the perceptual constructs and the learning constructs (Sheth, 2011). The perceptual constructs comprise
of information sensitivity, perceptual bias and the information search. Information sensitivity is the extent that the consumer can control the flow of information stimuli (Sheth, 2011). The perception bias is the alteration of the of the existing consumer’s knowledge by the new information. The information search refers to the activeness of the buyer in search of new information which influence consumption choices. The buyer internalises both the input variables and the intervening variables before making a decision to buy.
2.3.2 The Theory of Reasoned Action (TRA)
The early researchers developed a prescriptive cognitive model (PCM) which put more emphasis on attitudes and beliefs that were viewed as the main determining factors of customers’ buying behaviour (Albarq & Alsughayir, 2013). According to Weisberg, Te’eni & Arman (2011), individuals’ overall attitudes toward objects are derived from their beliefs about the objects’ attributes. Later, the PCM was improvised to the theory of reasoned action (TRA) which incorporated the assessment of consumer behaviour on addition to attitudes and beliefs (Albarq & Alsughayir, 2013). According to the TRA, individuals’ behaviours are approximated to be equal to the behavioural intentions derived from consumers’ attitudes towards the purchase of the product. Similarly, the TRA acknowledges the assumption of the subjective norm, which is the power of influencing others’ behavioural intentions (Fishbein & Ajzen, 2011). The theory implies that individuals have the power of influencing others to accept and acknowledge their concepts. Based on the notion of consumer behaviour, a customer is motivated to purchase a product or a service based on the view of others. However, Marshall et al. (2010) notes that in some situations, a relative contribution of an attitude and a subjective norm may not necessarily predict a consumer behaviour. Similarly, the influence on behavioural intention depends on the propensity to caring about other people’s beliefs, attitudes, product quality, perceived quality and emotional satisfaction. The other significant attribute of TRA is that attitudes towards the act of purchasing a product can be measured rather than simply having a positive attitude towards a product (Dzewaltowski, 2010). Consumers can have the right attitudes towards products, but not towards the acts of buying them. Based on the previous research findings, various empirical studies have shown a higher correlation between attitudes towards behaviour to behavioural intention. However, some researchers have disputed the high correlation arguing that it is due to unclear circumstances (Dzewaltowski, 2010). Despite the criticism, the TRA demonstrates that the customer’s intention to purchase a product can be influenced by others. Therefore, customer experience on customer’s recommendation and repeat purchasing can be greatly influenced by attitude and the beliefs of others. The components of the TRA are shown in Figure 2.
Figure 2: Theory of Reasoned Action (TRA)
Source: Albarq & Alsughayir (2013).
2.3.3 The Theory of Planned Behaviour (TPB)
The theory of planned behaviour (TPB) extends the concepts of the theory of reasoned action (TRA) but puts more emphasis on the intention to predict a behaviour. According to TPB, the creation of a perceived behavioural control depends on the combination of perceived present components that influence consumer behaviour (Shah & Mohamed Sayuti, 2011). Based on various studies, the findings of TPB conclude that that factors that influence consumer behavioural intentions are attitude and subjective norms (Han, Hsu & Sheu, 2010). The TPB is considered superior to TRA because the empirical tests show that it has enhanced behaviour predictability ability. The elements of the TPB are shown in Figure 3:
Figure 3: Theory of Planned Behaviour (TPB).
Source: Han, Hsu & Sheu (2010).
Based on Figure 3, the consumer’ intention to buy behaviour is influenced by attitude, subjective norm and the perceived controlled behaviour. Similarly, the behavioural, normative and the control beliefs play a vital role in influencing the intention to buy. According to Ajzen (2011), an individual’s purchase intention can be influenced by those who already believe that a particular product provides the perceived quality. However, other contemporary studies argue that both the TPB and the TRA should be modified to incorporate more variables that can increase consumer behaviour predictability. The major weakness of both TPB and the TRA is that consumer behaviour’s predictability is reliant on the researcher’s capability to measure all attributes that form attitude (Ajzen, 2011). Similarly, both the TPB and the TRA rely on the assumption that extensive cognitive process is critical before a consumer makes a purchasing decision. This assumption is challenged by Solomon et al. (2012) who argues that over-reliance on the cognitive process neglects other influences that may result from spontaneity and emotions. The pointed out limitations are vital in the context of Chinese electronic industry where emotional satisfaction is considered as one of the key influencers of customer’s recommendation and repeat purchase.
2.3.4 Theory of Trying (TT)
The theory of trying (TT) gives an alternative approach to other models such as the TPB and the TRA (Carsrud & Brännback, 2011). The TT does not only examine consumer’s explicit behaviour, but also assess the consumer’s act of trying to act. According to the TT, the consumer’s intention to try is determined by the subjective norm, expectation of success and attitude towards the service or product (Carsrud & Brännback, 2011). Previous studies have shown evidence that behaviour is a key influencer of consumer choice. Similarly, the TT integrates behaviour as a key component that influences the choices made by the customer. Figure 4 presents the elements of the theory of trying (TT)
Figure 4: Theory of Trying (TT)
Source: Carsrud & Brännback (2011).
According to Sandve & Øgaard (2013), besides behavioural intentions, the theory of trying emphasises that a consumer can have a behavioural goal in various situations, which he expects to fulfil. However, Carsrud & Brännback (2011) note that in the modern business context, the theory of trying is mostly applied in the health-related decisions compared to retail consumption. Despite this, the theory puts forward an important aspect of consumer behaviour that is the act of trying to purchase or repurchase a product. The goal-directed behaviour is essential in influencing consumer decisions because of the desire of trying to act. According to Carsrud & Brännback (2011), desire is a stronger variable and predictor of the behaviour intentions than other variables such as attitude, subjective norm or behavioural control. For instance, in the Chinese electronic industry, the desire to purchase related electronic products is likely to influence consumer behaviour compared to subjective norm and attitudes. The main limitation of the goal-directed behaviour model is its complexity in interpretation. However, when compared to the TPB and TRA, the theory of trying puts more focus on the goal-directed behaviour which has a higher predictability of the consumer behaviour.
2.4 Empirical Studies on Effects of Customer Experience on Customers’ Recommendation and Repeat Purchases
2.4.1 Impacts of customers’ experience on customer’s recommendation
According to Young et al. (2012), positive customer experience results from emotional satisfaction that impacts positively on customer loyalty. The empirical study carried by Jansson-Boyd (2010) suggest that there is a strong
relationship between customer satisfaction, customer loyalty and profitability. The study utilised a data set comprising 1,200 retail customers from 59 firms and used regression analysis in examining the relationships among customer satisfaction, loyalty and profitability. The results showed consistency among the multiple measures under consideration that revealed that there is a strong relationship among customer satisfactions, customer loyalty and profitability. The strong relationship between the three tested variables also implies that a positive customer experience results in increased profits. The increased profitability is due to customer satisfaction that leads to customer retention, repeat purchase and customer’s recommendations (Zarantonello & Schmitt, 2010). However, despite showing that a positive customer experience increases customer loyalty, the study failed to identify the endowment effect, brand reliability and the impact of customer experience on customer switching. Similarly, the past literature has associated customer loyalty and satisfaction with affordability and product quality (Gössling et al., 2012). Not much has been done to investigate the impact of positive customer experience on brand reliability. According to Van Doorn et al. (2011), customer’s recommendations can have a strong correlation to brand reliability. However, more research is needed to show precisely how customer experience on customer’s recommendation impacts on brand reliability. Therefore, there is an existing gap that need to be addressed in the current and future studies relating to the effects of customer experience on customer’s recommendation to help management understand how brand reliability can lead to increased sales.
Palmer (2010) notes that much of the existing literature has solely concentrated on the impact of customer satisfaction on loyalty, but little has been done to investigate the impact of customer experience on the intention to switch. Similarly, Liu, Guo & Lee (2011) argues that the few studies that have tried to investigate the impact of customer experience on switching intention only link it to customer satisfaction. However, most of the past literature agree that customer satisfaction can significantly influence the likelihood of customer’s recommendation and repurchase intentions. This is in line with the theory of consumer behaviour which argues that a favourable customer attitude can increase the intention to buy. Similarly, the theory of buyer behaviour notes that positive attitude and beliefs regarding a certain product can greatly influence others in purchasing similar products (Yuksel, Yuksel & Bilim, 2010). Based on the theories of consumer behaviour, customers recommend others to purchase similar products because they have already experienced the perceived quality. However, there is no clear linkage on how customer recommendation influence customer switching. Kumar (2010) conducted a research on the impact of customer satisfaction on customer switching and loyalty in the banking industry. The study utilised the questionnaire method based on the survey method in which 120 respondent customers participated. Based on the research findings, it was noted that customer satisfaction was the major determinant of customer switching. It implies that the rate of customer switching is high whenever a client is dissatisfied. However, the study fails to link customer switching to the customer experience on recommendations. As noted earlier under the theories of consumer behaviour, attitudes, beliefs and subjective norms greatly influence the behaviour of others. The current research literature does not precisely show the impact of customer experience on recommendations on customer switching. Zhao et al. (2012) argue that dissatisfied customers can turn away prospective clients from the company. Therefore, there is a high likelihood that consumer’s attitudes, beliefs and subjective norms have either direct or indirect impact on customer switching. This research aims at investigating how the customer experience on customer’s recommendation can influence customer switching. From a snapshot point of view, Hernández, Jiménez & Martín (2010) note that a customer with negative attitude and beliefs regarding a particular product can greatly demotivate a prospective client from purchasing a new product by 70-90%. It is critical to carry out an extensive research to investigate how customer’s experience on recommendation influence customer switching.
