Introduction
It is rather interesting to note that various theories of consumer decision making processes always seem to assume that consumers pass through distinct stages/steps before, during and after the process of selecting a particular product to buy or service to utilize.
On the other hand Van der Merwe (2010) states that this may not necessarily be the case since not all consumers pass through a particular decision making process and in some instances consumers may in fact skip certain stages all together (Van der Merwe, 11 – 16). What must be understood is that an average consumer is influenced by a myriad of different factors that affect the way in which they choose to patronize a particular product or service (Sahoo, 57 – 63).
This can range from various psychological reactions such as the way in which they think and feel about different products (i.e. brand perception) to the way in which the market environment they are currently present in affects the way in which they perceive a particular product or service (i.e. local culture, their family, local media influences etc.) (Danziger, 5).
For example, the 2008 financial crisis and the subsequent financial recession we are currently experiencing have greatly affected the way in which consumers perceive particular products or services at the present.
When examining the present day consumer decision making process what is apparent is that there is not only a decision to resolve a current problem (i.e. buying food when they’re hungry or picking a particular insurance policy when it is necessary) rather what also happens is the necessity to fulfill a “higher need” in terms of what patronizing a particular product or service means to a customer.
This principle can be seen at work in the insurance industry in Riyadh wherein product choice is not governed by just price and quality but rather by the processes that go into it that consumers have increasingly been taking into consideration before patronizing a particular company.
For example, consumer satisfaction regarding health insurance can be seen as being governed not only by the inherent price of a policy but the various medical institutions that are willing to accept it, the convenience by which claims can be made, the ease of use of the process, the way in which the customer support staff handles their request and finally the readiness in which doctors are willing to assist a patient based on the use of that particular type of insurance policy.
It is based on this that this study will examine the Tawuniya health insurance company in Riyadh, Saudi Arabia in order to determine the extent of customer satisfaction with the company’s services and to determine if the company has the proper instruments in place to fulfill the “higher need” that customers look for when patronizing the services of a particular company.
Problem Statement
Though Tawuniya is one of the leading health insurance companies within Riyadh it is unknown whether its clients are satisfied with the product itself or the added services it has. This paper will attempt to examine what drives consumer satisfaction in the case of Tawuniya and will determine whether it is based on the price of health insurance or the added services it has.
Research Questions
- Do Tawuniya’s current services fulfill the “higher need” of consumers?
- What affects consumer satisfaction and service patronage?
- What is necessary in maintaining consumer satisfaction in a modern day era?
- What tools do businesses need to have in order to stay competitive in today’s business environment?
- Are Tawuniya’s consumers satisfied with the company’s current product offering?
- What drives consumer satisfaction in the case of Tawuniya?
Review of Related Literature
Introduction to Literature
This section reviews and evaluates literature and theories on customer satisfaction, current trends in consumer behavior as well as the evaluation of methods of ensuring product patronage.
The literature in this review is drawn from the following EBSCO databases: Academic Search Premier, MasterFILE Premier; as well as Jstore and various internet sources when applicable. Keywords used either individually or in conjunction include: customer satisfaction, consumer behavior, consumer decision making, consumption and patronage.
Theoretical Framework
Theory of Consumer Behavior
The theory of consumer behavior revolves around the concept of the perceived value or satisfaction that a consumer derives from the consumption/ use of a particular commodity. In terms of actually understanding the demand side of market consumption/utilization the theory of consumer behavior uses two distinct methods of measurement, namely Total Utility (TU) and Marginal Utility (MU).
Total utility is defined by various experts in the field of consumer behavior as being the equivalent to the total level of satisfaction that a consumer can get from the use/consumption of a particular good or service. In the field of analyzing consumer behavior marginal utility is basically described as an add-on, namely it is the additional form of satisfaction that a consumer /health insurance client can get from the use/consumption of an added portion of a particular good or service.
It must be noted though that while total utility increases with the overall level of quality, at some point due to the continuous consumption of a particular product or use of a type of service the overall yield will result in smaller and smaller levels of additional utility towards the consumption. To illustrate this point one can imagine a person buying a scoop of dark chocolate ice cream at an ice cream store due to the hot and humid weather in Riyadh.
