Enterprise Agility on Consumption Value: Bringing Satisfaction in New Product
Nikhil Chandra Shil, Anup Chowdhury
Department of Business Administration, East West University, Dhaka, Bangladesh
To cite this article:
Nikhil Chandra Shil, Anup Chowdhury. Enterprise Agility on Consumption Value: Bringing Satisfaction in New Product. European Business & Management. Vol. 2, No. 1, 2016, pp. 8-16. doi: 10.11648/j.ebm.20160201.12
Received: September 3, 2016; Accepted: October 20, 2016; Published: November 21, 2016
Abstract: Agility becomes the norm of business, means of success. This is due to technological advances, accelerated learning process, diffusion of technologies in every sphere of life, short life cycle, high degree of risk and uncertainties. Aptly customer satisfaction has been modeled from different perspectives to address every possible explanation. Consumer behavior is very much situational. Ensuring an expected level of consumption value for new product becomes the biggest challenge to most of the marketers. How high degree of enterprise agility can bring satisfaction through confirming a satisfactory level of consumption value for new product is an issue of extensive research. A structured questionnaire is used to conduct a survey on Enterprise Agility (EA) and Consumption Value (CV). This research applies the consumption value model as the basic framework, which included the functional value, the social value, the emotional value, the epistemic value and the conditional value. The researchers also consider some agility dimensions as the influencers, that is, the brand image, consumers’ perceived risk, consumer attitude towards the new product, the buying intention, and the level of post-purchase satisfaction. As putting these two theories together, this research intends to verify whether the expected consumption value will be influenced by enterprise agility. After surveying consumers and implementing a canonical analysis, the data reveals two types of correlation between enterprise agility dimensions and consumption values. One is defined as the behavioral-facilitated relationship, which means that consumer behavior characterized by brand image, attitude and post-purchase satisfaction has positive relation to having higher willingness of preferring high function, social value, enthusiastic feeling, and novelty to make them satisfied while using new product. Contrarily, the second type is called the situational-conditional relationship, which means that the perceived risk combined with intention has the higher positive relation with the conditional value. The research will give more insights to the market researchers and professionals regarding the benefits of enterprise agility to ensure more customer satisfaction.
Keywords: Enterprise Agility, Consumption Value, Consumer Behavior, Customer Satisfaction, New Product Development, Canonical Correlation
21st Century is better termed as technology era (age). During the times of rapid technological changes, extensive globalization and intensive competition, perhaps the most critical concern is finding solutions for the quick, flexible and consistent adaptation of the enterprise to a business environment characterized by frequent, abrupt, extensive and unexpected opportunities, events, and challenges, leading into unpredictable directions. Enhancing the enterpriseagility , ; sum of flexibility, visibility and consumer responsiveness; is pursued constantly. The enterprise’s marketing agility is particularly important as it highlights its ability to manage and even generate change, which is viewed as an opportunity. Thus, the agile enterprise basically rely on marketing and innovation, an iterative and incremental development, which means to continually explore new opportunities and exploiting the market place with new solutions. Bottom line is obviously a consideration behind agility, but at the same time, customer satisfaction issue cannot be undermined.
In case of new product, the team is always serious to capture a good market share. And thus, agility becomes the rule of the game from the very beginning. The agile enterprise relies on its ability to rapidly evaluate feedback, and also new information, followed by taking decisions almost in real time. As market globalization raises competitive pressures worldwide, one essential requirement for enterprise survival is continuous ability to meet customer needs and demands . The agile organization of the enterprise effectively means that it operates according to the "just-in-time" principle so that it is not losing any single dime due to short-sightness.
