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CHAPTER III CONCEPTUAL FRAMEWORK OF

PERCEPTION, EXPECTATION AND SATISFACTION

The consumption evaluation process is a confirmation/disconfirmation

paradigm whereby consumers compare their expectations for product
performance with the perceived product performance and notice whether a
difference (expectancy disconfirmation) exists. Whereas confirmation occurs
when a product performs as expected, contributing to satisfaction or
indifference (neutral feelings), positive or negative disconfirmation arises from
discrepancies between prior expectations and actual performance, respectively
leading to satisfaction and dissatisfaction.

3.1 PERCEPTION

The perceived quality construct developed by Parasuraman et. al.,

(1988), with its service quality instruments, is defined as the difference
between perceptions and expectations. Perception is the “process by which an
individual receives, selects and interprets stimuli to form a meaningful and
coherent picture of the world” (Schiffman et. al., 2007). In customer
satisfaction and service quality dimensions, perceptions are defined as the
consumer’s judgment of the service organization’s performance.

Boulding and Kalra (1993) in their process model of service quality,

conceptualized customers’ perception of each of the dimensions of service
quality as a cumulative construct. This means that the perception is updated
each time a customer is exposed to the service. They argue, therefore, that
customer perceptions are not only influenced by expectations of the service but
also by the decency of the service encountered. Boulding and Kalra (1993)
stated that it is important to understand the type of expectation of the customer,
in order to manage the perception of service quality and satisfaction. The
analysis of student perceptions of study outcomes asserts that the length of
experience with an educational service can influence student perceptions. Even
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if the customers experience an identical service, the cumulative perception

would be different. This is because of differences in their expectations. The
main argument is that a person’s expectations can change the way he or she
perceives reality.

The customer perceptions of post consumption performance are:

appraisals and feelings about a chosen alternative. Consumers react to it on an
objective (product or service-attribute) level as well as on a subjective
(emotional) level (Neelamegaham and Jain, 1999). Diversity of perceptions is
one of the most fundamental concepts in intercultural communication (Limaye,
2000).

According to Jandt (1995), perception is unique to each person; it begins

a three-step process of selection, organization and interpretation. It has also
been found that perceptions differ due to physical environment of the service
settings (Wakefield and Blodgett, 1999), cultural background (Limaye, 2000),
and differences in gender (Lin et. al., 2001; Ndhlovu and Senguder, 2002).
These indicate that a clear understanding of how perceptions are formed is
critical to any service business as it facilitates formulation of strategies to
manage customer perceptions of service performance.

The evaluation of the quality and performance of a service can take

place only after experiencing or consuming because customers have limited
tangible pre-choice cues. The perceptions formed during this evaluative process
are key indicators of customer satisfaction or dissatisfaction (Halstead et. al.,
1994).

3.2 EXPECTATIONS

Various personality and situational factors may affect the consumer’s

expectations of a product’s performance (Day, 1977). Expectations are based
upon prior experience with the product, word-of-mouth
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endorsements/criticisms and/or the marketing efforts of companies (Woodruff

et. al., 1983; Laufer, 2002). Whether a particular item was purchased because
of its presumed superior functional performance or for some other reason,
consumers have some level of expected performance in mind, ranging from
quite low to quite high, regarding the acquired appliance (Hawkins et. al.,
2001). Expectations are as beliefs or predictions about a product’s expected
performance. It can be termed “anticipated performance” or “what performance
will (probably) be” (Laufer, 2002).

Woodruff et. al., (1983) suggest that consumers often have experiences
beyond the product that they have actually purchased and used. For instance,
experiences with various products and brands within the product class and
comparable use situations. This may cause them to form different kinds of
norms or standards, instead of expectations, that can be used to evaluate
perceived product performance. However, these norms are constrained by the
consumer’s experiences with real products and brands and are therefore
unlikely to be unachievable ideals. Using the confirmation / disconfirmation
paradigm, expectations are theorized as the standard or baseline for evaluating
the quality of product performance (Chen et. al., 1999).