Additionally, numerous researchers have put a little effort into investigating how customer experience on recommendation affects the endowment effect. Previous studies have focused on the impact of customer loyalty and customer satisfaction on sales (Oliver, 2014). Therefore, many firms have taken an assumption that customer experience correlates to loyalty while ignoring the impact of customer’s recommendation on the endowment effect. Based on the current literature, many firms believe that the best way of achieving customer loyalty is through the provision of affordable prices and product quality. The research conducted by Nam, Ekinci & Whyatt (2011) on the impact of customer recommendation and customer feedback on sales revealed that higher customer ratings translated to increased sales revenue. The study majorly shows the linkage of customer experience on recommendation and increase in sales revenue. On this view, many firms are devoting much effort in managing customer feedback as the best way of passing information about their products. Therefore, this shows that much need to be done to help management understand the impact of the endowment effect that result from customer experience on the recommendation. This research will attempt to fill this gap by identifying the possible ways customer’s recommendation affects the endowment effect. The endowment effect is the feeling of ownership that is developed by the consumer. For instance, instead of the client saying that he is going to purchase a laptop, he will simply say “Am heading to buy my Lenovo laptop”. This clearly demonstrates that the consumer trusts Lenovo than any other brands in the market because he has endowment effect on it.
2.4.2 Impacts of customers’ experience with repeat purchases
The majority of the previous studies have linked repeat-purchase to loyalty programmes. As noted earlier, customer loyalty is influenced by emotional satisfaction. Many firms have employed loyalty programmes based on the previous research findings to increase repeat purchase intentions. Hong & Cho, (2011) expound that the commonly used loyalty programmes include discounts, credit buying, use of simple redeemable points system and tier system. Further, Oliver (2014) notes that financial returns greatly depend on the increase in the market share that result from repeat purchases. Therefore, most of the existing literature agree that a positive customer experience can result in increased sales. In a competitive market such as the Chinese electronic industry, customer loyalty programmes are vital to gaining competitive advantage. Based on the research conducted by Hernández, Jiménez & Martín (2010), the replication and extension of repeat purchase are directly linked to the loyalty programmes. The study relied on 592 respondents who were requested to provide their respective experiences on product purchases. The closed-ended questionnaire method was used and the findings were interpreted using statistical techniques. The higher scores indicated that repeated purchasing resulted from customer loyalty programmes. Many other researchers have emphasised that repeat purchase is results from customer loyalty. However, the studies fail to show the impact of customer’s experience on brand reliability. Rahbar & Abdul Wahid (2011) note that customer loyalty alone does not result to repeat purchasing. The assumption undertaken by many firms is that repeat purchasing is majorly linked to customer loyalty, thus ign
oring other vital aspects such as brand reliability. Very few studies have discussed brand reliability as the outcome of customer’s experience on repeat purchasing. Sheth (2011) notes that brand reliability is an outcome of emotional satisfaction, customer loyalty, customer recommendation and repeat purchasing. However, most of the researchers have failed to show how brand reliability is linked to customer’s experience on repeat purchasing. This study will fill the identified existing gap by investigating how customer’s experience on repeat purchasing impact on brand reliability.
Young et al. (2010) postulates that repeat purchasing greatly depends on consumer behaviour and the level of satisfaction. The repeat purchase intention is significant to the company’s profitability targets because it determines the number of purchases made during a particular period. The research conducted by Solomon (2012) reveals that negative customer experience results to buyer’s remorse that greatly reduces the repeat purchase behaviour. The consumer’s remorse is a feeling of regret resulting from dissatisfaction after purchasing a certain product. The study investigated the impact of buyer’s remorse on the repeat purchase intentions. The researcher employed qualitative methodology in which semi-structured interviews were used. A sample of 400 employees was randomly selected from five companies. The findings revealed that consumer’s remorse has a negative impact on repeat repurchase intentions because most of the respondents indicated that they will not repurchase the same product that initially dissatisfied them. To a greater extent, the study helped to show a linkage between buyer’s remorse and customer switching. However, the aspect of customer’s experience on recommendation was ignored. As noted earlier, repeated purchasing behaviour is greatly influenced by the attitudes and beliefs of others. Therefore, much need to be done on investigating how customer experience on repeat purchases influence customer switching. Similarly, the current literature does not clearly show how customer experience on repeat purchasing influence the endowment effect. Much concentration is diverted to satisfaction-retention relationships. In the effort to achieve satisfaction-retention relationships, many researchers have diverted their intentions on the factors driving consumer satisfaction (Conitzer, Taylor & Wagman, 2012). However, the influence of customer experience on the endowment effect has been ignored.
Based on the existing literature, there are three basic inconsistencies identified regarding customer experience on recommendation and repeat purchase (Palmer, 2010). Firstly, the existing literature has put more emphasis on customer loyalty as the key impact of customer experience on recommendation and repeat purchase. However, the effect of customer recommendation and repeat purchase on brand reliability has been ignored. Secondly, the previous researchers’ findings on customer switching are inadequate because little has been done to link customer switching to customer’s recommendation and repeated purchasing. Many studies conclude that customer switching is majorly influenced by the buyer’s remorse. Thirdly, the endowment effect has not been associated with the customer experience on recommendation and repeat purchasing. Therefore, this study’s main aim is to address the identified inconsistencies to help management formulate strategies that will help the firms in the Chinese electronic industry to generate more sales.
2.5 Summary
The previous literature review indicates that positive customer experience is significant for any business that anticipates increasing its profitability. Customer recommendation and repeat purchasing result from loyalty and the perceived product quality. Customer’s recommendation is a written or oral recommendation to a prospective client to go ahead and purchase a good or service. Repeat-purchase intention is greatly influenced by emotional satisfaction. Based on the existing literature, the four core theories of consumer behaviour are the theory of buyer behaviour, the theory of reasoned action, the theory of planned behaviour and the theory of trying. According to the theory of buyer behaviour, environmental factors that influence consumer choice include marketing environment, social environment and the psychological environment. The theory of buyer behaviour integrates the factors that influence consumer choice into an interpretable information process. The major aim of the theory of the buyer behaviour is to help a consumer to analyse various purchasing scenarios to make the right choice. The theory of planned action puts more emphasis on attitudes and beliefs that were viewed as the main determining factors of customers’ buying behaviour. Further, the theory of planned action shows that individuals’ behaviours are approximated to be equal to the behavioural intentions derived from consumers’ attitudes towards the purchase of the product. The theory further acknowledges the assumption of the subjective norm that is the power of influencing others’ behavioural intentions. Based on the theory of trying, the consumer’s intention to try is determined by the subjective norm, expectation of success and attitude towards the service or product. Previous studies have shown evidence that behaviour is a key influencer of consumer choice. It is also vital to note that the existing literature has focused on profitability and customer loyalty as the key impacts of customer experience on recommendation and repeat purchase. However, the previous literature has not focused on customer experience and customer’s recommendation impact on brand reliability, customer switching and the endowment effect. This study will address the current gap by closing investigating how customer experience on recommendation and repeat purchasing influence brand reliability, customer switching and the endowment effect.
Chapter 3:
Methodology
3.1 Introduction
The method selected is very critical in determining the success of any study because the research findings are reliant on the methodology (Flick, 2015). According to Pickard (2012), the use of inappropriate methodology can lead to misleading research findings. This chapter provides an overall methodology that was used by the researcher to achieve the research objectives. The research hypotheses were formulated based on the literature review and the core objectives of this research. The formulation of the research questions was also based on the core objectives of this research. This chapter also presents the research philosophy, approach, strategy and the research design that was used to attain the core objectives of this research. The chapter also presents the methods used to collect data. Data analysis techniques are also explained in detail. The last section provides a comprehensive summary of the whole chapter.