While initially the total utility and marginal utility are equal if the person were to go back and kept on buying the same product in order to stay cold the total utility would increase due to the consumption however the marginal utility would decrease over time as a result of the continuous consumption of the same product. This is based on notion that continuous consumption of the same product would eventually cause a person to get tired of consuming it thus the added value continues to decrease over the course of consumption.
In order to better understand how such a concept integrates itself into business planning and marketing the four fundamental concepts of consumer choice must be taken into consideration namely: rational behavior, preferences, budget constraints and prices. The concept of rational behavior assumes that all consumers are rational individuals who try to use their earned income in order to derive the greatest amount of satisfaction/ utility.
In other words consumers try to get the most out of their income through rational buying behavior which results in a maximization of total utility from the products or services used. In the case of the this paper this comes in the form of clients choosing a particular health insurance company based on their perception that they would get the most value from patronizing that company.
This rational behavior is based on the fact that consumers will act in an economically competent manner in that they will not spend too much money on irrational purchases or services. This can take the form of stockpiling unneeded products or choosing certain services that are well beyond their budgetary means.
As such the concept of rational behavior assumes all consumers engage in rational buying behaviors which becomes the basis for any future analysis of consumer patronage towards a particular type of product or utility.
For the health insurance industry this means that customers have a certain “limit” to the amount they are willing to pay on insurance premiums on a particular insurance package based on the rates that the company has allotted for them (Logie-MacIver and Piacentini, 60 – 76).
It must also be noted that the concept of preferences is based on the fact that each individual consumer has his/her own personal preference towards a particular service or product that is currently available in the market from which they are able to derive the greatest amount of total utility/ satisfaction.
Consumers are inherently aware of how much in the way of marginal utility they are able to derive from successive use/consumption of a particular product or service. It must be noted though that the amount of marginal and total utility derived from a particular product or service differs based on each individual consumer group since they all have individual tastes, preferences and ideologies. In the case of the health insurance industry in Riyadh this comes in the form of various healthcare payment packages that the companies offer customers.
If a customer pays a lot into their health insurance package yet regularly uses their health insurance plan on a yearly basis this mean they are able to derive the greatest amount of total utility/satisfaction from patronizing that company’s services. On the other hand it must be noted that if a customer is paying a lot into a service yet doesn’t use it at all it can be stated that they are not making the most of the service and as such are not able to derive a any total utility/ satisfaction from paying into the service.
Under the concept of budget constraints each consumer is assumed to have a fixed and finite income due to the limited amount of work in exchange for income each individual consumer is capable of achieving. In this case it is assumed that there is unlimited demand for goods and services however this is offset by a limited income.
For the insurance industry in Riyadh this takes the form of having specific types of insurance packages available that take into account varying income levels instead of having fixed price packages that neglect to take into account a person’s level of income before a particular payment plan is set.
Finally, the concept of prices assumes that each individual consumer is part of the total demand in the market. Due to the limited amount of income each consumer is capable of achieving they must choose to obtain the best combination of goods that maximizes their total utility while at the same time remaining within a certain price range.
In this study the point of view of the consumer, namely consumer preference, plays an important role in determining whether the total utility of the consumer knowing that the health insurance company they are under has beneficial practices (i.e. good customer service, widespread insurance usage, online tracking of claims etc.) actually contributes to consumer patronage of that particular health insurance company.
It must be noted that while the concept of consumer preference plays an important role in the choice of a particular product or service the fact remains that the remaining concepts of rational behavior, budget constraint and price also play roles that can actually override the concept of preference.
While a consumer may prefer to use a particular health insurance company that has widespread coverage and great services, barriers to this choice in the form of higher prices which directly conflicts with a consumer’s inherent budget constraints would thus change their pattern of behavior to choose a more affordable solution in order to conform to what is rational.
On the other hand if a consumer is presented with two choices namely a health insurance company that accommodates their “higher need interests” while the other has not with both prices being similar it is likely that the consumer will choose the former choice rather than the latter.