Expanding the base of experiences to include other products, means that

consumers will probably go through a sequence of judgments leading to the
choice of a standard for evaluating perceived product performance (Woodruff
et. al., 1983). Whereas the confirmation/ disconfirmation paradigm limits
comparison to experience with one product, the experience-based norm
approach takes into consideration consumers’ past experience. Therefore,
expectations and experience- based norms are used frequently as the point of
reference (standard of comparison) against which product performance is
evaluated (Woodruff et. al., 1983; Chen et. al., 1999).
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Predictive expectations, which have their origin in expectancy-value

theory (Tolman, 1932), have been defined as consumer predictions about the
outcome of a transaction or interchange (Oliver, 1980), estimates of the
anticipated performance level (Prakash, 1984), the most likely performance of
the product (Tse and Wilton, 1988), finally, the consumer’s prior beliefs about
the future performance or attributes of a product ( Ngobo, 1997), and pre-
purchase cognition about the product performance (Park and Choi, 1998). In
short, these conceptualizations adopt ‘‘anticipation’’ as a central idea, which
allows to define the expectations as the product performance anticipated by the
consumer.

The theory of attitude formation proposed by Zajonc (1968) postulates

that, the mere exposition of the individual to a stimulus or an object enhances
attitude towards it. The repeated encounters with a service probably enhance
the user expectations of a future encounter. Individuals with a high familiarity
tend to polarize their inferences and evaluations of the stimulus compared to
individuals with a low familiarity (Peracchio and Tybout, 1996; Soderlund,
2002). The consumer’s past experience will influence positively in their
expectations of a future episode (Hoffman et al, 1997; Oliver et al, 1999). On
the other hand, Soderlund (2002) suggests that a high level of familiarity leads
to a more elaborated cognitive structure, and therefore, to a different frame for
evaluations compared to a low level of familiarity.

The close relationship between image and expectations is that, in view

of the high uncertainty caused by the intangibility of services, the image of the
provider acts as a signal of the true capabilities of the company (Weigelt and
Camerer, 1988). Gronroos (1990) considers the corporate image as the result of
how the consumer perceives the firm, or in other words, their vision of the
company. Corporate image facilitates the prior knowledge of consumers about
service performance. The intangible nature of services may be perceived to be
risky and uncertain. So, consumers seek information from a wide variety of
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sources to reduce the risk and uncertainty of their future experiences, e.g.
advertisements, brochures and promotional material (Murray, 1991). There is a
generalized consensus about intangibility as a distinctive and essential
characteristic of services. This characteristic may complicate the formation of
expectations because users cannot perceive the tangible outcome of the service,
and therefore, they cannot clearly form their expectations of a future encounter
with the service (Bebko, 2000).

Consequently, users can evaluate easier the service before its use, and
therefore, they can form more firmly their expectations of a future encounter
with the service. The users’ interaction with the employees and physical
installations of the company, an essential element to form corporate image
(Gronroos, 1990), leads to a mental representation of the service that is closer
to reality. Consequently, users can anticipate more accurately the service
performance.

3.3 SATISFACTION

Swan and Combs (1976) were among the first to argue that satisfaction
is associated with performance that fulfils expectations, while dissatisfaction
occurs when performance falls below expectations. Poisz and Von Grumbkow
(1988) view satisfaction as a discrepancy between the observed and the desired.
Early concepts of satisfaction have typically defined satisfaction as it post
choice evaluative judgment concerning a specific purchase decision (Oliver
and DeSarbo, 1988; Churchill and Surprenant, 1992). (Yi, 1990) based on
Westbrook and Reilly ‘value-percept disparity theory’ developed response to
the problem that consumers could be satisfied by aspects for which
expectations never existed. The most widely accepted conceptual framework in
which satisfaction is a function of disconfirmation, which in turn is a function
of both expectations and performance (Oliver, 1997). The disconfirmation
paradigm in process theory provides the grounding for the vast majority of
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satisfaction studies and encompasses four constructs of expectations,

performance, disconfirmation and satisfaction (Caruana et. al., 2000). There are
two principal interpretations of satisfaction indicated as process and an
outcome (Parker and Mathews, 2001). The value-percept theory views
satisfaction as an emotional response triggered by a cognitive-evaluative
process (Parker and Mathews, 2001). In other words, it is the comparison of the
“object” to one's values rather than an expectation.

