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8/10/2019 Industry CharIndustry characteristics and consumer dissatisfactionacteristics and Consumer Dissatisfaction
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8/10/2019 Industry CharIndustry characteristics and consumer dissatisfactionacteristics and Consumer Dissatisfaction
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2 0 THE JOURNAL OF CONSUMER AFFAIRS
ing the relationship between industry characteristics and consumers'
responses to dissatisfaction. Specifically, the paper utilizes a con-
ceptual framework, based largely on Hirschman's (1970) model, to
propose several hypotheses for the impact of industry characteristics
on consum ers' responses to perceived dissatisfaction (e.g., complaint
behaviors), sellers' responsiveness to complaints, and consumers'
satisfaction with sellers' response (e.g., redress). Hirschm an's model
has received extensive attention in the political science literature (see
Laver 1976 for review), and its applications in psychology (e.g.,
Rusbult, Johnson, and Morrow 1986), organizational behavior (e.g..
Spencer 1986), and consumer behavior (e.g., Andreasen 1985; Singh
1990) have begun to appear. A s such, H irschm an's model is likely to
offer a solid foundation for developing the conceptual framework
and positing testable hypotheses. Following this, the paper empir-
ically examines the proposed hypotheses utilizing a purposive selec-
tion of three service industries. Because services usually entail higher
consumer dissatisfaction than manufactured products (Best and
Andreasen 1977;Marketing News 1980), it is desirable to focus on
service industries. In addition, the hypotheses are tested under
several different contingencies so as to ascertain the stability and
validity of the underlying processes. Moreover, this allows delinea-
tion of dissatisfaction responses into one of three categories: (a)
macro-drivenresponses, i.e ., where industry characteristics play a
dominant role on consumers' responses, (b)micro-drivenresponses,
i.e., where individual factors play a dominant role, and (c)
mixed
responses, i.e., where both industry and individual factors interplay
in affecting dissatisfaction responses. Finally, several implications
for researchers, managers, and public policy officials are elaborated.
The paper begins with a discussion of the conceptual framework.
CONCEPTUAL FRAMEWORK
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SUMMER 1991 VOLUM E 25, NUM BER 1 2 1
corrected within the marketing system. For such reparable lapses,
Hirschman posited that no external (e.g., government) regulation is
necessary in the interest of societal and consumer welfare. Alterna-
tively, some industries may be characterized by a general status of
irreparable lapses, thatis,when atrophy in firms and their outputs
goes uncorrected within the system; resulting in continued decline in
the performance of firms, product quality, consumer satisfaction,
and , consequently, societal welfare. Some form of regulation is man-
datory in this case to stem the deterioration of consumer and social
welfare.
Interestingly, the key mechanisms identified by Hirschman as
underlying reparable or irreparable lapses are closely related to con-
sumer dissatisfaction. In particu lar, processes related to , ho w con-
sumers respond to perceived dissatisfaction? and how sellers in
different industries react to dissatisfied consum ers' resp onses? are
thought to be central to an understanding of the general, long-term
status (i.e., reparable or irreparable) of lapses within a given industry
(Andreasen 1988). Because of Iheir centrality, each of
these
processes
is discussed in greater detail.
Consumers' Responses to Dissatisfaction
A dissatisfied consumer, according to Hirschman, has three poten-
tial options: (a) exit, (b) voice, and (c) loyalty. By exit a consumer
voluntarily terminates an exchange relationship such as by switching
patronage to another product, service, and/or retailer. Exit is per-
ceived as pain fu l since it involves certain am ount of effort, such as
switching costs and searching for alternatives. In contrast, voice is
conceptualized as an attempt to change rather than escape from an
objectionable state of affairs. Most voice attempts are directed at
sellers and entail effort and motivation on the part of consumers.
Interestingly, Hirschman views the loyalty option passively because
lo yal consumers neither exit nor
voice.
They continue to stick with
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2 2 THE JOURNAL OF CONSUMER AFFAIRS
to unsatisfactory experiences, ranging from complaining to friends
and relatives (negative word-of-mouth, W-O-M) to seeking redress
from third parties (e.g., consumer protection agencies, courts, etc.).
Recently, Singh (1988) found that a parsimonious structure underlies
the various dissatisfaction responses. His results show that a three-
dimensional structure appears to be congenial with data and evi-
dences discriminant and external validity. Specifically, this structure
consists of: (a) voice dimension, encompassing responses directed
towards parties directly involved in the dissatisfying experience (e.g.,
salesperson, retailer, seller),
(h)private
dimension, including negative
W-O-M communication (e.g., to friends and relatives) and exit from
exchange relationship, and (c)third-partydimension, involving com-
plaints to formal agencies not directly involved in the exchange rela-
tionship (e.g., consumer agencies).
Furthermore, CCB literature suggests that consumers often utilize
a wide variety of responses that can be successfully categorized into
the preceding three dimensions (Singh 1988). For this reason, it
appears desirable to explicitly recognize and consider voice, private,
and third-party responses. Although Hirschman's model does not
include such a diversity of responses, the key hypotheses in his frame-
work easily submit themselves to such extension (cf., Singh 1990).
