1.

Customer Satisfaction Theories:

Customer satisfaction has been extensively studied in marketing literature, and one of the

most widely accepted theories explaining this concept is the Expectation-Confirmation

Theory (ECT). According to Oliver (1980), customer satisfaction emerges when there is a

positive confirmation between pre-purchase expectations and the actual performance of the

product or service. He explains that satisfaction “can be seen as an additive combination of

the expectation level and the resulting disconfirmation" (Oliver, 1980, p. 461). In this

framework, satisfaction is achieved when perceived performance meets or exceeds

expectations, leading to a reinforcement of positive attitudes toward the brand or service

provider (Oliver, 1980). Building on this idea, Churchill and Surprenant (1982) developed the

Disconfirmation Theory, which further explains satisfaction as the result of a discrepancy

between prior expectations and actual experience. They state that "an individual's expectations

are: (1) confirmed when a product performs as expected, (2) negatively disconfirmed when

the product performs more poorly than expected, and (3) positively disconfirmed when the

product performs better than expected" (Churchill & Surprenant, 1982, p. 492). Positive

disconfirmation occurs when performance surpasses expectations, leading to satisfaction,

while negative disconfirmation results in dissatisfaction (Churchill & Surprenant, 1982). Both

theories highlight the central role of expectation-perception alignment in shaping consumer

satisfaction.

2. Customer Perceived Value Theories

2.1. Value Hierarchy Model

Woodruff (1997) proposed the Customer Value Hierarchy Model, which frames customer

value as a layered structure, moving from specific product attributes at the base to broader

consequences of use, and finally to the customer’s ultimate goals and purposes. This
hierarchical approach illustrates that customers interpret and evaluate value in a structured

manner that connects product features with higher-level needs and goals.

At the core of this model is the idea that value is not static or intrinsic to the product alone,

but constructed by customers based on how well product attributes help achieve meaningful

outcomes. Woodruff emphasized that customers develop preferences for attributes and

attribute performances because of the consequences they bring in use situations, which in turn

are important due to the personal goals they serve. Thus, value is understood in a means-end

framework, where each layer informs the significance of the layer below it.

This understanding allows marketers to shift focus from simply identifying "key buying

criteria" to uncovering the why behind those criteria, offering deeper insights into customer

motivations. Furthermore, the model informs satisfaction analysis, suggesting that customer

satisfaction can be assessed at multiple levels—ranging from satisfaction with specific

attributes to broader feelings about how well a product helps achieve personal goals. As

Woodruff put it, customer value is “a customer’s perceived preference for and evaluation of

those product attributes, attribute performances, and consequences arising from use that

facilitate (or block) achieving the customer’s goals and purposes in use situations” (p. 141).

2.2. Trade-Off Model of Perceived Value

Zeithaml (1988) offers an alternative perspective through the Trade-Off Model of Perceived

Value, where value is conceptualized as a mental balance between perceived benefits and

perceived sacrifices. Benefits may include product quality, functionality, or emotional

satisfaction, while sacrifices generally involve price, time, or effort. This model highlights the

subjectivity of value: what one consumer perceives as a benefit, another may disregard, and

what feels like a high cost to one may seem minimal to another.
Zeithaml underscores the role of extrinsic cues—like brand name, packaging, and especially

price—as significant indicators of value, particularly in contexts where intrinsic product

qualities are difficult to evaluate before consumption. In her study, she found that price often

acts as a surrogate indicator of quality, especially when consumers face uncertainty. She

defined value as “the consumer’s overall assessment of the utility of a product based on

perceptions of what is received and what is given” (p. 14).

Importantly, Zeithaml also observed that value judgments are fluid and context-dependent,

shaped by personal preferences, situational factors, and past experiences. She noted that

constructs like quality, worth, and utility are often conflated in consumers' minds,

complicating standardized assessments of value across diverse markets. Her approach

encourages marketers to take into account the situational and individual nature of

perceived value rather than applying one-size-fits-all metrics.