Satisfaction should be viewed as a judgment based on the cumulative

experience made with a certain product or service rather than a transaction-
specific phenomenon (Wilton and Nicosia, 1986). Traditional models implicitly
assume that customer satisfaction is essentially the result of cognitive
processes; new conceptual developments suggest that affective processes may
also contribute substantially to the explanation and prediction of consumer
satisfaction (Westbrook and Oliver, 1991). Customers want a meeting between
their values (needs and wants) and the object of their evaluations (Paker and
Mathews, 2001). In recent past, renewed attention has been focused on the
nature of satisfaction with or without emotion and fulfillment (Parker and
Mathews, 2001).

The contrast theory (Hovland et. al., 1957; Anderson, 1973) postulates
that when expectations are not matched by actual product performance,
consumers will magnify or exaggerate this discrepancy due to the contrast or
surprise effect that is generated. According to assimilation theory (Sherif and
Hovland, 1961), consumers experience a psychological conflict, if they
perceive a discrepancy between their expectations and their perception of the
consumption experience. Consumers will adjust their perception to become
more consistent with their expectations and minimize the psychological tension
(Anderson, 1973). Post-consumption evaluations are a function of
disconfirmation of expectations (Oliver, 1977, 1997). Consumer satisfaction
research requires a joint analysis of the structure i.e. content and dimensions
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and the process i.e. antecedents and consequences (Singh, 1991). Therefore,
consumer satisfaction is conceptualized as a consumer judgment incorporating
cognitive and affective evaluations after their use or consumption experience.
The expectation–satisfaction relationship requires a review of the function of
expectations in consumer satisfaction judgments (Oliver, 1997). Consequently,
post-consumption evaluations are a function of consumer expectations (Oliver,
1997).

In addition the nature of the expectation–satisfaction relationship may

depend on several contextual and behavioural factors. So, user expectations
may have different impact on the formation of satisfaction within particular
contexts. Expectations may be more important when the product performance
is ambiguous (Yi, 1993; Oliver, 1997). Nyer, (1996) stated that expectations
may be more important when the product performance are unambiguous and
the consumer is well experienced (Soderlund, 2002). So, users will reduce the
psychological conflict after their experiences, and therefore, they will reinforce
the choice.

3.4 CONSUMER DECISION MAKING PROCESS

Consumer decision-making has advanced multi-disciplinary theoretical

and conceptual frameworks over time to interpret the complex process. The
resulting models provide somewhat different views of the consumer's decision-
making process. The well known and those representative of the broader
perspective of consumer decision making include the Economic model, Passive
model, Cognitive model and Emotional model (Lawson et. al., 1996;
Schiffman et. al., 2001)

Economists are the first to develop comprehensive consumer models of

decision-making seeking to understand the general economic system. These
include contributions by Simon (1957); Arrow and Hurwicz (1972); and Keeny
and Raiffa (1976). Micro and Macro economists’ develop alternative views of
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consumers, though the fundamental assumptions remained the same. The

economic theory of consumer decision-making behaviour is based on the basic
assumption of maximizing satisfaction of wants and needs with the available
scarce resources.

The passive model of consumer decision-making is different from the

economic viewpoint as it is based on the belief that consumers are submissive
to the self-serving interests and promotional efforts of marketers. In this
context, consumers are perceived as impulsive and irrational purchasers, ready
to yield to the arms and aims of marketers (Lawson et. al., 1996; Schiffman et.
al., 2001).

The cognitive model views consumers as information processing

systems, actively seeking products and services that fulfill their needs and
enrich their lives. This model focuses on the processes by which consumers
seek and evaluate information about selected products and services and accept
that the consumer does not make economically rational decisions. (Schiffman
et. al., 2001).

The emotional model follows the concept of consumer decision-making

based on deep feelings and emotions or impulses. Such emotional purchase
decisions place less emphasis on the search for pre-purchase information. The
cognitive or problem solving model of decision-making has been identified at
three levels - extensive problem solving, limited problem solving and
routinized response behaviour (Howard and Sheth, 1969). This model
borrows from learning-theory concepts to explain “brand-choice behaviour
over time as learning takes place and the buyer moves from extensive to
routinized problem-solving behavior” (Lawson et. a1., 1996).