Agility must not be understood as navigation without a compass, as just a series of responses to the opportunities and/or threats in the environment, but rather as the complex process of assessment, planning and monitoring the enterprise’s resources and capabilities ,  that deliver customer value, to a higher level than the competition, and therefore guarantee sustainable competitive advantage and stability on the market. Agility requires discipline and the courage to stick with it as the change will be challenging . But agility is not an isolated concept in marketing literature. It should be aligned with consumer behavior to reap maximum benefit out of it. Consumer behavior is a study of the processes involved when individuals or groups select, purchase, use, or dispose of products, services, ideas, or experiences to satisfy needs and desires . It is ‘the process and activities people engage in when searching for, selecting, purchasing, using, evaluating, and disposing of products and services so as to satisfy their needs and desires’ . Consumer behavior varies on perceived consumption value from a product. In case of new product, things are to some extent difficult and it becomes the role of the enterprise agility team to define consumer behavior. Current research targets to study the impact of enterprise agility on consumption value with extended emphasis on satisfaction in case of new product. A questionnaire will be administered considering different parameters of enterprise agility and consumption value. Potential consumers will be targeted and mall-intercept method will be applied to fill-up the questionnaire. Then a canonical correlation method will be applied to find out any relationship between enterprise agility and consumption value. The research is expected to add new knowledge in consumer behavior literature.
2. Literature Review
The theories of consumer decision-making process assume that the consumer’s purchase decision process consists of several steps through which the buyer passes in purchasing a product or service. However, this might not be the case. Not every consumer passed through all these stages when making a decision to purchase and in fact, some of the stages can be skipped depending on the type of purchases. Andreasen  proposed one of the earliest models of consumer behavior. The model recognizes the importance of information in the consumer decision-making process. It also emphasizes the importance of consumer attitudes although it fails to consider attitudes in relation to repeat purchase behavior. Another model proposed by Nicosia and Mayer  concentrates on the buying decision for a new product. The model concentrates on the firm's attempts to communicate with the consumer, and the consumers' predisposition to act in a certain way. These two features are referred to as Field One. The second stage involves the consumer in a search evaluation process, which is influenced by attitudes. This stage is referred to as Field Two. The actual purchase process is referred to as Field Three, and the post-purchase feedback process is referred to as Field Four. This model was criticized by commentators because it was not empirically tested , and because of the fact that many of the variables were not defined . Howard and Sheth  model of buyer behavior highlights the importance of inputs to the consumer buying process and suggests ways in which the consumer orders these inputs before making a final decision. The model is not perfect as it does not explain all buyer behavior. It is, however, a comprehensive theory of buyer behavior that has been developed as a result of empirical research .
The study of consumer behavior focuses on how individuals make decisions to spend their available resources (time, money, effort) on consumption-related items . The field of consumer behavior covers a lot of ground. According to Solomon , consumer behavior is a study of the processes involved when individuals or groups select, purchase, use, or dispose of products, services, ideas, or experiences to satisfy needs and desires. Consumer behavior is defined as the process and activities people engage in when searching for, selecting, purchasing, using, evaluating, and disposing of products and services so as to satisfy their needs and desires. Behavior occurs either for the individual, or in the context of a group, or an organization. Consumer behavior involves the use and disposal of products as well as the study of how they are purchased. Product use is often of great interest to the marketer, because this may influence how a product is best positioned or how we can encourage increased consumption. There are lots of model explaining consumption values. In this paper, we have used the model proposed by Sheth et al. . According to this model, there are five consumption values influencing consumer choice behavior. These are functional, social, conditional, emotional, and epistemic values. Any or all of the five consumption values may influence the decision. Various disciplines (including economics, sociology, psychology, marketing, and consumer behavior) have contributed theories and research findings relevant to these values . Each consumption value in the theory is consistent with various components of models advanced by Maslow , Katona , Katz  and Hanna . Five consumption values form the core of the model as shown in Figure 1 below:
2.1. Functional Value
Sheth et al.  defined the functional value of an alternative as ‘the perceived utility acquired from an alternative for functional, utilitarian, or physical performance. An alternative acquires functional value through the possession of salient functional, utilitarian, or physical attributes. Functional value is measured on a profile of choice attributes’. Traditionally, functional value is presumed to be the primary driver of consumer choice. This assumption underlies economic utility theory advanced by Marshall  and Stigler  and popularly expressed in terms of "rational economic man." An alternative’s functional value may be derived from its characteristics or attributes  such as reliability, durability, and price. By identifying the dominant function of a product (i.e., what benefits it provides); marketers can emphasize these benefits in their communication and packaging. Advertisements relevant to the function prompt more favorable thoughts about what is being marketed and can result in a heightened preference for both the ads and the product . Katz  developed the functional theory of attitudes. He identifies four attitudes based on the functional values:
a) Utilitarian function: The utilitarian function is related to the basic principles of reward and punishment. We develop some of our attitude toward products simply based on whether these products provide pleasure or pain.
