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Chapter 15
Beyond Consumer Relationships
Learning Objectives
After studying this chapter, students should be able to accomplish the following objectives.
15-1 List and define the behavioral outcomes of consumption.
15-3 Use the concept of switching costs to understand why consumers do or do not continue to
do business with a company.
15-5 Link the concept of consumer co-creation of value to consumption outcomes.
Lecture Example
Lecture Outline with PowerPoint® Slides
LO 15-1: List and define the behavioral outcomes of consumption.
I. Outcomes of Consumption [Instructor PPT Slides 4 and 5]
CB does not end with the transaction. In fact, a transaction can be a starting place. To help bring
customers back, many companies offer satisfaction guarantees. Are all companies really
interested in complete satisfaction? If consumers could not return to do business again, the
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pursuit of satisfaction would represent a purely altruistic exercise. Many firms might lose interest
in serving customers if the only opportunity to do business with them is in the first transaction.
Exhibit 15.1 illustrates post-consumption CB by expanding the disconfirmation framework
traditionally used to represent consumer satisfaction. Disconfirmation results from a cognitive
comparison of what a consumer thought would happen (expectations) with the consumer’s actual
performance perception.
Procedural justice, in particular, refers to the extent that consumers believe the processes
involved in processing a transaction, performing a service, or handling a complaint are fair. At
times, a consumer may think the process to get a refund was too difficult but may think the
refund itself was fair. In such a case, procedural justice contributes to inequity, but distributive
fairness contributes to equity, since the consumer believes the refund was just.
LO 15-2: Know why and how consumers complain and spread word-of-mouth and know
how word-of-mouth helps and hurts marketers.
II. Complaining and Spreading WOM
A. Complaining Behavior [Instructor PPT Slides 6 and 7]
Complaining behavior occurs when a consumer actively seeks out someone to share an
opinion with regarding a negative consumption event. The person may be a service provider,
a supervisor, someone designated by a company to take complaints or an institution like the
Better Business Bureau (BBB) or Federal Trade Commission (FTC). Consider a consumer
faced a wait. Making a consumer wait 30 minutes for lunch may be unacceptable and evoke
negative disconfirmation, a negative affective consequence, and encourage the consumer to
complain.
Complainers
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As one probably knows from one’s behavior, not all dissatisfied customers complain. In
fact, far less than half of customers experiencing some dissatisfaction complain to
management. Marketers have to assume that for every customer who complains about a
problem, there are ten more who experienced one but didn’t complain. Complaints,
however, are a prime source of information that can be used to make improvements to
goods and services.
Consumers who complain experience different emotions than do those who do not
complain. In contrast to consumers who are merely dissatisfied, angry consumers are very
likely to complain and, at times, the anger becomes very strong and reaches the stage of
rage. These consumers complain and more. In addition, consumers high in price sensitivity
are more likely to complain than consumers with some indifference about the price paid for
a service.
The Results of Complaining [Instructor PPT Slide 8]
Exhibit 15.2 provides a summary of what happens when consumers do or do not complain.
The fact of the matter is that for consumers as well as marketers, complaining pays off.
The BBB reports that over three out of four consumer complaints across all industries are
resolved satisfactorily. The following list gives service providers advice for handling
consumer complaints effectively:
• Thank the customer for providing the information.
• Listen carefully to understand the facts.
• Apologize sincerely.
• Show empathy for the customer.
• Explain the corrective action that will take place.
• Empower people to take corrective action quickly.
• Communicate clearly and professionally.
Today it’s easier than ever for consumers to complain publicly. Both the BBB (bbb.org)
and FCC (bbc.gov/complaints) offer formal opportunities to complain. These organizations
help facilitate responses from companies but they also make the complaints public.
Q: Ask students to share their experiences of being dissatisfied with a service. Did they
complain? What action was taken by the service provider to rectify the situation?
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Responses Pay Off
A host of evidence suggests that it’s better for companies to respond aggressively to
complaining. Companies sometimes do more than just offer a refund when a service has
gone bad. Sometimes, the something more comes in the form of a coupon or voucher that
amounts to a prepayment for future purchases. For firms that act slowly, taking a week or
more to respond, complaining consumers reduce their spending by a total of over $1
million per year.
The Result of Not Complaining
So, what happens when a consumer does not complain? When marketers can take action to
address a negative situation before a consumer complains, a very positive outcome can
result. These customers are likely to be very appreciative and become more likely to
maintain a relationship with the firm.