3.2 The Formulation of Hypotheses
Creswell (2013) defines the research hypotheses as speculative statements made by a researcher concerning the possible outcome of the study experiment. Further, Punch (2013) argues that it is possible to formulate research hypotheses from the reviewed literature. There are three specific reasons why research hypotheses are critical in this research. Firstly, as noted by Punch (2013), researchers that do not have hypotheses are like sailors in the sea without a compass. The researcher used the formulated hypotheses as a guide to achieving the study objectives. Secondly, the hypotheses help the researcher in highlighting the cause of the problematic situation under study. Thirdly, as argued by Rossi, Wright & Anderson (2013), by using the hypotheses, the researcher can accurately and precisely conduct a scientific research because they help in separating the irrelevant obser
vations from the relevant ones. Considering the existing literature, more emphasis has been put on how customer experience impacts on the company’s profitability and the level of loyalty (Zhao et al. 2012). The literature also shows that a good customer experience can increase repurchase intentions and customer recommendations. Similarly, the theories of consumer behaviour show that the customer’s perception towards a product or service is influenced by attitude, beliefs and the perceived quality. A negative customer experience can adversely affect the company’s profitability because it will reduce loyalty, repurchase intentions and customer’s recommendations (Zhang et al., 2011). Just like any other market, in the Chinese electronics industry, customers’ intentions to repurchase and recommend greatly rely on the perceived service quality, attitudes and beliefs (Zhang, Dixit & Friedmann, 2010). When studying the impact of customer experience on customer’s recommendation and repeat purchases, it is essential to consider brand loyalty, customer switching and the endowment effect. As noted in the literature review, the past literature has put more focus on profitability and customer loyalty levels. However, to help management improve its efficiency in customer experience, it is essential to study and investigate how customer’s recommendation and repeat purchasing affects brands reliability, customer switching and the endowment effect. Brand reliability, customer switching and the endowment effect if not well managed can impact negatively on the overall profitability of any firm operating in the Chinese electronic industry (Zarantonello & Schmitt, 2010). Therefore, the firms must focus on emotionally satisfying their customers to create strong relations between them and their brands. Similarly, emotional satisfaction can greatly reduce customer switching and increase the endowment effect. Based on the presented arguments, the researcher formulated three hypotheses as shown below:
Hypothesis 1:Brand reliability increases as a result of positive customer experience on customer’s recommendation in the Chinese electronic industry
Hypothesis 2: Good customer experience on recommendation increases the endowment effect in the Chinese electronic industry.
Hypothesis 3:Reduction in Customer Switching is dependent on good customer experience on repeat purchase in the Chinese electronic industry.
3.3 Research Questions
- How does customer experience on recommendation impact on brand reliability in the Chinese electronic industry?
- How does customer experience on recommendation impact on the endowment effect in the Chinese electronic industry?
- How does customer experience on repeat purchase impact on customer switching in the Chinese electronic Industry?
3.4 Research Philosophy
According to Rossi, Wright & Anderson (2013), research philosophy is a vital segment in research methodology because it helps the researcher to effectively and appropriately collect data. As defined by Bunniss & Kelly (2010), research philosophy entails the development of knowledge on how the research should be conducted. There are two specific reasons why the researcher had to understand the research philosophies before collecting data. Firstly, the research philosophy selected guides the researcher on which specific methods are used in collecting and analysing data (Bunniss & Kelly, 2010). Secondly, understanding the research philosophy helps the researcher to enhance his creativity required in the exploration of the methodology. The two most common types of research philosophy are positivist and interpretive philosophy. Bunniss & Kelly (2010) note that a researcher must understand the differences between the research philosophies to effectively and appropriately select the research methodology. According to the positivist philosophy, generalising, quantifying observations and evaluating results is done using statistical methods (Al-Habil, 2014). Similarly, positivism philosophy is based on explanations, tangibility and objectivity. Further Al-Habil (2014) notes that positivism philosophy is highly reliant on a structured methodology and it is frequently used in the natural sciences. The researcher in this study adopted the positivism philosophy because the research findings were evaluated using the statistical methods. Based on the motives of this study, the researcher aimed at investigating the impact of customer experience on customer’s recommendation and repeat purchase. The observable facts under study were brand reliability, customer switching and the endowment effect that were measured using the ordinal numbers. The scores were ranked using the Five Likert scale and were analysed using the descriptive statistics. There are three specific benefits that are attributable to the use of the positivism philosophy. Firstly, the positivism philosophy helped the researcher to verify empirically the research findings, thus making them more reliable (Saunders & Lewis 2012). Secondly, the positivism philosophy helped the researcher to remain objective because the study required adherence to a highly structured methodology. Thirdly, the positivism approach played a critical role in enabling the researcher to establish a cause and effect relationship. On the other hand, interpretive philosophy is based on understanding and belief that the social world of business is highly complex and cannot be formulated in the social science (Saunders & Lewis 2012). Therefore, the interpretive philosophy was inappropriate for this study because it required generalisation and data quantification to generate the research findings. The interpretive philosophy is largely based on meanings, introspection and gaining understanding, but this study was based on data quantification and statistical evaluation. As compared to interpretative philosophy, the positivism philosophy was the most appropriate in this study.
3.5 Research Approach
Holstein & Gubrium (2013) expound that a research approach is majorly based on the selected research philosophy. The two common research approaches are deductive and inductive approaches. Table 1 provides the differences between inductive and deductive approach.
Table 1: Inductive Vs. Deductive Research Approaches
| Deductive Approach | Inductive Approach |
| The Main objective is to test a theory | Aimed at generating a new theory |
| Begins with hypotheses | Begins with research questions |
| More focus on causality | More focus on exploring new phenomenon |
Source: Holstein & Gubrium (2013)
Saunders et al. (2011) argue that in the inductive approach, a researcher will first collect data that is relevant to his topic of study. After collecting the required data, the researcher will check the data patterns to help him in generating theories that can explain the identified patterns. Figure 2 provides a summary of the steps required when using the inductive research approach.
Figure 5: Inductive Approach
Source: Saunders et al. (2011)
As shown on both Table 1 and figure 2, the inductive approach is aimed at generating a theory to explain the phenomena. Similarly, the inductive approach begins with the research questions rather than the hypotheses (Saunders et al., 2011). Further, the inductive approach puts more emphasis on the exploration of new phenomenon or using the previous phenomenon to explain a concept.
On the other hand, the deductive research approach reverses the steps outlined under the inductive research approach (Easterby-Smith, Thorpe & Jackson, 2012). In most cases, t
he researchers using the deductive approach begins with social theories whose data implications are tested to determine their reliability. The deductive approach is associated with scientific investigations (Creswell, 2012). Deductive researchers study the existing literature out of which they formulate the hypotheses. The hypotheses are tested using descriptive statistics. Figure 3 provides the steps followed when conducting research using the deductive approach.
Figure 6: Deductive Research Approach
Source: Creswell (2012)
As noted earlier, the research approach selected is based on the selected research philosophy. The inductive approach is based on interpretivism or phenomenology while the deductive approach is associated with natural sciences that are based on positivism (Collis & Hussey, 2013). Based on the requirements of this study, the researcher aimed at empirically testing the observations using the descriptive statistics. Similarly, the researcher used the existing literature and theories to formulate the research hypotheses. The hypotheses were analysed and empirically tested to generate the research results. Since this research was quantitative, it was essential for the researcher to adopt the deductive approach. The quantitative research puts emphasis on the specific variables, numbers and figures (Creswell, 2013). The deductive approach also helped the researcher in establishing the causal and effect relationship between the variables and how they impact on customer experience on recommendation and repeat purchasing in the Chinese electronic industry. The inductive approach was not appropriate for this study because it is based on interpretivism phenomenology. Unlike the deductive approach, Table 1 shows that the inductive approach aims at generating new theories to explain the phenomena. Additionally, the inductive approach begins with research questions and focuses on exploring the new phenomena. Therefore, based on the objectives of this study, the deductive approach was the most appropriate approach as opposed to the inductive approach.
3.6 Research Strategy
Ary et al., (2013) explain that using an appropriate research strategy is critical in answering and addressing the study questions. The three common research strategies are experimental, case studies and surveys. Each research strategy is applied based on the research approach and the philosophy used. However, Tashakkori & Teddlie (2010) argue that in some situations, it is possible to use surveys in case studies. Experimental research strategy shows the link between the independent and interdependent variables (Tashakkori & Teddlie, 2010). As noted by Babbie (2015), experimental research strategy is commonly used in exploratory studies to answer the questions ‘why’ and ‘how’. The survey research strategy is used by those researchers who use a large amount of the collected data from the selected samples. The survey research strategy is also used to collect the quantitative data that is analysed using either the inferential or descriptive statistics (Babbie, 2015). The case study is the most common traditional research strategy that is commonly in the social sciences. This research aimed at studying the impact of customer experience on recommendation and purchase in the Chinese electronic industry. The researcher collected large quantitative data using the online questionnaires. The collected data was analysed using the descriptive statistics. Therefore, based on the nature of this research, the researcher adopted the survey research strategy. The experimental and case study research strategies were not used because they are majorly used in exploratory studies. Exploratory studies are associated with phenomenology in qualitative research where only a small amount of data is collected and analysed (Babbie, 2015). However, this study involved the collection of a large amount of data from the sampled customers that was quantitatively analysed.