This decision is influenced by all concepts of consumer behavior wherein preference and rational behavior for health insurance companies that have “higher need services” led the consumer to choosing the insurance company that has better services while the similar prices for each insurance company conformed to the consumer’s budget constraint thus letting the choice be left up to preference.
It must be noted that the theory of consumer behavior is basically an examination of what influences a consumer’s choice in a particular product or service. Should a consumer be presented with the same service with both being within budget constraints and prices, the choice is usually left up to consumer preference. On the other hand if a choice is beyond budget constraints, price level and is considered to be an irrational choice preference is no longer included into the decision making process.
Thus in terms of understanding consumer behavior preference should not be considered the sole deciding factor in understanding consumer behavior rather a combination of rational behavior, preference, budget constraints and price must always be taken into consideration in order to understand how consumer behavior towards a particular product or service works.
Market Trends
One of the current marketing trends in the health insurance industry has been to connect special amenities, services and exclusive offers to particular health insurance packages.
For example, in the case of Tawuniya this comes in the form of online methods of claim tracking, international insurance for people travelling to other companies, widespread acceptability of Tawuiya online eServices for individuals and corporations as well as professional customer service representatives that will handle your claim with the utmost respect and cordiality.
These aspects are the “higher need” services indicated in the beginning of this paper and as such are often connected to greater levels of customer satisfaction when it comes to using a particular type of health insurance,
Tools Necessary in Ensuring Consumer Satisfaction
Information Systems
Information systems can be described as the interface between people, organizations and technology enabling the business to accomplish a specific task or action. One example of an information system are the various applications and websites utilized by Amazon in selling products, accepting client payments through credit card processing applications, contacting their warehouses and shipping bought products to the correct addresses indicated by their consumers.
While this is only a one example of the plethora of information systems out there what must be understood is that information systems act as methods of integration for a company helping to streamline specific processes so that they can be controlled, influenced and improved when necessary.
Developing proper information systems is an essential aspect for a company for without it a company will be unable to properly deal with the buying, selling and the utilization of resources across various locations in the country. Due to the varied and often complicated nature of company operations it becomes a necessity to streamline and integrate product delivery processes, methods of operation, customer service and various other operational capacities.
A company cannot just simply develop and market a product without taking into consideration how best to allocate specific resources in determining where a product needs to go, which branch needs it most, how will product returns be processed and how HR services will deal with salaries for the myriad employees within a company.
A company requires an efficient and up-to-date information system in order to integrate the factors mentioned into an efficient and effective operational strategy so as to better serve its clients.
The larger a company get the more hectic and haphazard its operations tend to become, especially in instances where its operations are located in different countries. Organizations need to understand how to properly allocate resources to specific international locations, how suppliers can be contacted, what are the limits of production on a daily basis and how will each branch location contact each other.. In other words information systems can be classified as solutions to identified problems or necessary methods of integration.
What must be understood is that while managers and CEOs are great at coming up with specific solutions to problems they are lost when it comes to implementing these particular solutions when they require computer programming as one of the factors behind the implementation. Information systems and information system specialists bridge this gap by being able to integrate the ideas of managers and CEOs into viable technological applications that can be implemented on a company wide basis.
For example, if a company is currently having problems with its archaic method of form based ordering in order to get products from the warehouse to consumers a manager or CEO would think to implement a faster and better means of getting orders to warehouses without having to rely on someone physically going there and handing them the orders.
They would of course think to apply a computer based system for this particular solution and this is where information systems come in. An information system in this particular situation becomes an applied solution where it is developed in order to help a company resolve a particular problem.
On the other hand if the company was to expand and have a more diverse array of products and factories further development of the initial information systems becomes necessary in order to adapt to the growing needs of the company. It is based on this that it can be seen that information systems act as a necessary method of process integration which enables a company to do its job better and as such it is essential to have it within a company.
Turning All Consumer Interactions into an “experience”
In a documented interview, entrepreneurs Rob and Pablo, creators of “Snog”, a U.K. based chain of yogurt outlets, state the following regarding what it takes to become a successful entrepreneur “now we are in a recession and we see businesses that are successful I think the one thing you see that they all have is the experience which is the most important part in everything so we made sure that there was an experience”.
