Page 182 - DMGT506_CONSUMER_BEHAVIOUR

Unit 13: Consumer Decision-making Process

Simply receiving complaints efficiently is not enough. Consumers who record their complaints Notes
expect tangible results and failure to effectively deal with their complaints can be disastrous for
the concerned marketer. It is essential for the marketers to not only give consumers an opportunity
to complain but also to effectively resolve the cause of their complaints. In a developing country
like India, this is an area of major opportunity for businesses because retaining once-dissatisfied
consumers by encouraging them and responding to their complaints effectively is more
economical than attracting new customers in an increasingly competitive market environment.

Case Study Star Airways

tar Airways offered passengers air services within the country and served a territory
of 18,000 sq. miles with an expanding population of over 70 lakh of people who are
Spotential users of the airline services. The geographic diversity and scattered business
and commercial cities have led to a steady increase in the number of people who use air
travel. The clientele includes business people, as well as individuals on non-business
trips, holidays, and leisure trips etc. As a result, the passenger traffic had been increasing
steadily since the firm started operations in 1983. In the last three years, however, the
growth has not been consistent with the growth pattern showed by the company in the
last fifteen years - as against a healthy growth of 13 percent, the sales have marginally
improved, registering a growth of 6 percent.
The company's early success was due to the pioneering concepts used by it in the airline
industry, which was dominated by large private and government operators with little
market orientation. The launch of the company's services coincided with a boom in the
aviation sector and reduced government dominance, which opened up the skies for private
operators. Besides this, the company offered a host of innovations in the customer service
functions such a smaller and newer planes, convenient schedules, free gifts, comfortable
seats, exclusive terminals, express baggage-check, and airport-to-hotel transit for its first
and business class clients. In turn, the fares charged by the company were premium in the
category and almost 15 percent higher than the industry average. The company president
in the following words justified this move: "We are selling entirely on the basis of providing
quality experience of our clients. Our services, ambience, and commitment to safety and
time-bound schedule, all surpass the standards of the industry."
During the first ten years of operations the company faced no direct competition. The only
problems faced by the marketing staff were (a) the price, (2) the need to convince clients
that air service was more efficient than other alternatives, (c) identifying the customers,
and more importantly (d) developing the image of a dependable service. The consumers,
who till now were forced to put up indifferent service offered by large government
operators, did not offer much resistance and were agreeable to try out new company. Once
customers were convinced, retaining them was very easy. Hence the company enjoyed
immense loyalty from its clients with almost 40 percent of them being regular users. Sales
were handled by the sales division as well as by some independent sales representatives.
In the early 1990s, the company faced direct competition for the first time with a new
company coming up with smaller planes and all other advantages which were previously
associated with Star Airways. The growing business had made the market very lucrative
and hence in the next three years, four major competitors were also vying for the market
share. The company gradually lost to these competitors and could manage to retain only
30 percent of market share by the end of 1994. All the competitors were engaged in
Contd...

LOVELY PROFESSIONAL UNIVERSITY 177