3.7 Research Design
As noted by Tashakkori & Teddlie (2010), to successfully attain the research objectives, the researcher needs to determine effectively the study design. According to Tashakkori & Teddlie (2010), the researcher must weigh the benefits and disadvantages of using each research design before settling on the most appropriate. There are various research designs that the researcher must be aware of before attempting to conduct research. The two common research designs are exploratory and descriptive research designs (Tashakkori & Teddlie, 2010). In the exploratory research design, the aim of the researcher is to generate a new hypothesis and more focus is diverted to exploring the new phenomena (Creswell, 2013). On the other hand, the descriptive research design is categorised into the case study and statistical methods. The case study method is highly employed in the commerce industry. The aim of the case study method is to establish the cause and result of the phenomena (Creswell, 2013). The statistical method is majorly used in descriptive studies that involve quantitative data analysed using the statistical and mathematical techniques. The nature of the research greatly determines the type of research design to be used. This study aimed at investigating the impact of the customer experience on recommendations and repeated purchasing in the Chinese electronic industry. As mentioned earlier, the three variables under investigation are the brand reliability, customer switching and the endowment effect. The data was collected using questionnaires and analysed using statistical methods. Therefore, based on the nature of this research, the most appropriate research design was descriptive.
3.8 Data Collection Methods
Research Findings are greatly influenced by the method used to collect data (Kim, 2015). Based on the research requirements, data can be collected using either primary or secondary sources. The secondary data is readily available from the existing published and unpublished materials. The published materials can include books, journals and the periodicals (Kim, 2015). The unpublished material may include the available information from the online sources and recorded tapes. However, Turpin, Asano & Finlayson (2015) note that it is sometimes impossible to acquire secondary materials required on specific research topics. Therefore, despite the availability, the secondary sources may not be always reliable. Additionally, Creswell (2013) notes that secondary information is poorly arranged making it unreliable for primary researchers. The primary researchers follow a complex and strict procedure when verifying the sources of data collection (Creswell, 2013). For instance, primary researchers scrutinise data sources to verify their reliability. Secondary data cannot be easily scrutinised or verified, thus making it impossible to be used in this research. The research aimed at investigating the impact of customer experience on customer’s recommendation and repeat purchase. The three variable under study were brand reliability, customer switching and the endowment effect. The researcher collected data using online questionnaire that is a primary source. The primary method of collecting data was the most optimal for achieving the core objectives of this research. Additionally, the researcher had extensive experience in primary data collection methods which made it more relevant to this research. There are various benefits of using the primary sources of data. Firstly, the researcher had full control of the method of collecting the data that suited the research objectives. Unlike the primary data, the researcher had a maximum choice and control of the data that was analysed to meet the objectives of this research. Secondly, the researcher achieved higher levels of accuracy that he could not have attained if the secondary data was used. Thirdly, the researcher opted to use online questionna
ires that were faster, cheaper and accurate. Similarly, it is quicker to analyse data collected from the online questionnaires. According to Zikmund et al. (2012), online questionnaires are flexible because the researcher can change the questions anytime to fit his requirements. Further, Zikmund et al. (2012), note that the researcher can be more selective because he can screen participants only to select those who match research profile. Lastly, the online questionnaire as a data collection tool provides standardised responses that are easier to analyse using statistical methods. Despite the many benefits of using the primary data, the researcher encountered one key challenge. The researcher did not get an opportunity to interact face to face with the participants. However, this did not hinder the researcher from attaining valid information that enabled him to achieve the core objectives of this research. Additionally, the use of online questionnaires was superior to other primary sources such as the interview because they only target a small population.
3.9 Description of Data
The customers were randomly selected from the five Chinese cities with the highest concentration of electronic products. Customers were randomly selected from the cities of Beijing, Shanghai, Guangzhou, Hong Kong and Tianjin. A total of 180 customers were targeted. 50 customers were selected from Beijing, 30 from Shanghai, 40 from Hangzhou, 30 from Hong Kong and 30 from Tianjin. Participants were customers of the following electronic companies Huawei, Lenovo, TCL, Konka and ZTE. The respondents were contacted using the email addresses and phone calls.
3.9.1 Huawei
Huawei is one of the biggest private electronic companies in China belonging to the telecommunications and equipment sector (Lee, Xiang & Kim, 2011). The company was founded in the years 1987 with its headquarters in China. The company has both Chinese and international customers. The products provided to the customer by the Huawei are smartphones, mobile, broadband networks and tablet computers among others with a total revenue of US$4.5 billion in2014 indicating the large customer base the company holds (Liu & Agbola, 2014).
3.9.2 Lenovo
Lenovo is among the biggest public electronic companies in China whose headquarters are in Beijing. The company belongs to the computer hardware and electronics. The company serves both the Chinese and the international market (Lee, Xiang & Kim, 2011). The key products of Lenovo are smartphones, storage devices, tablets, printers, televisions among others. At the end of 2014, the company’s total revenue amounted to US$46.3 billion which is a reflection of the large customer base the company has both in China and internationally (Liu & Agbola, 2014).
3.9.3 TCL
TCL is a public electronics company headquartered in Huizhou China. The company serves both Chinese and International customers. The key products of TCL are televisions (TV) sets, mobile phones and the video Cameras. At the end of 2014, the company had a total revenue of US$16.4 billion which shows that the company has a significant customer base in China (Liu & Agbola, 2014).
3.9.4 Konka
Konga is a public company in China founded in the year 1980. The headquarters of Konka is at Shenzhen in China. The company operates in the electronic company and it majorly serves the Chinese market (Lee, Xiang & Kim, 2011). The company’s products include television sets, set-top boxes, refrigerators and other related products.
3.9.5 ZTE
The ZTE a public electronic company trading on the Chinese Stock Exchange. The company belongs to electronic industry and networking equipment. The company started in the year 1985 and its key products are smartphones, hardware, software, computers, and tablets among others (Lee, Xiang & Kim, 2011). The company serves both the Chinese and international market. At the end of the year 2014, the company recorded a revenue of US$ 81.7 billion. This revenue amount is an indication of the large customer base that the company holds (Liu & Agbola, 2014).
3.10 Data Analysis
Kim (2015) defines data analysis as the process that uses statistical and mathematical techniques to systematically recap, describe, evaluate and condense data. Further, Kim (2015) expounds that the process used to analyse data influences the research outcome. This research’s core objective was to investigate the impact of customer experience on customer’s experience on repeat purchase. The researcher used deductive approach and online questionnaires to collect data. The researcher adopted the quantitative data analysis in which the statistical techniques were applied. The descriptive statistics used made the research findings more convincing and appealing. To be more specific, the researcher utilised the measure of the central tendency (Mean) in analysing data. The customers who participated in this study ranked their responses regarding the particular variables on the Likert-scale whose score were from 1-5. The measure of central tendency was the most appropriate because most of the data was distributed normally. Turpin, Asano & Finlayson (2015) argue that descriptive statistics presents data in a more convincing, understandable and meaningful way. The inferential statistics is used when the data required for analysis is not fully available. However, based on this research, the data was fully available and that is the reason the researcher adopted descriptive statistics.
3.11 Chapter Summary
This chapter presented the methodology employed by the researcher to achieve the core objectives of this research. Three hypotheses were formulated based on the existing literature. The research philosophy adopted was positivism because this was a quantitative research. The researcher in this study adopted the positivism philosophy because the research findings were evaluated using the statistical methods in which the mean was used. The research utilised deductive approach. The deductive approach helped the researcher in establishing the causal and effect relationship between the variables and how they impact on customer experience on recommendation and repeat purchasing in the Chinese electronic industry. The three research strategies discussed were the survey, case study and experiment. This study adopted the use of the survey strategy because the researcher collected a large amount of quantitative data that was analysed using the statistical methods. Similarly, the researcher adopted the use descriptive research design. Primary sources were used to collect data. The online questionnaires were used because of flexibility and the researcher could change the questions anytime to fit his requirements. Further, the researcher was more selective because screened participants only to select those who matched research the profile. The secondary data was not used because of its unreliability and it could not be easily scrutinised or verified. Additionally, the secondary data was not used because its information is poorly arranged making it unreliable for primary research.
Chapter 4:
Data Analysis and Presentation
4.1 Introduction
According to Kim (2015), data analysis is the process of simplifying data into constituents that can be readily observed and interpreted. This research aimed at investigating the impacts of customer experience on customer’s recommendation and repeat purchase in the Chinese electronic industry. Base
d on the goal of this research, the process of data analysis ensured that all the three formulated hypotheses were testable. This chapter presented the overall research findings and the structure, which was adopted by the researcher in achieving the key objectives. As noted by Kim (2015), the process of data analysis involves interpreting data to uncover any hidden trends with an aim of establishing statistical relationships that can be observed and interpreted easily. This chapter has five main parts. The first section introduces the chapter and provides the overall structure adopted by the researcher to achieve the research objectives. The second and third sections present the sample description in which the gender, age bracket, education level, marital status, monthly income and occupational ranking are discussed in detail. The fourth section provides a detailed discussion of the analysed data to test the research hypotheses while the last section provides the comprehensive summary of the chapter.