The “experience” that Rob and Pablo refer to is not just the quality of the product itself but what customers feel when they enter into a particular establishment.
In the case of Snog, all their outlets have a warm and friendly ambiance which is not only family friendly but actually promotes, in their words, “a happy feeling” for customers. Going back to the example of Apple Inc., it can be seen that all their stores, no matter what country they are present in, have a stylish and ergonomic design that looks “clean, modern and cutting edge” which has come to exemplify the experience of buying products at an Apple store.
Based on the popularity of not only Snog but of Apple itself, it can be seen that by making their store into an “experience” rather than just a store; this helps to encourage buying behavior among their clientele and even repeat visits. As such, for any business that wants to increase their customer base, it is important to develop the experience, the business provides so as to appeal better to consumers and create repeat business.
Strategy to maintain balance between competitor and customer orientations
Businesses don’t operate within a vacuum and have to deal with intense competitive environment forces on an almost daily basis. What must be understood is that there are three components to market orientation that dictate how a company acts within a competitive environment, these are: customer orientation, competitor orientation, and inter-functional coordination.
In the case of customer orientation a company spends what resources it has in gathering data on the needs and behaviors of various consumers, the same can be said for competitor orientation however it focuses on competitors instead.
What must be understood is that either method has a distinct weakness. Focusing too much on consumer orientation can actually blind a company to changes in the market or may actually stifle innovation since the company focuses too much on consumer satisfaction rather than changing based on trends.
Focusing too much on competitor orientation on the other hand results in too much time and capital being placed on competitive activities which results in companies at times neglecting their consumer bases and focusing too much on getting ahead of the competition. On the other hand both methods also have their own respective strengths such as the customer orientation strategy being more effective in uncertain markets whereas competitor oriented strategies become effective in fast growing markets.
The best way to maintain a balance between the orientations is to first create a market intelligence mechanism that gathers consumer information and disseminates it within the company and secondly is to encourage the free flow of information within the organization. What must be understood is that market orientations tend to become ineffective when organizations are mired in bureaucratic nuances which prevent information from being passed on quickly.
By allowing information to freely flow within an organization this increases its ability to respond to changes in the market and enables it to respond to these changes in an effective manner. One company where such strategies are evident can be seen in the case of Whole foods Inc. which combines both competitor and customer orientation strategies in its business model.
This is evident by its focus on providing consumers with cheap and healthy selections which change depending on consumer preferences within a particular location while at the same time it utilizes a competitor oriented strategy by having prices which are marginally lower than other competitors in the health food market. It must be noted though that a company’s strategies do change over time depending on changes within the market.
For example, as mentioned earlier customer orientation strategy are more effective in uncertain markets whereas competitor oriented strategies become effective in fast growing markets, the inherent problem with this is that markets tend to change over time as seen in the case of Netflix. As such when markets change this necessitates changes in orientations as well with companies at times shifting towards either customer oriented or competitor oriented strategies.
Methodology
Aim
The aim of this paper is to research the current level of customer satisfaction with Tawuniya
Objective
The main research objectives of this study are the following:
- To compare the level of income of Tawuniya customers have and compare it to the level of satisfaction they derive from their current insurance plan.
- To examine whether “higher need” services are a necessity towards satisfaction in the case of Tawuniya
- Investigate other factors that contribute towards consumer satisfaction
Survey Questions
Consumer Demographic Information
Q1) your age is
â–ˇ15-20
â–ˇ20-25
â–ˇ25-30
â–ˇAbove 30
Q2) Social status
â–ˇMarried
â–ˇSingle
Q3) Current Level of Income
â–ˇ Below $1,000
â–ˇ$1,000 to $3,000
â–ˇAbove $3,000
Services From the Company
Financial Aspect
Customer Service and Information Systems Aspect
Conclusion
Research Plan/Design
Surveys will be carried out for this study with a focus on the various patients within hospitals in Riyadh as well as customers of the randomly selected clinics within the city.