Revenge [Instructor PPT Slide 9]
On occasion, consumers’ verbal complaints to the marketing company do not eliminate the
negative emotions they are experiencing. Rancorous revenge is when a consumer yells
insults and makes a public scene in an effort to harm the business. Retaliatory revenge is
a term that captures these extreme types of behavior. Revenge often occurs out of feelings
of inequity; in particular, violations of procedural or interactional justice can lead to
revenge.
B. Word-of-Mouth/ Publicity [Instructor PPT Slide 10]
Negative word-of-mouth (negative WOM) takes place when consumers pass on negative
information about a company from one to another. Some estimates suggest that consumers
who fail to achieve a valuable consumption experience are likely to tell their story to an
average of 16 others, not including social media.
Negative Public Publicity [Instructor PPT Slide 11]
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When negative WOM spreads on a relatively large scale, it can result in negative public
publicity. Negative public publicity could even involve widespread media coverage. The
outcome of such events questions the old cliché that bad publicity is better than no
publicity at all. More and more consumers are turning to social media as a way of
spreading negative publicity. YouTube contains many videos with various consumer rants
about different companies. Spirit Airlines seems to have their share of videos about
unresponsive employees and long wait times. These sites can turn a complaint into
negative publicity—particularly when the complaint goes viral!
Q: Ask students to describe incidents where they participated in negative WOM and
positive WOM.
How should a firm handle negative public publicity? Here are some alternative courses of
action:
• Do nothing; the news will eventually go away.
• Deny responsibility for any negative event.
• Take responsibility for any negative events and be visible in the public eye.
• Release information allowing the public to draw its own conclusion.
Doing Nothing
Denying Responsibility
Denials can also be tricky given the potential to bring attention to something that may not
even be true. Denials should be made only when the evidence unambiguously supports the
actual truth.
Taking Responsibility
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One might easily see that attribution theory plays a role in dealing with negative publicity.
If consumers blame the company for the event surrounding the negative public publicity,
then the potential repercussions appear serious. However, public action to deal with any
consequences of a negative event can mollify any negative effects.
Releasing Information
Participating in Negative WOM
Consumers can be angry when they believe they have been wronged in this way, and these
actions are a small way of trying to get revenge. Consumers who spread negative WOM
without complaining to the company itself are particularly likely not to ever do business
with that company again.
Implications of Negative WOM [Instructor PPT Slide 12]
Third-Party Endorsements [Instructor PPT Slide 13]
Consumers often see publicity as more credible than advertising because the source is someone
other than the firm. A third–party endorsement represents one form of publicity in which an
ostensibly objective outsider (neither the customer nor the business) provides publicly
available purchase recommendations. These come in two forms.
• The first type makes recommendations based on cumulative consumer ratings.
• The second type involves recommendations from subject experts.
LO 15-3: Use the concept of switching costs to understand why consumers do or do not
continue to do business with a company.
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III. Switching Behavior [Instructor PPT Slide 14]
Exhibit 15.1 suggests that a consumer evaluates a consumption experience, reacts emotionally,
and then, perhaps, practices switching behavior. Switching, in a consumer behavior context,
refers to the times when a consumer chooses a competing choice, rather than the previously
purchased choice on the next purchase occasion.
All things considered, consumers prefer the status quo. Change brings about, well . . . change,
and this can mean costs that diminish the value of an experience. Thus, the consumer will incur
some switching costs, or the costs associated with changing from one choice
(brand/retailer/service provider) to another. Switching costs are one reason why a consumer may
be dissatisfied with a service provider but will continue to do business with them. Switching
A. Procedural Switching Costs
Procedural switching costs involve lost time and effort. Although Apple computers have a
stellar reputation for being easy to use, many computer users stick with PC models.
B. Financial Switching Costs
C. Relational Switching Costs
The relational switching cost refers to the emotional and psychological consequences of
changing from one brand/retailer/service provider to another.
D. Understanding Switching Costs [Instructor PPT Slide 15]
Exhibit 15.3 demonstrates conventional consumer behavior theory that explains switching
costs. Consumers become dissatisfied for any number of reasons, and these reasons and
dissatisfaction together determine how likely a consumer is to return on the next purchase
occasion. Equity judgments, in particular perceptions of unfair treatment, are particularly
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prone to lead consumers to switch. Perceptions of unfair prices may make consumers
temporarily angry, but they also create lasting memories.
Q: Ask students to provide an example to illustrate the concept of switching. What
switching costs did they incur?