4.2 Description of the Sample
The researcher only concentrated on China since this research aimed at investigating the impact of customer experience on recommendation and repeat purchasing in the Chinese electronics industry. It is, therefore, clear that the researcher targeted electronic customers who live in China. The 180 sampled customers resided in cities such as Beijing, Shanghai, Guangzhou, Hong Kong and Tianjin. The mentioned cities also had a high concentration of electronic companies such as Huawei, Lenovo, TCL, Konka and ZTE. The data was mainly collected using the online questionnaire attached in the appendix. Since the customers were sampled using the online questionnaire, the geographical limits did not hinder the researcher from reaching the target population. More than 90% of the sampled customers had purchased various electronic products from the mentioned electronic companies. Therefore, the customers had the required experienced on customer recommendation and repeat purchasing in the Chinese electronic industry. The answers provided by the participants were reliable and honest since the answering of the questions was voluntary. More than 500 participants showed the interest in participating in the online survey, but the researcher had to narrow down the number to 180. The researcher screened the participants to match the study profile age, gender, marital status, education level, monthly income and occupational ranking. The researcher also ensured that the participants had customer experience on Huawei, Lenovo, TCL, Konka and ZTE, which are some of the biggest electronic firms in China. The questionnaires were administered electronically to the 180 respective respondents who were the target of this study. Interestingly, out of the 180 electronically distributed questionnaires, 175 were all filled and returned representing 97.2%. The 2.8% percent of the unreturned online questionnaires was insignificant and could not affect the study results.
4.3 Profile of Respondents
4.3.1 Gender
Out of the 175 participants who successfully filled and returned the online questionnaires, 95 were male, and the rest were female. Therefore, the male participants represented 54.3% of the targeted population while 45.7% represented the female. Table 2 and Figure provides the summary of gender representation in this research.
Table 2: Gender
| Gender Category | Number of Participants | Percentage |
| Male | 95 | 54.3% |
| Female | 80 | 45.7% |
Source: Author.
The results of Table 2 are summarised in Figure 7 as shown below:
Figure 7: Pie Chart Representing Gender Participants
Source: Author
The difference between male and female participants was 8.6% that was insignificant. Therefore, the difference in gender representation did not influence the study outcome in this research. Based on research conducted by Clottey, Collier & Stodnick (2011), in China, the percentage of the male gender is slightly higher (51.2 %) than that of the female that stand at 48.8%. On this view, the researcher was able to achieve the gender balance, which ensured that the research findings were not biased.
4.3.2 Age Groups
The target sample comprised of different age groups to ensure that all categories of the electronic customers participated in this research. Therefore, the selected age groups composed of ages 15-24, 25-54 and above 65. However, the majority of the respondents (45.7%) belonged to the age group 25-54 followed by age group 55-64 that represented 25.7% of the total respondents. Those participants who belonged to age group 14-24 comprised of 20% of the total sampled population. Those customers who were above 65 years old represented 8.6% of the entire study sample. Table 3 and figure 8 provides a summary of the age groups of the customers who participated in this research.
Table 3: Age Groups
| Age Group | Number of Participants | Percentage |
| 15-24 | 35 | 20% |
| 25-54 | 80 | 45.7% |
| 55-64 | 45 | 25.7% |
| 65 and Above | 15 | 8.6% |
Source: Author
The results presented in Table 3 are summarised in Figure 8.
Figure 8: Respondents’ Age Groups
Source: Author
4.3.3 Occupations
The target sample comprised of the employed, unemployed and students. All the participants in Age group 14-24 were students in high schools, colleges and universities. Those under age group 25-54 were employed in both public and private institutions. The majority of those participants in age-group 55-64 were self-employed while those above age 65 were unemployed or had just retired from their respective jobs. The researcher took into consideration of the occupational ranking to compare their varying customer experiences on recommendation and repeat purchase in the Chinese electronic industry. Table 4 and Figure 9 provides the summary of the respondents’ occupational ranking.
Table 4: Occupational Ranking
| Occupation | Number |
| Employed | 80 |
| Self Employed | 45 |
| Students | 35 |
| Unemployed | 15 |
Source: Author
The results of Table 4 are also summarised using Figure 9.
Figure 9: Respondents’ Occupational Ranking
Source: Author.
4.3.4 Marital Status
The respondents as well were categorised based on their marital status. 23 of the respondents were married, 150 were single while 2 were divorced. Figure 10 illustrates the respondents’ marital status in terms of percentages.
Figure 10: Respondent’s Marital Status
Source: Author
Based on Figure 10, the majority of the respondents were single representing 86% of the entire target market. The married respondents were the second with a representation of 13%. A subtle
group of the respondents comprised of the divorced individuals with a representation of 1%. As explained by Clottey, Collier & Stodnick (2011, the young and single Chinese have a higher affinity to fashionable electronic products as opposed to the married and the aged. Additionally, the married also go shopping electronic products for themselves and their children. The balanced marital status based on the level of affinity to purchasing electronic products in China helped the researcher to get unbiased data.
4.3.5 Education Level
It was critical for the researcher to profile the respondents based on their education level. The Educational level was divided into three categories namely high school level, diploma and university levels. 60 respondents had the university education, 80 with diploma education, and the rest had the secondary school education. The respective percentages of each participants’ level of education are shown in figure 11.
Figure 11: Respondents’ Education Level
Source: Author.
As summarised in Figure 11, the majority of the respondents had diploma level of education. The percentage of the diploma level respondents was 45.7%. The second highest level of education was the university, which comprised of 34.3% of the study sample. The secondary education level respondents comprised of only 20%.
4.3.6 Monthly Income
Participants were also categorised based on their monthly salaries. Their monthly income greatly determined the purchasing capability of the respondents. For instance, the monthly salaries were separated using four levels as shown in Table 5 and figure 12.
Table 5: Monthly Income
| Level of Income | Below RMB 25,000 | Between RMB 26000-49,000 | Between RMB 50,000-59,000 | Above RMB 60,000 |
| Respondents | 35 | 80 | 60 | 10 |
Source: Author
The respective percentage proportions of the respondents’ monthly salary are illustrated using figure 12 as shown below.
Figure 12: Respondents’ Monthly Salary
Source: Author
As indicated in Figure, the majority of the respondents (43%), earn a monthly income of between RMB 26,000-59,000 which is attributable to the fact that they are new in employment and trying to progress in their careers. The respondents who were earning a salary of between RMB 50,000-59,000 comprised of 33% of the entire study sample representing a relatively higher professional ranking. 19% of the respondents represented a group earning below RMB 26,000 of which the majority are homemakers and college student who engage in part-time paid jobs. Only 5% of the respondents earn above RMB 60,000.
4.3.7 Customer Experience on Recommendation and Repeat Purchase
The researcher considered it essential to rank respondents based on their experience on customer recommendation and repeat purchase. This profiling was significant to help the researcher avoid any bias in the research findings. Ten respondents had no experience customer recommendation and repeat purchasing while the rest had experience on customer recommendation and repeated purchasing. The respective percentage proportions are provided in Figure 13.
Figure 13: Customer Experience on recommendation and Repeat Purchasing in the Chinese electronic industry.
Source: Author.
4.4 Main Results
4.4.1 Overview
The researcher targeted at establishing the impacts of customer experience on customer recommendation and repeat purchasing in the Chinese electronic industry. According to Kim (2015), to achieve the research objectives, it is critical to analyse the respondents’ responses. The respondent’s responses were ranked on 1-5 Likert-scale. The scale was marked Strongly Disagree, Disagree, Neither Disagree, Agree and Strongly Agree from 1 to 5 respectively. Therefore, the mean score of 3.0 indicates that the respondents agreed to the study question’s requirement. A mean score of less than 3.0 implies that the respondents did not agree with the question’s requirement. Impartiality is indicated with exactly the mean score of 3.0 in which the respondents neither agreed nor disagreed with the asked questions. The researcher was able to test all the three research hypotheses that included:
- Brand reliability increases as a result of positive customer experience on customer’s recommendation in the Chinese electronic industry.
- Good customer experience on recommendation increases the endowment effect in the Chinese electronic industry.
- Good customer experience on repeat purchase in the Chinese electronic industry reduces customer switching.
4.4.2 Brand reliability increases as a result of positive customer experience on customer’s recommendation in the Chinese electronic industry
Based on the first objective and hypothesis, the researcher aimed at examining the impacts of customers’ experience on customer’s recommendation in Chinese electronics industry. According to the first hypothesis, brand reliability increases as a result of positive customer experience on customer’s recommendation in the Chinese electronic industry. The researcher tested the first hypothesis using the variable brand reliability. Using brand reliability as the key variable in testing this hypothesis, the researcher formulated five questions related to the variable. The responses were scored on 1-5 Likert-scale in which the values stood for strongly disagree, disagree, neither agree nor disagree, agree and strongly agree respectively. The scores were analysed using the descriptive statistics. The mean score above 3.0 showed that the respondents either agreed or strongly agreed with the question’s requirement. Further, the mean score of exactly 3.0 indicated impartiality implying that the respondents neither disagreed nor agreed with the questions requirement. The mean score below 3.0 indicated that the respondents either disagreed or strongly disagreed with the questions requirement. The descriptive statistics results with the respective mean scores are illustrated in Table 6 and Figure 14.