The survey will be in a form of questionnaires with four major areas of focus, namely: how important the interviewee thinks “higher need” services are within the health insurance industry, their level of income, the level of satisfaction derived from using the insurance services of Tawuniya and whether they think Tawuniya has adequate services. Data from the surveys will be collected and filtered based on the pre-defined criteria. The data will then be categorized and analyzed accordingly to achieve the objectives for this study.
Scope and Limitations
The study will be limited to within the city of Riyadh and will only examine confirmed members of Tawuniya’s health insurance section. The goal of this research paper is to encompass 3 local hospitals and 3 local clinics in order to determine the level of consumer satisfaction towards Tawuniya, whether price factored into their decision to choose the company and whether the company is able to administer to their “higher needs” in terms of adequate services to address their health insurance concerns.
Population and Sample
The population for this particular study will consist of 3 hospitals and 3 clinics selected at random in Riyadh. For each individual hospital, 5-10 staff members and 20-30 patients will be selected to participate in the survey. That gives a total of 150-240 potential participants.
The reason this particular type of population was used for this study is due to the experience and expertise staff members have with the consumer health industry and the fact that patients are the primary source of information needed in order to determine the level of satisfaction they derive from a particular service.
Duration of Study
The total duration of the study will last only one month; the collection of the survey results, creating the appropriate graphs, and the overall period of investigation does not entail anything particularly time consuming as such one month has been determined as being more than enough time to complete the study and present the needed results.
Procedures and techniques used for collecting and analyzing data
The data to be utilized in this study will gathered using surveys consisting of questions that will enable this study to determine what the opinion of hotel workers and guests are towards the concept of customer satisfaction and “higher need services”. The data will be collected and analyzed using the online survey tool Surveymonkey.com which has a free online survey maker as well as a data analysis tool that should be more than sufficient in properly analyzing the data from the surveys.
To make sure this study attempted a minor test of the operational capacity of the site by making a small survey campaign using online social networking to get several known acquaintances of the researcher input their data on their favorite movies. After one week the data was examined and analyzed using the online tools of the website and the result was more than satisfactory in terms of data clarity and accuracy of the results.
Cost budget for the research
The overall cost of the study itself was negligible; utilizing the online free survey tool Surveymonkey.com removed the need to print 200 copies of the survey questionnaire. This greatly facilitated the collection of survey results which resulted in the only cost for the study being the cost of transportation to and from the various hospitals/clinics chosen as samples to be used.
Analysis and Discussion
Level of Satisfaction and “Higher Need” Services
Based on the results of the survey it was determined that consumers placed more importance on price and then “higher need” services when it came to determining what gave them the most satisfaction. For this section this paper will examine the concept of “higher need” services and then move on to the concept of price in the next section.
What must be understood is that “higher need” service encompasses not only additional amenities such as international health insurance but rather constitutes other services in relation to information systems and the “experience” of customers when dealing with a company. While it may be true that health insurance companies are more competitor driven that customer driven that fact remains that data shows customers appreciate a certain degree of additional service when the patronize a particular company.
In the case of health insurance this comes in the form of information systems which enable the customer to not only make easy payments from a variety of locations but enables them to make an immediate follow up on their claim. What must be understood is that customers are vastly different from the way they were several years ago, today things revolve around being quick, instantaneous and above all convenient.
As such the utilization of effective information systems for the benefit of consumers is a necessity in many of today’s companies. Tawuniya understands this particular aspect as evidenced by their online systems for customer support management and assistance which is considered a “higher need” service in terms of the satisfaction customers can derive from the convenience such a system provides for them. It must also be noted that consumers expect a certain “experience” when dealing with a company.
This can come in the form of either the physical aspect of a location or the psychological aspect of the customer service a company provides. Taking this into consideration it can also be seen that Tawuniya has customer service representatives that are always kind and cordial and as such contribute to a positive consumer interaction resulting in greater product satisfaction. All of these factors have actually contributed to most of the respondents being satisfied with the company’s services due to the addition of these “higher need” services.
Connection of Income Level with Decision Making Process and Customer Satisfaction
The four fundamental concepts of consumer choice must be taken into consideration namely: rational behavior, preferences, budget constraints and prices when trying to determine what drives the decision making process of consumers to choose a particular type of Health Insurance Company.