b) Value-expressive function: Attitude that performs a value-expressive function expresses the consumers’ central values or self concept. A person forms a product attitude not because of its objective benefits, but because of what the product says about him or her as a person.
c) Ego-defensive function: Attitude formed to protect the person, either from external threats or internal feelings, perform an ego-defensive function. Example of this function is deodorant campaigns that stress the dire, embarrassing consequences of being caught with underarm odor in public.
d) Knowledge function: Some attitude is formed as a result of a need for order, structure, or meaning. This need is often present when a person is in an ambiguous situation or is confronted with a new product.
2.2. Social Value
Social value of an alternative is defined as ‘the perceived utility acquired from an alternative association with one or more specific social groups. An alternative acquires social value through association with positively or negatively stereotyped demographic, socioeconomic, and cultural-ethnic groups. Social value is measured on a profile choice imagery . Social imagery refers to all relevant primary and secondary reference groups likely to be supportive of the product consumption. Consumers acquire positive or negative stereotypes based on their association with varied demographic (age, sex, religion), socioeconomic (income, occupation), cultural/ethnic (race, lifestyle), or political, ideological segments of society. Choices involving highly visible products (e.g., clothing, jewelry) and good service to be shared with others (e.g., gifts, products used in entertaining) are often driven by social values. For example, a particular make of automobile is being chosen more for the social image evoked than for its functional performance. Even products generally thought to be functional or utilitarian are frequently selected based on their social values.
2.3. Emotional Value
Emotional value of an alternative is defined as ‘the perceived utility acquired from an alternative’s capacity to arouse feelings or affective states. An alternative acquires emotional value when associated with specific feelings or when precipitating those feelings. Emotional values are measured on a profile of feelings associated with the alternative’ .
A number of different attempts have been made to identify the various emotions that people experience. Izard et al.  develops the taxonomy of affective experience approach that describes the basic emotion that people feel. He measures emotions using ten fundamental categories: interest, joy, surprise, sadness, anger, disgust, contempt, fear, shame, and guilt. This approach has been used extensively by consumer researchers [e.g., 24]. Emotional value is often associated with aesthetic alternatives (e.g., religion, causes). However, more tangible and seemingly utilitarian products also have emotional values. For example, some foods arouse feeling of comfort through their association with childhood experiences, and consumers are sometimes said to have "love affairs" with their cars.
2.4. Epistemic Value
Sheth et al.  defined epistemic value as ‘the perceived utility acquired from an alternatives capacity to arouse curiosity, provide novelty, and/or satisfy a desire for knowledge’. Epistemic issues refer to reasons that would justify the perceived satisfaction of curiosity, knowledge, and exploratory needs offered by the product as a change of pace (something new, different). Entirely new experience certainly provides epistemic value. However, an alternative that provides a simple change of pace can also be imbued with epistemic value. The alternative may be chosen because the consumer is bored or satiated with his or her current brand (as in trying a new type of food), is curious (as in visiting a new shopping complex), or has a desire to learn (as in experiencing another culture). The concept of epistemic values has been influenced by theory and by several important areas of research. Exploratory, novelty seeking, and variety seeking motives have been suggested to active product search, trial, and switching behavior . One of the most significant contributors to the study of the optimal stimulation and arousal has been Berlyne , who contends that individuals are driven to maintain an optimal or intermediate level of stimulation. Finally, Hirschman and Mills  has advanced innovativeness, or a consumer’ propensity to adopt new products.