Table 6: Descriptive Statistics on Brand Reliability
Descriptive Statistics
| Variable | N | Minimum | Maximum | Mean | Std. Deviation |
| Always prefer the same recommended brand | 175 | 1.00 | 5.00 | 3.6343 | 1.07370 |
| Attracted to the same recommended brand | 175 | 1.00 | 5.00 | 3.4343 | 1.15717 |
| Motivated to use same recommended brand | 175 | 1.00 | 5.00 | 3.7886 | .96840 |
| Remains loyal to the recommended brand | 175 | 1.00 | 5.00 | 3.8457 | .99086 |
| Try another brand not recommended | 175 | 1.00 | 4.00 | 2.1371 | .79766 |
| Valid N (listwise) | 175 |
Source: Author
The above descriptive statistics on brand reliability as summarised using Figure 14.
Figure 13: Descriptive statistics: Brand Reliability.
When asked whether, after a recommendation to buy an electronic product by a friend, they will always prefer the same product the next time they are going to buy a similar product, the mean score was 3.6343. The mean scored on this question implies that a positive customer experience on recommendation greatly increases brand reliability in the Chinese electronic industry. The outcome of this question is in line with the findings of Young et al.(2010)who argues that the increase in sales is directly correlated to the extent to which both existing, and potential customers rely on the company’s brand. Further, the higher mean scored on this question indicates that the potential customers rely on the experience of the existing customers before they trust a new electronic brand in the Chinese electronic industry.
The second question asked respondents whether they are attracted to the same electronic product brand recommended to them as opposed to other products. The respondent’s answers scored a mean score of 3.4343 which was above 3.0 indicating that they either agreed or strongly agreed with the question’s requirement. The higher score in this question also explains that brand reliability is greatly influenced by customer’s experience on recommendations in the Chinese electronic industry. Similarly, the respondents were asked whether they are motivated to use the same electronic product recommended to them. The mean scored on this question was 3.7886 which is above 3.0 implying that they either agreed or strongly agreed. The outcome of this question shows that the strong desire to remain loyal to a particular electronic brand in the Chinese electronic market is significantly influenced by the customer’s experience on a recommendation. Further, the respondents were asked whether when an electronic product is recommended to them, they assess its quality and whenever satisfied, they remain loyal to the brand. The mean score was 3.8457 which was relatively higher compared to other positive feedbacks. It, therefore, implied that the majority either agreed or strongly agreed to the requirement of the question. Additionally, the outcome of this question shows that in the Chinese electronic industry, customers do not only rely on customer’s recommendations to remain loyal to a particular brand, but they also assesses product quality. Whenever satisfied with the product’s quality, customers’ reliability on the brand increases.
Lastly, the respondents were asked whether they intend to try another electronic product brand besides the one recommended to them. Based on the fact that the recommended product met their expectations, the respondents’ answers scored a mean score of 2.1371. The mean score was below 3.0, which implied that the respondents either disagreed or strongly disagreed with the question’s requirement. The outcome of this question shows the strong relationship between the brand reliability and the customer’s recommendation. The respondents indicated that they were not ready to try another electronic brand besides the one recommended to them as long as it meets their expectations. Therefore, the respondents’ responses based on the five analysed questions indicated that a positive customer experience on recommendations increases brand reliability in the Chinese electronic industry.
4.4.3 Good customer experience on recommendation increases the endowment effect in the Chinese electronic industry
The second hypothesis was in line with the first objective of this research. According to the second hypothesis, good customer experience on recommendation increases the endowment effect in the Chinese electronic industry. The same approach was used in which a mean score of exactly 3.0 indicated impartiality, a mean score of below 3.0 indicated disagreed or strongly disagreed. Similarly, a mean score of above 3.0 implied that the respondents either agreed or strongly agreed. Based on the four questions asked to test the variable endowment effect, the responses were analysed using descriptive statistics, and the results are shown using Table 7 and Figure 14 respectively.
Table 7: Descriptive Statistics: Endowment Effect.
Descriptive Statistics
| Variables | N | Minimum | Maximum | Mean | Std. Deviation |
| You get ownership feeling after recommendation | 175 | 1.00 | 5.00 | 4.0400 | 1.00207 |
| The recommended electronic product becomes part of your lifestyle | 175 | 1.00 | 5.00 | 4.1143 | .80841 |
| You disown a brand after other brands discourage you. | 175 | 1.00 | 3.00 | 1.6000 | .67806 |
| You get emotionally attached to the recommended product | 175 | 1.00 | 5.00 | 4.1314 | .97667 |
| Attractive advertisements can discourage you for endowing the recommended product | 175 | 1.00 | 3.00 | 1.6571 | .78575 |
| Valid N (listwise) | 175 |
Source: Author
The findings of Table 7 are summarised in Figure 14.
Figure 13: Descriptive Statistics: The Endowment Effect.
Source: Author.
The first question required respondents to indicate whether after getting satisfaction from the recommended product brand, they got a feeling of owning the product. Based on the responses, the mean score attained was 4.0400 which is above 3.0 implying that they either agreed or strongly agreed with the question’s requirement. The endowment effect as explained by Nam, Ekinci & Whyatt (2011), is feeling of owning a certain brand. For instance, instead of the customer saying that he is going to purchase a TCL TV, he simply says, “Am going to buy my TCL TV”. The statement shows the buyer’s strong connection and affection to the TCL TV. The high mean scored on this question showed that customers’ endowment effect has a strong correlation to the customer’s experience on a recommendation in the Chinese electronic industry. The second question asked the respondents whether when a certain electronic product or service recommended to them becomes part of their lifestyle. The responses scored a mean score of 4.1143 similarly above 3.0 implying that the respondents either agreed or strongly agreed to the question’s requirement. Based on customer’s experience on a recommendation, the outcome of the question showed that particular electronic brands were part of the consumers’ lifestyles. Such products probably included mobile phones, TVs, laptops, tablets among others. The higher mean score in this question implies that in the Chinese electronic industry, customers are selective of particular brands which form
part of their lifestyle. The third question asked the respondents whether they will disown an electronic brand of their choice recommended to them by a friend if they come across an advert encouraging them to try another brand. This question was intended to test whether customers whose loyalty is based on a recommendation can disown the recommended brand to try the new ones. The responses scored a mean score of 1.6000 which implies that either the respondents disagreed or strongly disagreed. The very low score on this question shows a strong relationship between customer’s recommendation and the endowment effect in the Chinese electronic industry. Customers are not influenced by the advertisements to change to new brands. Similarly, the low score in this question is suggestive that in the Chinese electronic industry, the power of mouth is stronger than any form of advertisement.
Similarly, the fourth question asked the respondents whether they are endowed with the recommended electronic product as long as they get emotional satisfaction. The response to this question scored a relatively higher score of 4.1314 which implied that they either agreed or strongly agreed to the requirements of the question. According to Zhao et al. (2012), emotional satisfaction is strongly related to customer royalty. Further, Zhao et al. (2012) argue that an emotionally satisfied customer has a strong connection to a particular brand. The higher mean score in this question suggested that in the Chinese electronic industry, customer’s emotional satisfaction is strongly related to the customer experience on a recommendation. The mean scores obtained from the asked questions implies that good customer experience on customer’s recommendation in the Chinese electronic industry increases the endowment effect.
4.4.4 Reduction in Customer Switching is dependent on good customer experience on repeat purchase in the Chinese electronic industry.
The third variable tested by the researcher with an aim of achieving the core objective this research was the customer switching. The third hypothesis was in line with the second research objective, which targeted at examining impact of customer’ experience on repeat purchases in Chinese electronics industry. Based on the third hypothesis reduction in customer switching is dependent on good customer experience on repeat purchase in the Chinese electronic industry. The researcher asked five questions to the test the third hypothesis. The results were analysed using descriptive statistics in which the measure of the central tendency (mean) score of 3.0 indicated neutrality. The mean score of above 3.0 indicated that respondents either agreed or strongly agreed. Conversely, the mean score below 3.0 implied that the respondents either disagreed or strongly disagreed with the question’s requirement. The descriptive statistics are illustrated using Table 8 and Figure 15 respectively.