In the hospital/clinic survey four different kinds of income streams were added namely: those below $1000, $1000 – $2000, $2000 – $3000 and income streams above $3000. These levels of income were directly contrasted to decision making process of the customer. The survey revealed that the greatest factor in the decision making process for patients was the price of the insurance rates, followed by the general applicability of the insurance card in various hospitals, and finally the “higher need” services offered.
It is the assumption of this study that as income levels increase the propensity for consumers to go beyond the demographic of price and consider other factors in the decision making process such as “higher need” services increases as well. In order to prove this point the four fundamental concepts of consumer choice will be utilized in order to trace consumer behavior in this study and will attempt to explain how patients make their decisions regarding what health insurance company to patronize.
The concept of rational behavior assumes that all consumers are rational individuals who try to use their earned income in order to derive the greatest amount of satisfaction/ utility. In other words consumers try to get the most out of their income through rational buying behavior which results in a maximization of total utility from the products or services used.
For people choosing between various health insurance companies within Riyadh this means choosing the appropriate type of insurance company that is commensurate with the budget that they have. The results of the survey show that there are two particular levels of income that act as majorities in the income selection namely incomes below $1000 and incomes above $3000.
An examination of the individual surveys show that individuals with incomes below $1000 chose prices as the determining factor in choosing insurance providers while those with incomes above $3000 chose “higher need” services as the primary factors behind their decisions.
Such actions conform to the concept of preferences which is based on the fact that each individual consumer has his/her own personal preference towards a particular service or product that is currently available in the market from which they are able to derive the greatest amount of total utility/ satisfaction.
For people with health problems in Riyadh their preferences are set according to their inherent preferences which are greatly influenced by their income. Consumers with greater incomes thus have a different set of preferences as compared to those who have lower income rates.
What must be understood is that under the concept of budget constraints each consumer is assumed to have a fixed and finite income due to the limited amount of work in exchange for income each individual consumer is capable of achieving. Due to the limited amount of income each consumer is capable of achieving they must choose, under the concept of price, to obtain the best combination of goods that maximizes their total utility while at the same time remaining within a certain price range.
In this study the point of view of the consumer, namely consumer preference, plays an important role in determining whether the total utility of the consumer knowing that the health insurance company that they utilize has “higher need” services actually contributes to consumer patronage of that particular insurance company.
It must be noted that while the concept of consumer preference plays an important role in the choice of a particular product or service the fact remains that the remaining concepts of rational behavior, budget constraint and price also play roles that can actually override the concept of preference.
While a consumer may prefer to utilize a health insurance company that has “higher need” services, barriers to this choice in the form of higher prices which directly conflicts with a consumer’s inherent budget constraints would thus change their pattern of behavior to choose a more affordable solution in order to conform to what is rational.
Conclusion/Recommendation
Based on the results of the survey and the concepts of rational behavior, preference, budget constraints and prices it can be said that consumer preferences in Riyadh’s health insurance industry is one determined by two factors, namely price and “higher need” services.
What must be understood is that a modern day health insurance client greatly differs from one 20 or 30 years ago. As patients become more modern and internationalized with increasing needs in the form of instantaneous assessment or the ability to check their current status at anytime they wish online comes the necessity of providing such services to them.
For a health insurance company that lacks such services this greatly affects the decision making process of consumers since it enables them to instantly know whether a particular health insurance company is bad, lacks particular amenities or is too backwards to utilize for their modern day lifestyle. This differs from past situations where consumers had to physically go to the office in order to file a claim or complete any paperwork.
When it comes to price what must be understood is that due to the current volatile economic situations around the world customers are not careless with their money as they used to be. At the present they take into account first the price of a particular insurance package and then the subsequent benefits and “higher need” services before they choose to patronize a particular company.
It is based on this that strategies involving consumer satisfaction for Tawuniya in the future should begin first with price based changes and then move on to “higher need” additions for particular insurance packages in order to not only satisfy a customer’s inherent need for affordable pricing but their desire for “higher need” services as well.
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