2.5. Conditional Value
The conditional value is defined as ‘the perceived utility acquired by an alternative is the result of the specific situation or set of circumstances facing the choice maker. An alternative acquires conditional value in the presence of antecedent physical or social contingencies that enhance its functional or social value. Conditional value is measured on a profile of choice contingencies’ . An alternative’s utility will often depend on the situation. For example, some products only have seasonal value (e.g., greeting cards), some are associated with once in a life events (e.g., wedding dress), and some are used only in emergencies (e.g., hospital services). Several areas of inquiry have also influenced conditional value. Based on the concept of stimulus dynamism advanced by Hall , Howard and Sheth  recognized the importance of learning that takes place as a result of experience with a given situation. Howard and Sheth  then extended Howard’s earlier work by defining the construct inhibitors as non-internalized forces that impede buyers’ preferences. The concept of inhibitors was more formally developed by Sheth  in his model of attitude-behavior relationship as anticipated situations and unexpected events. Recognizing that behavior cannot be accurately predicted based on attitude or intention alone, a number of researchers during the 1970s investigated the predictive ability of situational factors.
The five consumption values identified by the theory make differential contributions in specific choice contexts. For example, a consumer may decide to purchase coins as an inflation hedge (functional value), and also realize a sense of security (emotional value) from the investment. Social, epistemic, and conditional values have little influence. Of course, a choice may be influenced positively by all five consumption values, for example, to a first-time home buyer, the purchase of a home might provide functional value (the home contains more space than the present apartment), social values (friends are also buying homes), emotional values (the consumer feels secure in owning a home), epistemic value (the novelty of purchasing a home is enjoyable), and conditional value (starting a family).
Agility, on the other hand, does not have any standardized model like consumption value. Agility is more formally defined as the ability of an enterprise to operate profitably in a rapidly changing and continuously fragmenting global market environment by producing high-quality, high-performance, customer-configured goods and services. It is the outcome of technological achievement, advanced organizational and managerial structure and practice, but also a product of human abilities, skills, and motivations . Agility is an enterprise-wide response to an increasingly competitive and changing business environment, based on four cardinal principles: enrich the customer; master change and uncertainty; leverage human resources; and cooperate to compete , . It is defined and used in line with the perspective under consideration. Agility has got different dimensions in literature. Here, we are using it from a marketer’s point of view. To keep the discussion in line with the main objective of current research, the following five indicators  will be used as a measure of enterprise agility from the viewpoint of a new product development team:
1. brand image,
2. the customers’ perceived risk,
3. the customer’s attitude towards the proposed product,
4. the buying intentions, and
5. the level of post-purchase satisfaction.
2.6. Brand Image
The overall vision or position of brand in the mind of the consumer defines the brand image . The enterprise gains agility when it manages to rapidly create a strong and favorable perception towards its brand/brands among customers. In order to link the brand image more expressively to the company’s agility, the "consumer brand preference" will be suggested for monitoring. The indicator will be tracked both in relation to the enterprise’s ownbrand and to those of its competitors.
2.7. Perceived Risk
Perceived riskmeans the uncertainty that consumers face when they cannot foresee the consequences of their purchase decisions . The enterprise gains agility when it is able to rapidly create a strong and favorable perception of the limited buyer risk carried by the proposed product/brand.
Attitudes are learned predispositions to respond to an object or class of objects in a consistently favorable or unfavorable way, which can be used to predict consumer behavior . The enterprise gains agility when it is able to rapidly create a favorable attitude towards its overall offering or just a specific product/brand.
Intention is the behavioral component of attitude, and it describes attitudes not toward a brand, but toward brand purchase . This way, it is a far better predictor of behavior than either beliefs or affective responses. The enterprise gains agility when it is able to rapidly generate more definite buying intentions among its customers.