Table 8: Descriptive Statistics: Customer Switching
Descriptive Statistics
| N | Minimum | Maximum | Mean | Std. Deviation | |
| Repurchasing a similar product as long as it gives emotional satisfaction | 175 | 1.00 | 5.00 | 3.8914 | 1.24323 |
| Recommended product provides more satisfaction than other brands | 175 | 1.00 | 5.00 | 4.3200 | .79539 |
| You get bored to repurchase a similar product regardless of its satisfaction level. | 175 | 1.00 | 4.00 | 1.6686 | .86029 |
| Motivation to repurchase is f the recommended product offers the best quality. | 175 | 1.00 | 5.00 | 4.2286 | .69834 |
| Loyalty is based on good customer experience on repeat purchase | 175 | 1.00 | 5.00 | 4.0114 | .96483 |
| Valid N (list) | 175 |
Source: Author
These results are summarised using the Figure 15.
Figure 15: Descriptive Statistics: Customer Switching
Source: Author.
The first question asked the respondents whether they will repurchase a similar electronic product as long as it provided emotional satisfaction. According to Hong & Cho (2011), repurchase intentions are influenced by some factors such as affordability and quality. The respondents’ responses scored a mean score of 3.8914 showing that the respondents either agreed or strongly agreed with the question. This implies that besides quality and affordability, emotional satisfaction is significant in influencing repeat purchases. Emotional satisfaction is linked to a good customer experience. The higher mean score in this question implies that that in the Chinese electronic industry, repeat purchase is positively influenced by a good customer experience. Therefore, the good customer experience on repeat purchasing reduces customer switching in the Chinese electronic industry. The other question asked the respondents whether they get little satisfaction from the new brands as compared to the brand they are used to repurchasing based on the good customer experience. The mean score was 4.3200 suggestive that most of the respondents either agreed or strongly agreed with the question’s requirement. The respondents’ responses further indicated that the level of customer satisfaction is based on customer experience but not on the newly introduced brands. On this basis, in the Chinese electronic industry, good customer experience on repeat purchases reduces customer switching to new products.
The third question asked the participants whether they get bored to repurchase a similar electronic product regardless the fact that it meets all your needs. The researcher asked this question to investigate whether at some point the customers will get bored to the electronic products they are used to repurchasing. The question scored a mean score of 1.6686 which implies that the respondents either disagreed or strongly disagreed with the question’s requirement. The low score suggests that as long as there is a good customer experience, the customers will remain loyal and continue repurchasing the same product. Therefore in the Chinese electronic industry, a good customer experience impacts positively on repeat purchasing and this to a great extent reduces customer switching. The fourth question tested the respondents whether a good customer experience motivated them to repurchase a similar electronic product. The responses scored a mean score of 4.2286 which showed that the majority of the respondents either agreed or strongly agreed. Similarly, the last question asked the participants whether a positive customer experience increased their loyalty. The responses scored a mean score of 4.0114 similarly implying that most of the respondents either agreed or strongly agreed to the question’s requirement. Based on the questions asked to test the variable customer switching, the analysed results using the descriptive statistics shows a good customer experience reduces customer switching in the Chinese electr
onic industry.
4.5 Summary
The chapter presented how the collected data was analysed. The chapter began by providing an overview of the respondents profile based on age, occupation, gender, education level, customer experience on recommendation and repeat purchasing, monthly income and marital status. The respondent’s profile helped the researcher to balance his participants to ensure that the data collected did not contain any element of bias. Similarly, the chapter analysed and tested the three research hypotheses using the descriptive statistics. The three variables used to test the hypotheses are brand reliability, endowment effect and customer switching. Based on the first hypothesis, respondents’ answers suggested that good customer experience is critical to increasing the brand reliability. After testing the second hypothesis using the mean score, the researcher noted that good customer experience increases the endowment effect in the Chinese electronic industry. Similarly, the results obtained from the testing of the third hypothesis indicated that a positive customer experience on repeat purchase reduces the customer switching effect. In general, based on the analysed data, good customer experience on recommendation and repeat purchase in the Chinese electronic industry increases brand reliability and the endowment effect. Additionally, a good customer experience on recommendation and repeat purchase reduces customer switching in the Chinese electronic industry.
Chapter 5
Conclusion and Recommendation
5.1 Introduction
The core results of this study are highlighted in this chapter. The hypotheses tested were formulated from the literature review discussed in the second chapter. The respondents’ answers were analysed using the descriptive statistics. This chapter, therefore, highlights the three key findings analysed in the fourth chapter. Firstly, the chapter discusses how a positive customer experience on a recommendation in the Chinese electronic industry increases brand reliability. The second section highlights how a good customer experience on recommendation increases the endowment effect. The chapter also discusses how a positive customer experience on repeat purchasing reduces customer switching in the Chinese electronic industry. Similarly, the chapter provides the recommendation, recommendations on the future research and limitations.
5.2 Conclusion
The three key research findings were summarised in this section based on the main objectives of this research. The research aimed at studying the impact of customer experience on customer’s recommendation and repeat purchasing in the Chinese electronic industry. The key variables under consideration were brand reliability, the endowment effect and customer switching
5.2.1 Brand reliability increases as a result of positive customer experience on customer’s recommendation in the Chinese electronic industry
The previous literature revealed that some studies have attempted to study the impact of customer experience. However, most of the reviewed literature indicated that the key impact of a good customer experience is customer loyalty. Similarly, as noted by Solomon et al. (2014), most authors have put more emphasis on the factors influencing the repurchase intentions. For instance, Shaw, Dibeehi & Walden (2010) argues that perceived quality is a key determinant of repurchase intentions. The few studies that have attempted to focus on customer experience on recommendation and repeat purchasing have not adequately addressed how they affect brand reliability.
The first research hypothesis tested by the research was that Brand reliability increases as a result of positive customer experience on customer’s recommendation in the Chinese electronic industry. Various questions were asked and the respondents’ responses were ranked on a Five Likert-Scale. The scores were analysed using the descriptive statistics to study how customer experience on recommendation impacts on brand reliability. Based on the research findings, the majority of the respondents indicated that brand reliability increases as a result of a positive customer experience on recommendation in the Chinese electronic industry. For instance, when respondents were asked whether they preferred recommended electronic products, the mean score was 3.6343 which was above 3.0 indicating that they either agreed or strongly agreed. Similarly, the respondents’ responses indicated that based on positive customer experience, their motivation to repurchase similar brand increases. However, the intentions to repurchase the similar electronic product in the Chinese electronic industry also influenced by the perceived quality, attitudes and the subjective norm as indicated by Ajzen (2011). Further, the research findings indicated that customers in the Chinese electronic industry do not prefer new brands as opposed to those recommended to them. After the testing the hypothesis, the researcher was able to establish that the brand reliability increases as the good customer experience on recommendation increases. Therefore, the research findings showed a strong relationship between brand reliability to the good customer experience on customer recommendation and repeated purchasing in the Chinese electronic industry.
5.2.2 Good customer experience on recommendation increases the endowment effect in the Chinese electronic industry.
According to Oliver (2014), little has been done to investigate the impact of customer experience on the endowment effect. However, Nam, Ekinci & Whyatt (2011) attempted to conduct research on customer recommendation, but it aimed at showing the correlation between customer experience and the positive feedback. The outcome of Nam, Ekinci & Whyatt (2011)’s research established that a good customer experience results to increased sales revenue. On this view, Hernández, Jiménez & Martín (2010) established that sales revenue can drastically reduce if the organisations ignore to ensure positive customer experience. However, the researcher noted that the existing literature did not put more focus on how the endowment effect can influence sales revenue. Oliver (2014) and Nam, Ekinci & Whyatt (2011) majorly focused on how customer experience impacts on loyalty and increased sales revenue. To establish the impact of endowment effect, the researcher tested the hypothesis that good customer experience on recommendation increases the endowment effect in the Chinese electronic industry.
Based on the descriptive statistics, the research established that majority of the customers in the Chinese electronic industry get a feeling of ownership when a product is recommended to them. The research further established that the endowment effect is not only influenced by customer recommendation, but also the perceived quality of the product itself. Further, based on the analysed responses, as long as the recommended electronic product possessed the perceived quality, the clients remained loyal to the brand. Loyalty was greatly influenced by the emotional satisfaction that made the recommended electronic products much attractive. Therefore, the researcher established that there is a strong relationship between customer experience and the endowment effect. The tested hypothesis indicated that a good customer experience increases the endowment effect in the Chinese electronic industry.
5.2.3 Reduction in Customer Switching is dependent on Good Customer Experience on Repeat Purchase in the Chinese electronic industry.
The existing literature has put more emphasis on the factors influencing repeat purchase intentions. According to Hong & Cho (2011), th
e repeat purchase intentions are influenced by the loyalty programmes such as discounts, credit buying and redeemable points. Hong & Cho (2011) arguments were further supported by Hernández, Jiménez & Martín (2010) who expounded that replication and extension of repeat purchase are directly linked to the loyalty programmes. However, Rahbar & Abdul Wahid (2011) noted that customer loyalty alone does not result to repeat purchasing. The assumption undertaken by many firms is that repeat purchasing is majorly linked to customer loyalty, thus ignoring the impact of customer switching. The research conducted by Solomon (2012) tried to shed light that negative customer experience can result to buyer’s remorse that greatly reduces the repeat purchase behaviour. To precisely study the impact on customer switching in the Chinese electronic industry; the researcher tested the hypothesis that reduction in customer switching is dependent on customer experience on repeat purchase. The respondents were asked questions regarding customer experience on repeat purchasing and its linkage to customer switching. The research findings established that customer the reduction in customer switching is dependent on good customer experience on repeat purchase in the Chinese electronic industry. Most of the responses from the participants score a mean score of above 3.0 which showed that they either agreed or strongly agreed that good customers experience on repeat purchasing reduces customer switching. According to the research findings, factors that reduce customer switching include emotional satisfaction, motivation to repurchase and customer loyalty. Therefore, a good customer experience on repeat purchasing reduces customer switching in the Chinese electronic industry.
