Competitive strategy: the link between service characteristics and customer satisfaction

Purpose – This study aims to examine how firm strategy may affect customer satisfaction in relationship to service the characteristics of quality, servicescape and value. Specifically, this research utilizes Porter’s depiction cost leaders and differentiation strategy to suggest customers may be satisfied even if they rate value or quality lower than for another similar firm. Design/methodology/approach – This research utilizes survey data gathered from 179 customers of four services representing two industry segments. Analysis of variance is utilized to test four hypotheses proposing firm strategy may affect customer rating of a service characteristic, while customers may still remain loyal with high levels of customer satisfaction. Findings – The results support the assertion that customer expectations of firm strategy may enable firms in the same industry to receive very different ratings on service characteristics such as value, quality and servicescape, while having equally loyal and satisfied customers. Practical implications – The results point to the importance of aligning firm strategy and operational decisions when seeking to maximize customer satisfaction. Decision-makers benefit from understanding how strategy matters in service operational choices. Originality/value – This research connects strategy and operations academic disciplines, highlighting the importance of linking firm competitive strategy with service operation choices to enhance customer satisfaction. The model developed here, supported with empirical results, provides decision-makers with an important tool to help determine the competitive payoff for investment in service dimensions.