A Latent Structure Factor Analytic Approach for Customer Satisfaction Measurement

Marketing Letters, Volume 17, Issue 3, pp 221-238, 2006

Posted: 11 Jun 2016

See all articles by Jianan Wu

Jianan Wu

Louisiana State University, Baton Rouge - E.J. Ourso College of Business Administration

Wayne S. DeSarbo

Pennsylvania State University

Pu-Ju Chen

University of Central Florida - Rosen College of Hospitality Management

Yao-Yi Fu

Indiana University

Date Written: July 2006

Abstract

The linkage of customer satisfaction, customer retention, and firm profitability has been well established in the marketing literature, and provides ample justification as to why customer satisfaction measurement (CSM) has been a focal point in marketing decision making. Although aggregate market level research on understanding the determinants of customer satisfaction is abundant, CSM decisions at segment level are possible only if the individual or market segment differences in the formation of overall satisfaction judgments and subsequent heterogeneity in the role these various determinants play are understood. Based on expectancy-disconfirmation theory in customer satisfaction, we propose a maximum likelihood based latent structure factor analytic methodology which visually depicts customer heterogeneity regarding the various major determinants of customer satisfaction judgments involving multiple attributes, and provides directions for segment-specific CSM decisions. We first describe the proposed model framework including the technical aspects of the model structure and subsequent maximum likelihood estimation. In an application to a consumer trade show, we then demonstrate how our proposed methodology can be gainfully employed to uncover the nature of such heterogeneity. We also empirically demonstrate the superiority of the proposed model over a number of different model specifications in this application. Finally, limitations and directions for future research are discussed.

Keywords: Customer satisfaction measurement (CSM), Market segmentation, Latent structure analysis, Finite mixture models, Factor analysis

Suggested Citation

Wu, Jianan and DeSarbo, Wayne S. and Chen, Pu-Ju and Fu, Yao-Yi, A Latent Structure Factor Analytic Approach for Customer Satisfaction Measurement (July 2006). Marketing Letters, Volume 17, Issue 3, pp 221-238, 2006, Available at SSRN: https://ssrn.com/abstract=2793436

Jianan Wu

Louisiana State University, Baton Rouge - E.J. Ourso College of Business Administration ( email )

Baton Rouge, LA 70803-6308
United States

Wayne S. DeSarbo (Contact Author)

Pennsylvania State University ( email )

University Park
State College, PA 16802
United States

Pu-Ju Chen

University of Central Florida - Rosen College of Hospitality Management ( email )

9907 Universal Blvd
Orlando, FL 32819-8701
United States

Yao-Yi Fu

Indiana University ( email )

107 S Indiana Ave
100 South Woodlawn
Bloomington, IN 47405
United States

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