Note that these dimensions are not posited as mutually exclusive
responses. Instead, the framework accepts that consumers may often
engage in multiple responses; such as voice and private responses.
Sellers' Reactions to Consumers' Responses
Hirschman posits that sellers' reactions to consumers' responses
will vary significantly depending upon the nature of the industry
involved in the dissatisfying experience. In order to highlight these
effects, he identified three typical industry structures: (a) competi-
tive,(b) monopolistic, and (c) loose monopoly. A
com petitive
struc-
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SUMMER 1991 VOLUME 25, NUMBER 1
2 3
Not surprisingly, competitive firms are alert and responsive to con-
sumer complaints should dissatisfaction be voiced. Hirschman likens
this mechanism to the Invisible Hand, th e sort of mechanism eco-
nomics thrives o n (15).
On the other hand, am onopolisticstructureisdescribed by a single
firm, no alternatives for consumers, and very high switching costs
because the only other option is to go without the focal product/
service. In this situation , dissatisfied consum ers have no choice but to
voice. In tu rn, voice provides the key mechanism for comm unicating
dissatisfactions to management, and collective voice sets in motion a
process that could repair lapse s in such firms.
Andreasen (1985, 137) observes that most contemporary industries
are neither fully competitive nor completely monopolistic markets.
Instead, they are characterized by loose monopoly conditions. For
this reason, Hirschman especially focused on such industry structures
(as will this study). Although Hirschman did not explicitly identify
the key attributes of loose monopoly markets, based on his original
work and subsequent expositions by Andreasen (1984; 1985) six key
characteristics can be deduced. These are shown in Table 1.
Ideally, theloosemonopolycondition occurs when consumers per-
ceive that: (a) few alternatives to the offending product/service are
available (AALT), (b) their knowledge about different offerings is
limited (RINFO), (c) they are unable to detect poor product/service
(CKNO), (d) the time gap between buying a product/service and
finding out that it was of poor quality is long (LRCY), (e) complaint
actions (voice/private) leave little impact on the sellers/providers
(LIMP), and (f) several psychological inhibitions dissuade them from
complaining about poor product/service (PCOS). Andreasen's
research shows that the physician care indust ry meets most of
these criteria.
When consumer dissatisfaction occurs in such loose monopoly
markets, Hirschman posits that consumers would tend to neither
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2 4 THE JOURNAL OF CONSUMER AFFAIRS
TABLE 1
KeyDimensionsof Loose Monopoly Construct and itsOperational Measures
(Listed Itemsare for Auto-RepairCategory)
Dimension Definition/Operational Items
Availability of Alternatives (AALT)
Definition.
Consumers' beliefs about availability of alternative providers/sellers wh
would provide better product/service and/or care more about customer satisfaction
Hirschman notes that in a loose monopoly although alternatives are available they are no
perceived as providing better product/service (1970, 24-25, 44-45).
Operational
Items.
(1) One could change the auto-repair shop one goes to , but there is n
guarantee that the other shop would care more about customer satisfaction. (2) One can
always find another auto-repair shop which provides comparable or better parts and/o
service (reversed).
Restricted Information (RINFO)
Definition.
Consumers' perceptions about the customs (or norms) prevalent in an industr
that restrict the amount of information available to customers. Examples of such custom
are discouragement of advertising and comparison shopping practices. Such restrictive
customs are usually common in loose monopolies (Hirschman 1970, footnote 27; Andrea
sen 1985).
Operationai
Items.
(1) Most auto-repair shops advertise about the parts and services the
provide (reversed). (2) It is appropriate to visit an auto-repair shop just to check prices
(reversed). (3) Auto-repair shops provide customers with enough information about the
parts/services needed (reversed).
Consumer Knowledge (CKNO)
Definition.
Consumers' beliefs about their ability to judge the quality (e.g., if it is poor) o
the various products/services offered by different industries. Hirschman observes that for
loose monopolies, buyers are usually unable to detect poor product/service (1970, 24-25)
Operationai
Items.
(1) One can obtain published evaluations for the service quality pr
vided by different auto-repair shops (reversed). (2) Most consumers are able to detect if the
parts and/or service they obtained from an auto-repair shop were of poor quality
(reversed).
Long Repurchase Cycle (LRCY)
Definition.
Consumers' perceptions about the time it takes between buying a product
service and finding out that it was of poor quality in different industries. Andreasen (1984
notes that loose monopolies are generally characterized by longer LRCY, thus making pro
viders less responsive to customer problems.
Operationai Items.
(1) It often takes a long time (e.g., several months) to find out that wh
you got fixed from an auto-repair shop was of poor quality. (2) It is easy to tell when a par
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SUMMER1991 VOLUME25,NUMBER1 2 5
TABLE 1 {continued)
Dimension Definition/Operational Items
Operational
Items.