3. Customer Loyalty Theories

3.1. Attitudinal vs Behavioral Loyalty

The distinction between attitudinal and behavioral loyalty has long been foundational in

loyalty research. Dick and Basu (1994) conceptualize behavioral loyalty as the observed

repeat purchase behavior over time, which may occur due to convenience, habit, or lack of

alternatives, rather than true preference. In contrast, attitudinal loyalty reflects a consumer’s

favorable predisposition or "relative attitude" toward a brand compared to alternatives,

encompassing both strength of preference and differentiation (Dick & Basu, 1994). This

conceptualization highlights that true loyalty is more than mere repetition—it is sustained

preference demonstrated through consistent choice in the presence of viable alternatives.

This framework introduces four possible loyalty states: true loyalty (high relative attitude and

high repeat patronage), spurious loyalty (low attitude but high behavior), latent loyalty (high
attitude but low behavior), and no loyalty (low on both dimensions) (Dick & Basu, 1994).

The authors argue that managing loyalty effectively requires targeting not only behaviors but

also the underlying cognitive and affective components of attitude. They suggest that

customer loyalty is “the strength of the relationship between an individual’s relative attitude

and repeat patronage".

3.2. Oliver’s Four-Stage Loyalty Model

To further elaborate on the formation of loyalty, Oliver (1999) proposes a sequential model

consisting of four phases: cognitive, affective, conative, and action loyalty. In the cognitive

stage, loyalty is based on brand beliefs formed from prior experience or marketing

communications. This is followed by the affective stage, where satisfaction and emotional

connection begin to influence preference (Oliver, 1999).

The third stage, conative loyalty, is characterized by a motivated intention to repurchase—a

commitment beyond mere liking. Finally, in the action phase, the intention translates into

behavior supported by inertia and resistance to switching, even in the face of external

obstacles. Oliver describes this ultimate form of loyalty as a "deeply held commitment to

rebuy or repatronize a preferred product/service consistently in the future" despite

situational factors (Oliver, 1999, p. 34).

A key insight from Oliver’s model is that satisfaction is a necessary but insufficient

condition for loyalty: while it typically precedes loyalty, it does not guarantee it. Indeed,

Oliver (1999) notes that loyalty “may become independent of satisfaction so that reversals in

the satisfaction experience… will not influence the loyalty state” (p. 35). This assertion

critically addresses the common misconception that improving satisfaction alone will ensure

customer retention.

4. Integrated Theories: Customer Satisfaction, Perceived Value, and Loyalty

In the domain of service marketing, a widely accepted framework proposes that perceived

value leads to customer satisfaction, which subsequently fosters customer loyalty. Cronin,

Brady, and Hult (2000) developed and empirically tested a comprehensive model that

integrates these constructs and evaluates their direct and indirect effects on behavioral

intentions across multiple service industries.

The researchers found that service value significantly enhances satisfaction, which in turn

influences behavioral intentions (Cronin et al., 2000). Their findings align with the appraisal-

emotion-behavior framework, which suggests that cognitive evaluations such as perceived

value and service quality precede emotional responses like satisfaction (Bagozzi, 1992, as

cited in Cronin et al., 2000). This theoretical underpinning supports the causal chain: quality

→ value → satisfaction → loyalty.

Moreover, Cronin et al. (2000) emphasized that each of these constructs—service quality,

value, and satisfaction—has a direct influence on behavioral intentions when considered

collectively. This nuanced understanding differs from previous research that typically

analyzed these variables in isolation. As they state, “quality, value, and satisfaction directly

influence behavioral intentions, even when the effects of all three constructs are considered

simultaneously” (Cronin, Brady, & Hult, 2000, p. 210).

Their study also underscores the strategic importance of adopting a holistic approach to

customer evaluation. They caution that overemphasizing one construct—such as satisfaction

—without accounting for the combined effects of perceived value and service quality may

lead to flawed managerial strategies (Cronin et al., 2000). As a result, enhancing customer

loyalty requires integrated efforts across all three dimensions.