5.3 Recommendations
The research results in this project established that a good customer experience on recommendation and repeat purchase in the Chinese electronic industry increases brand loyalty and the endowment effect. Similarly, the research findings confirmed that a positive customer experience on repeat purchasing can significantly reduce customer switching. The researcher recommends the following on how the Chinese electronic firms can maximise their sales revenue. Firstly, the organisations that target the Chinese electronic industry must come to terms that brand reliability is a key factor that can influence profitability. As mentioned by Solomon et al. (2014), brand reliability is one of the key determinants that influence repeat purchasing. The firms in the Chinese electronic industry should, therefore, establish mechanisms to ensure that they can measure their brand reliability. Firms can simply carry online interviews to establish how many customers value their brand as part of their lifestyle. According to the research findings, those customers who consider a particular brand as part of their lifestyles have a tendency of repurchasing it more often. Similarly, firms operating in the Chinese electronic industry must understand that customer’s endowment is critical is a critical factor that triggers repeat purchasing. Thirdly, combating customer switching is a key factor that will greatly influence profitability in the Chinese electronic industry. It is important for the Chinese electronic firms to realise customers experience on recommendation and repeat purchasing as a strong relationship with brand reliability, the endowment effect and customer switching. As explained by Clottey, Collier & Stodnick (2011), in the Chinese electronics industry, consumers are greatly influenced by the word-of-mouth and in-store marketing. This differs from other markets such as the US where consumers are typically captive to particular electronic brands. Further, Kim & Lee (2010) note that most of the electronic consumers in the Chinese cities purchase products based on emotional aspirations and customer’s recommendations. Therefore, most of the Chinese electronic firms tend to leverage on in-store and the word-of-mouth marketing techniques when conveying product information to the consumers.
5.3.1 Recommendations for Further Research
To explore conclusive outcomes in the future about customer experience on recommendation and repeat purchase in the Chinese electronic industry, this study recommends the following. Firstly, the future researchers should aim at reaching more respondents to enable them come up with a more comprehensive conclusion. Secondly, this research focused on the respondents who are of Chinese origin residing in the Chinese cities. The future researchers should aim at diversifying their respondents to help them compare their outcomes with this research. This research similarly recommends that the future studies should try to focus on the variables such as product appearance and price and how customer experience influences them.
5.4 Limitations
Regardless of the fact that the study outcome of this research is in line with the study objectives, the researcher noted three key limitations. Firstly, the researcher only concentrated on the study sample of 175 successful respondents that may not explicitly represent the entire Chinese electronic industry. Secondly, the research targeted a study sample from the clients of the big five electronic firms in China which may not exactly depict the Chinese electronic industry as a whole. Thirdly, the research put more focus on the three variables namely brand reliability, the endowment effect and the customers switching. Therefore, the research did not manage to capture other variables such as product colour, packaging and price. However, despite these limitations, to a greater extent the researcher managed to achieve the three core objectives of this research.
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Appendix 1: Questionnaire
Dear Respondent,
Questionnaire
Introduction
You are kindly requested to participate in filling this questionnaire to help the research in conducting a research on the impacts of customer experience on recommendation and repeat purchase in the Chinese electronic industry. All the information you provide will be treated with the highest level of confidentiality. The information provided will guide you on to fill the respective questions. Your participation is highly appreciated.
Section 1
Personal Information (Tick Where Appropriate)
(Gender, Age Group, occupational Ranking, Education Level Monthly Income, Marital Status and Customer Experience.
| Item | Tick Where Appropriate |
| Gender | Male Female |
| Marital Status | Married Single Divorced |
| Age Group | 15-24 25-54 55-64 65+ |
| Occupational Ranking | Employed Self-Employed Student Unemployed |
| Monthly Income (RMB) | <25,000 26,000-49,000 50,000-59,000 60,000+ |
| Education Leve l |
High School Diploma University |
| Customer Experience | With Experience Without Experience |
Part B
Kindly, based on your Answer, put a tick in the respective box. The responses are marked 1-5 indicating either strongly disagree, disagree, neither agree nor disagree, agree and disagree.
The Impact of Customer Experience on Brand Loyalty
- When you are recommended to buy an electronic product by a friend, you will always prefer the same product the next time you are going to buy a similar product.
| Strongly Disagree | Disagree | Neither Agree Nor Disagree | Agree | Strongly Agree |
| 1
☐ |
2
☐ |
3
☐ |
4
☐ |
5
☐ |
- You are attracted to the same electronic product brand recommended to you by a friend as opposed to other products.
| Strongly Disagree | Disagree | Neither Agree Nor Disagree | Agree | Strongly Agree |
| 1
☐ |
2
☐ |
3
☐ |
4
☐ |
5
☐ |
- You are motivated to use the same product brand recommended to you by another person.
| Strongly Disagree | Disagree | Neither Agree Nor Disagree | Agree | Strongly Agree |
| 1
☐ |
2
☐ |
3
☐ |
4
☐ |
5
☐ |
- Whenever a product is recommended to me, I assess the quality and whenever am satisfied, I will always remain loyal to the brand.
| Strongly Disagree | Disagree | Neither Agree Nor Disagree | Agree | Strongly Agree |
| 1
☐ |
2
☐ |
3
☐ |
4
☐ |
5
☐ |
- You intend to try another electronic product brand besides the one recommended to you by a friend? Bear in mind that the recommended product meets all your expectations.
| Strongly Disagree | Disagree | Neither Agree Nor Disagree | Agree | Strongly Agree |
| 1
☐ |
2
☐ |
3
☐ |
4
☐ |
5
☐ |
The Impact of Customer Experience on Endowment Effect
- After recommendation and getting satisfaction from the recommended product brand, you get a feeling of owning the product.
| Strongly Disagree | Disagree | Neither Agree Nor Disagree | Agree | Strongly Agree |
| 1
☐ |
2
☐ |
3
☐ |
4
☐ |
5
☐ |
- A certain electronic product, service or business premise recommended to you by a friend becomes part of your lifestyle.
| Strongly Disagree | Disagree | Neither Agree Nor Disagree | Agree | Strongly Agree |
| 1
☐ |
2
☐ |
3
☐ |
4
☐ |
5
☐ |
- You will disown an electronic brand of your choice recommended to you by a friend if you come across an advert encouraging you to try another brand.
| Strongly Disagree | Disagree | Neither Agree Nor Disagree | Agree | Strongly Agree |
| 1
☐ |
2
☐ |
3
☐ |
4
☐ |
5
☐ |
- You are endowed to the recommended electronic product as long as long as you get emotional satisfaction.
| Strongly Disagree | Disagree | Neither Agree Nor Disagree | Agree | Strongly Agree |
| 1
☐ |
2
☐ |
3
☐ |
4
☐ |
5
☐ |
The Impact of Customer Experience on Repeat Purchase on Customer Switching
- You will repurchase a similar electronic brand as long as it gives you emotional satisfaction.
| Strongly Disagree | Disagree | Neither Agree Nor Disagree | Agree | Strongly Agree |
| 1
☐ |
2
☐ |
3
☐ |
4
☐ |
5
☐ |
- You get little satisfaction from the new brands as compared to the brand you prefer repurchasing based on the good customer experience.
| Strongly Disagree | Disagree | Neither Agree Nor Disagree | Agree | Strongly Agree |
| 1
☐ |
2
☐ |
3
☐ |
4
☐ |
5
☐ |
- You get bored to repurchase a similar electronic product regardless the fact that it meets all your needs.
</t body>
| Strongly Disagree | Disagree | Neither Agree Nor Disagree | Agree | Strongly Agree |
| 1
☐ |
2
☐ |
3
☐ |
4
☐ |
5
☐ |
- You are motivated to repurchase a similar electronic brand because the service offered to you is excellent.
| Strongly Disagree | Disagree | Neither Agree Nor Disagree | Agree | Strongly Agree |
| 1
☐ |
2
☐ |
3
☐ |
4
☐ |
5
☐ |
- Your experience on repeat purchasing is good and that is why you remain loyal and attracted to a particular electronic product.
| Strongly Disagree | Disagree | Neither Agree Nor Disagree | Agree | Strongly Agree |
| 1
☐ |
2
☐ |
3
☐ |
4
☐ |
5
☐ |
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