Positive evaluation after purchase leads to satisfaction, while negative evaluation after purchase leads to dissatisfaction . The enterprise gains agility when it is able to rapidly deliver higher customer satisfaction. All of the five measures of enterprise agility have been summarized in Table 1 below.
|Indicator||Explanation||Type of influence||Measuring method|
|Brand image||The enterprise gains agility when it is able to rapidly create a strongfavorable perception of its brand/brands among customers.||Direct correlation: enhanced agility due to better product/brand image.||quantitative research, numerical evaluation scales|
|Buyers’ perceived risk||The enterprise acquires agility when it is able to rapidly create a strong favourable perception of the limited buyer risk involved by the proposed product/brand.||Indirect correlation: enhanced agility due to the more favourable perception of a lower risk involved in buying the company’sproducts/brands (consumer protection against the purchasing risk).||quantitative research, verbal evaluation scales|
|Attitudes towards the product/brand||The enterprise gains agility when it is able to rapidly create a favourable attitude towards its offering and its approach to the market, etc. among its customers.||Direct correlation: higher agility due to a more positive attitude towards the company’s product/service.||quantitative research, attitude scales|
|Buying intentions||The enterprise gains agility when it is able to create a more defined buying intention among its customers.||Direct correlation: enhanced agility due to a more favourable rating of the intention to buy the enterprise’s products/brands.||quantitative research, numerical evaluation scales|
|Post-purchase satisfaction||The enterprise gains agility when it is able to rapidly create a higher level of customer satisfaction.||Direct correlation: enhanced agility due to a higher post purchase satisfaction.||quantitative research, numerical evaluation scales|
A closer look at the above literature gives the indication that marketing agility to ensure consumption value is a prioritized concept to new product development team. Thus the researchers become motivated to initiate a study to look into the existence of any relationship between enterprise agility and consumptions values as advocated by consumers.
3. Research Methodology
Quantitative research methodology is used to carry out the study. Both primary and secondary sources are used to collect information. Literature review results different parameters to explain agility and consumption values which are used to construct a questionnaire. Then the study is conducted to configure a fitting pattern between consumption values and underlying agility dimensions (Figure 2).
Mall-intercept method is used to collect responses. Five important shopping points are selected and customers are requested to fill up the questionnaire containing questions on different agility and consumption value constructs. A total of 325 usable questionnaires were received for analysis. Then SAS statistical software was used to analyze and manipulate data.
4. Analysis and Findings
This section gives a detail analysis of the study. The questionnaire has a section containing the demographic profile of the respondents. After collecting the responses, we used SAS statistical software to analyze the data profile and conduct a canonical analysis for finding the fitting pattern between agility dimensions and consumption values. The basic profiles of respondents are given below (Table 2):
|Age||Less Than 18||10.5|
|Between 18 & 35||82.3|
|More than 35||7.2|
|Monthly Income||Less than BDT 10,000||29.8|
|Between BDT 10,000 to BDT 30,000||35.3|
|More than BDT 30,000||34.9|
4.1. Reliability and Validity
Reliability and validity on the test instrument and survey is very important to use the survey data for drawing inferences. Thus, we have measured the reliability and validity to ensure that the statistical analysis is done on the basis of worthy data. Cronbach’s alpha (or correlation coefficients where the construct has only two variables) is used as the coefficient of reliability for testing the internal consistency of the constructs. The alpha coefficients for all of the constructs are in excess of 0.7, considered acceptable for exploratory research . The alpha coefficients (or correlation coefficients) are included in Table 3 below.
|Factors||Cronbach’s α value|
|Enterprise Agility||Brand Image||0.721|
|Consumption Values||Functional value||0.731|
Before conducting a canonical analysis between two clusters of concerned factors, we implemented the confirmative factor analysis for each factor in order to detect the content validity of questions. Most of the prepared questions for each factor are suitable for measuring the magnitude of performance except one question in the buying intention and two in the dimension of satisfaction.