A more specific model of significance in explaining the consumer

decision-making process is one developed by Engel, Kolat and Blackwell
(1973). The EKB model (Engel, Kolat and Blackwell), incorporates both
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products and services for high involvement decisions. The revised EKB model,
known as EBM model (Engel, Blackwell and Miniard, 1986) explores the
extended problem solving decision process for a high professional service.

3.5 SATISFACTION AND LOYALTY

Halstead (1989) proposes that the real value of measuring consumer

satisfaction is the potential it creates to anticipate clients’ post-consumption
responses. Therefore, it is necessary to understand the nature of consumer
loyalty as well as the relationship between satisfaction and loyalty. Consumer
loyalty is often recognized as being a strategic objective for companies
(Reichheld, 1993; Oliver, 1999). Following Petrick and Sirakaya (2004),
consumer loyalty is clearly a critical aspect for firms because it is more
desirable, and less expensive, to retain existing customers than to seek new
ones.

Commitment and consistency are two key constructs in consumer

loyalty conceptualization (Oliver, 1997; Bloemer and De Ruyter, 1998).
Furthermore, Oliver (1999) postulates four loyalty phases. First, consumers
will be loyal in a cognitive manner (loyalty to information), second in an
affective sense (loyalty to liking), later in a cognitive manner (loyalty to
intention), and finally in a behavioural sense (action inertia). However, most
studies focus on the cognitive phase of consumer loyalty, i.e. behavioural
intention.

Repurchase intentions are therefore often used in marketing literature to

analyze the relationship between satisfaction and loyalty of the consumer.
Similarly, the consumer’s willingness to recommend the service, i.e. positive
word-of-mouth, manifests his/her intention to continue a relationship with the
company. Consequently, repurchase intentions and positive word-of mouth are
considered to be two important expressions of consumer loyalty (McDougall
and Levesque, 2000; Bei and Chiao, 2001; Yoon and Uysal, 2005).
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The satisfaction–loyalty relationship is thought to be non-linear because

there are several factors that may intervene in this relationship. First, this
relationship is weaker when consumers are less experienced and/or involved
because they make judgments which are not elaborated on and of which they
are not fully aware. Consequently, their satisfaction judgments will not
necessarily lead to commitment (Bloemer and De Ruyter, 1998). Second, it
may be strongly influenced by the personal characteristics of the customers,
such as predisposition to variety seeking or by age and income (Homburg and
Giering, 2001).

The hypothised model based on literature review is indicated by the

following relationships: Perception being a key variable is likely to affect
purchase intention, expectation and customer satisfaction. Purchase intention is
likely to impact expectation and customer satisfaction. Expectation if met is
likely to lead to customer satisfaction and in turn customer loyalty.

In the opinion of the researcher no strong apriori relationship can be

assumed and using multiple regression models alone may not be sufficient to
establish the relationship. It needs to be proved by robust statistical analysis
involving structure equation modeling.

Figure 1 – Hypothised Model for Purchase Decision of Private Brands

Men’s Apparel.
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However the apriori relationship is not very strongly established in the

opinion of the researcher. Therefore no apriori relationship can be assumed in
the research ruling out using multiple regression models to prove the
relationship which requires specification of independent and dependent
variables. A robust analysis using structural equation modeling is suggested
and followed in the analysis.

The following definitions are adopted for the present study.

Perception: It is a process by which an individual selects, organizes and

interprets stimuli into a meaningful and coherent picture of the world.
(Schiffman and Kanuk, 1996).

Expectation: A set of attributes and conditions buyers normally expect when

they purchase a product. (Kotler et. al., 2007).

Satisfaction: A person’s feeling of pleasure and disappointment resulting from

comparing product’s perceived performance or outcome in relation to his or her
expectations. (Kotler et. al., 2007).

Loyalty: A commitment to re-buy a preferred product. (Kotler et. al., 2007).

Purchase Intention: It is the intention of the consumer to own the product or

brand based on different stimuli offered by brand.