E. Satisfaction and Switching [Instructor PPT Slide 16]
The intermingling of consumer satisfaction/dissatisfaction and switching costs has received
considerable attention. In fact, in addition to the measurement difficulties associated with
CS/D, switching costs are another important reason why CS/D results often fail to predict
future purchasing behavior. Exhibit 15.4 summarizes how vulnerable a company is to
consumer defections based on the interaction between switching costs, competitive intensity,
and consumer satisfaction.
LO 15-4: Describe each component of true consumer loyalty.
IV. Consumer Loyalty
A. Customer Share [Instructor PPT Slides 17 and 18]
Marketing managers have come to accept the fact that getting business from a customer who
has already done business with the company before is easier than getting a new customer.
This basic belief motivates much of relationship marketing. One important concept is
customer share, which is the portion of resources allocated by a consumer to one brand from
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among the set of competing brands. Some managers use the term share of wallet to refer to
customer share. Exhibit 15.5 illustrates customer share.
Consumer Inertia
The concept of consumer inertia presents an analogy. Consumer inertia means that
consumers will tend to continue a pattern of behavior until some stronger force motivates
them to change. In fact, resistance to change is one of the biggest reasons why new
products fail in the marketplace. Change often means consumers must give up something.
Loyalty Programs
Many marketers have experimented with loyalty cards or programs as a way of increasing
customer share. A loyalty card/program is a device that encourages repeated purchasing
and keeps tract of the amount of purchasing a consumer has had with a given marketer (as
well as a list of actual items purchased by the consumer); more spending generally brings
more rewards in one form or another.
Q: Are loyalty cards important to you as a consumer? Do you shop in certain places
because of your loyalty card?
B. Customer Commitment [Instructor PPT Slide 19]
True consumer loyalty consists of both a pattern of repeated behavior as evidenced by high
customer share and a strong feeling of attachment, dedication, and sense of identification with
a brand. Customer commitment captures this sense of attachment, dedication, and
identification. Exhibit 15.6 depicts the components of loyalty. Customer share is behavioral,
and commitment is an affective component of loyalty.
Highly committed customers are true assets to a company. They are willing to sacrifice to
continue doing business with the brand and serve as a source of promotion by spreading
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positive WOM.
C. Preferred Customer Perks [Instructor PPT Slide 19]
Loyalty programs reward good customers with perks. From a behavioral learning perspective,
these can be regarded as rewards that condition behavior so that consumers repeat good
D. Antiloyalty [Instructor PPT Slide 20]
Loyalty is almost always discussed from a positive perspective. However, at times consumers
act in an antiloyal way. Antiloyal consumers are those who will do everything possible to
avoid doing business with a particular marketer. Antiloyalty is often motivated by a bad
experience between a consumer and the marketer that the marketer could not redress.
E. Value and Switching [Instructor PPT Slides 21 and 22]
Exhibit 15.7 reproduces the center portion of the Consumer Value Framework (CVF). The
exhibit clearly shows that value plays a role in the post-consumption process. For a host of
LO 15-5: Link the concept of consumer co-creation of value to consumption outcomes.
V. Link the Concept of Consumer Co-creation of Value to Consumption Outcomes
[Instructor PPT Slide 23–25]
A. Relationships and the Marketing Firm
Marketers have come to realize that the exchange between a business and a consumer
constitutes a relationship. Two factors help make this clear:
• Customers have a lifetime value to the firm.
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improved performance. Generally, relationship quality represents the degree of
connectedness between a consumer and a retailer. When relationship quality is high, the
prospects for a continued series of mutually valuable exchanges exist. When consumers are
truly loyal, and this loyalty is returned by the marketer, relationship quality is high.
Q: What is your favorite brand of soap or cereal? Are you exhibiting brand loyalty or
inertia?
B. Value and Relationship Quality
A healthy relationship between a consumer and a marketer enhances value both for the
consumer and the marketer. For the consumer, decision making becomes simpler, enhancing
utilitarian value, and relational exchanges often involve pleasant relational and experiential
elements, enhancing hedonic value. For the marketer, the regular consumer does not have to
be resold and thus much of the selling effort required to convert a new customer is not
necessary. Exhibit 15.9 displays some of the characteristics of a marketing relationship that is
very healthy.
Q: Ask students to analyze the relationship that they share with their cell phone service
provider.
Video material for this chapter is starting on page 19 of the IM.
End of Chapter Material
Review Questions
(*) Indicates material on prep cards.
1. *What are the cognitive and affective components that help shape post-consumption
behavior?