|Enterprise Agility||Consumption Values|
|Brand Image||1||0.3636||3.8098*||Functional value||1||0.7966||12.4310*|
|Perceived Risk||5||0.5325||5.1750*||Social value||5||0.5016||6.0938*|
|Buying Intention||13||0.4409||4.6529*||Epistemic value||13||0.6528||11.5234*|
4.2. Canonical Analysis
The authors dropped three ineffective questions in the validity test and conducted a canonical analysis in order to discover the most correlated relationship between enterprise agility and consumption value. The analysis results two significant canonical correlation coefficients, that is, 0.627 and 0.583. The detailed linear combinations of these two canonical variables are listed in the Table 5. Besides, the Figure 3 shows the factor combinational path of the two canonical variates.
|Enterprise Agility (X)||Canonical variates||Consumption values (Y)||Canonical variates|
|Brand Image||-0.721||-0.132||Functional value||-0.738||0.384|
|Perceived Risk||-0.113||-0.729||Social value||-0.975||-0.432|
|Buying Intention||-0.219||-0.878||Epistemic value||-0.735||-0.043|
According to the canonical analysis, we found two type of significant relationship between agility dimensions and consumption values. The first combination indicates brand image, consumers’ attitude and post-purchase satisfaction has positive relation to having higher willingness of preferring high function, social value, enthusiastic feeling, and novelty to make them satisfied while using new product. We define the first canonical relationship (η1) as the behavioral-facilitated relationship. In contrast, the second combination emphasizes that the perceived risk combined with intention has the higher positive relation with the conditional value. This canonical relationship (η2) is defined as the situational-conditional relationship.
Brand image, attitude towards it and expected post-purchase level of satisfaction are the agility constructs that has impact on functional, social, emotional and epistemic value as per the first correlation. Consumers’ behavior is directly linked with the values of a product. Thus, selecting new product for ultimate satisfaction is rightly controlled by different agility factors which by turn bring consumption values. So, this fitting pattern between agility and consumption values indicates the achievement of satisfaction by the users of new product is dependent on significant values.
Another correlation indicates that the remaining agility constructs, namely, consumers’ perceived risk and buying intention, has direct relation with conditional value. Perceived risk and buying intention is too much situational and thus the value is also conditional. This fitting pattern between agility and consumption values reveals the importance of maintaining internal drive without dissonance to external uncontrollable variables, organization in perspective, and time conventions. In case of buying decision regarding new product, perceived risks become significant and thus buyer intention is guided by his risk characteristics. These agility factors are rightly influenced by the condition that comes from the market, product, nature and other factors.
Consumer decision making is the central part of consumer behavior. Different models of consumer behavior describe satisfaction as the final output of the decision process or incorporate it in the feedback mechanism linking completed experiences to future behavior. For example, some studies attribute the state of CS/D to the dominant interest in the "final act" of consumers that is the purchase of product. Further, the concept of CS/D is given greater emphasis in the works done by different researchers in the field of customer relationship management. In their consumer behavior models, satisfaction is shown as the final output in the framework of purchase decisions. These buyer behavior models postulate that if the actual outcome of a product is judged to be better than or equal to the expected, the buyer will feel satisfied. If, on the other hand, actual outcome is judged not to be better than expected, the buyer will be dissatisfied. This disconfirmation paradigm of CS/D can be also found in handful of researches.
A consumers decision and selection process is composed of a series of stages that results in selecting one product over the other. However, it has also been proven that consumers’ decision making is not rational either. If this is the situation, being agile is the way to deal with the irrational behavior of consumers. The research concludes that different forms of agility bring different types of consumption values. Marketers should target the dimensions of consumption values and choose the right agility constructs. It may bring a satisfactory level of customers’ satisfaction and improve the bottom line. To address customer satisfaction in a more focused way, the paper highlights the application of different agility dimensions while satisfying demanded values by the consumers. And the analysis reveals two different types of relationships (behavioral facilitated and situational conditional) which explain the hidden correlation between agility dimensions and consumption values in new product development process.