Satisfaction and customer perceived need in adopting an entrepreneurial innovation.

Author:Pagiavlas, Notis A.
Position:Report
 
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  1. INTRODUCTION

    New product development (NPD) has always been a risky enterprise (Cooper, 1999), associated with very low rates of commercial success (Stevens and Burley, 1997), but a critical process for the viability of long-term marketing strategy (Urban, Weinberg, and Hauser, 1996). Business philosophy scholars have gone as far as to define marketing innovation as the core essence of business (Drucker, 1974).

    The typical difficulties of creating new products and the accompanying challenges of estimating market acceptance have been recognized in detail by numerous academic researchers (for a thorough review please see Johne and Storey, 1998). Most common areas of attention might be broadly termed as factors of design, process, and delivery. The difficulties are exaggerated when the product is classified as a relatively radical entrepreneurial innovation or "new-to-the-world" (Lovelock, 1984), requiring extensive market analysis and consumer feedback, often when these inputs are based on incomplete or hard to gather and unreliable data (Hamel and Prahalad, 1994). Additional challenges emerge when the new offering is a service with the typical characteristics of intangibility and service provider heterogeneity, along with the managerial challenges of simultaneous production/consumption, and perishability.

    Vital consumer feedback is often sought through marketing research studies and approaches that blend quantitative with qualitative information (Urban et al., 1996). Recognizing the relative void in this area of published research, marketing scholars suggest the need for more rigorous studies utilizing direct consumer involvement (Alam, 2002), a correlate of success (Martin and Horne, 1993) reflecting market orientation (Gatignon & Xuereb, 1997) and relationship marketing philosophies (Achrol, 1997; McKenna, 1991). Especially in service markets that depend on high technology (i.e., as it might be the case of private jet air transportation), marketing knowledge and capabilities are critical (Dutta, Narasimhan, and Rajiv, 1999), in minimizing uncertainty and improving commercial performance (Gatignon and Xuereb, 1997).

    The purpose of this manuscript is to present the methodology and exploratory findings of a process that analyzes potential user satisfaction with existing service alternatives and need perceptions for a compatible innovation; it finally assesses likelihood to adopt a radical new service in a business market that is not directly served at the present. The manuscript is composed of four parts. First, a literature review covers the foundations of new service development (NSD), followed by the methodology utilized to explore the potential of a radical service concept. The third part presents the results, while the fourth part concludes with the discussion, limitations and suggestions for future research.

  2. LITERATURE REVIEW

    2.1. New service development (NSD)

    While services account for the majority of new economic activity in most economically developed countries, focus on the fundamental requirements for a successful new service introduction has been relatively modest (Johne and Storey, 1998). The typical multi-stage NPD process of idea generation, concept development, marketing testing, etc. while very critical in shaping the commercial success of a new product or service (Mohammed-Salleh and Easingwood, 1993), is not followed as faithfully within the NSD area (Edget, 1993). Martin and Horne (1992) suggest that while NSD processes might be more formal than comparable NPD ones, consumer participation and involvement are lower in the service area. Kelly and Storey (2000) even challenge the notion that formal NSD processes are prevalent in the service sector, arguing that while firms adopt an "umbrella strategy" (Mintzberg, 1994) where broad guidelines are clearly defined, detailed processes are less formal and explicit. Understanding consumer opinions to better forecast service success requires both quantitative and qualitative examinations, with a specific emphasis on qualitative research (Johne and Storey, 1998).

    In a series of studies de Brentani (1995; 1993; 1989) reports a list of factors that affect the success of new service introduction in consumer markets. The findings can be summarized as follows: The most important factors affecting sales are understanding consumer needs, internal marketing, effective delivery and marketing execution, while service quality and innovativeness affect competitive performance. In addition, user or customer participation in the design of new services is especially critical for business-related services (de Bretrani and Ragot, 1996).

    2.2. Consumer satisfaction and perceived need for an alternative service

    Closely aligned with the marketing concept and market orientation (Kohli and Jaworski, 1990), is the fact that a new entrepreneurial offering must provide core benefits that satisfy a consumer perceived need better than existing options. The innovation ought to be compatible with the values, experiences and needs of targeted adopters (Rogers, 2003), considering the very realistic possibility of no consumption at all. Especially in high involvement product/service categories, it is well documented that consumers will elaborate or process "centrally" in-depth or "core" persuasive information before they form attitudes toward the stimulus message or object (Petty, Cacioppo, and Schumann, 1983). This process is often stimulated by the realization of an unfilled need or state of imbalance between the consumer ideal and actual state (Belch and Belch, 2004). Thus, dissatisfaction with existing options is a strong motivation or drive toward consideration of new alternatives, given implicit and explicit consumer search costs.

    In this study we assess the consumer level of satisfaction with existing commercial air transportation service as a high involvement product category, due to its importance, high monetary investment, and complexity of the purchase behavior. Air travel is considered by many U.S. business travelers a highly dissatisfying activity, often associated with unreasonably high prices, long delays, low quality services, and more recently invasions of privacy and humiliation (Goo, 2004).

    Research in consumer satisfaction has evolved during the past 2 decades in both conceptual and measurement terms. The most widely accepted view defines satisfaction as "a person's feelings of pleasure or disappointment resulting from comparing a product's perceived performance (or outcome) in relation to his or her expectations" (Kotler and Keller, 2006, p. 144). If performance fell below expectations, consumers are dissatisfied; if performance exceeded expectations, consumers are highly satisfied or even "delighted" (Fournier and Glenmick, 1999). Satisfied customers become more...

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