(1) Most auto-repair shops are eager to satisfy you if you tell them that
you are dissatisfied (reversed). (2) Many auto-repair shops would not care even if you told
them that you would never come to them gain.
Psychological Costs (PCOS)
Definition.Consumers' perceptions about the psychological costs or inhibitions involved in
taking some action in response to poor quality product/service in different industries.
Loose monopolies are usually characterized by psychological inhibitions on the part of con-
sumers to take voice and/or exit actions (Hirschman 1970, 26).
Operational
Items.
(1) It is appropriate to complain to auto-repair store manager about
poor par ts or service (reversed). (2) It is important to build a relationship with auto-repair
personnel (e.g., manager) to obtain good service. (3) No explanation is necessary if one
decides to stop patronage of an auto-repair shop.
edge to complain effectively (Andreasen 1984). As such, in loose
monopoly markets, channels for communicating quality declines are
relatively blo ck ed . A mechanism tha t can correct for lapses in
such markets is largely absent, resulting in higher levels of consumer
dissatisfaction and lower societal welfare.
Furthermore, Hirschman (1970) observes that because there are
some competitors, a loose monopoly further blunts the impact of
market forces in regulating the industry. This occurs because the more
knowledgeable and sophisticated consumers, who might normally
voice complaints and regulate the actions of sellers (e.g., as in a
monopolistic condition), tend to exit because they are aware of alter-
natives and are sufficiently aggressive to switch (Andreasen 1984). At
the same time, other consumers swallow their dissatisfacion believing
that they have few options and, consequently, appear to be lo ya l
to the seller. This flight of sophisticated consumers combined with
the loyal ty of the majority affords sellers in loose monopolies
many of the benefits of a t r u e monopoly without the aggravation
of voice that the latter must endure (Hirschman 1970; Andreasen
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2 6 THE JOURNAL OF CONSUMER AFFAIRS
those industries that were highly likely to exhibit different am ounts
of loose monopoly conditions. This variation is germane to fully
understanding the impact of industry structure on consumer dissatis-
faction. A combination of secondary (i.e., published studies) infor-
mation and a pilot study were utilized to facilitate this selection.
PILOT STUDY: SELECTING SERVICE INDUSTRIES
The aim was to select three service industries that were at the
high
(i.e., depicts most, if not all, features of loose monopoly markets),
low
(i.e., portrays few characteristics of loose monopoly markets)
and
midpoints
along the loose monopoly continuum. This selection
was arrived at by implementing the following steps. First, secondary
data and published studies were collected for several service indus-
tries. Second, these data were analyzed with a view to formulate a
preliminary choice for three industries that met the preceding cri-
terion. This analysis narrowed the choice to
medicalcare, automotiv
repair, andgrocery retailingservices. Third , a profile for the select
industries on each of the loose monopoly characteristics (Table 1)
was developed. This profile is summarized in Table 2.
Table 2 reveals that while medical care and grocery retailing denote
the high and low points, respectively, on the loose monopoly con-
tinuum, automotive repair falls somewhere in between. Andreasen's
research offers support for the location of medical care industry. For
automobile repair, note that consumer knowledge about (and ability
to judge) service problems is usually limited (Day and Landon 1976),
long repurchase cycles are common, and few be tter alternatives
are available. By contrast, few psychological barriers exist since
research shows that consumer complaints are highest for auto-repair
problems (Best and Andreasen 1977). For grocery industry, a review
suggests that it exhibits few, if any, features of loose monopoly
markets (Reese and Alexander 1985). Consumers have significant
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SUMMER 1991
VOLUME25,>fUMBER 1
27
TABLE 2
Evaluative Sum mary ofThree Service Categories
on Loose MonopolyCharacteristics
BasedonSecondaryData)
Industry
Characteristic Grocery Auto-Repair Medical Care
LT
RINFO
KNO
LR Y
LIMP
P OS
Many competing
firms with no
dominant player
{Progressive Grocer
1983)
Few, if any, restric-
tions in the flow of
information(Pro-
gressive Grocer 1981)
Easy to judge quality
Relatively small
because of its
perishable nature
No information
available
No inhibitions in
complaining
Many options are
available (Webbink
1978)
Effort is required to ob-
tain information (e.g.,
quotes) (Ritchie, Clax-
ton, and Claxton 1979)
Relatively difficult to
ascertain quality
because of technical
nature (Day and
Landon 1976)
Varies from long to
very long
Little impact because
complaints about
auto repair to third
parties are highest
(Bearden, Crocket,
and Graham 1979)
Few hindrances in
complaining (Bearden,
Crocket, and Graham
1979)
Supply of physicians is
restricted (Andreasen
1985)
Advertising and price
communication is not
customary (Cahal
1962)
Complex service; very
difficult to assess
quality (Benham and
Benham 1975)
Varies; generally
relatively long
(Andreasen 1984)
Many consumers per-
ceive doctors to be
unresponsive to
patient problems
(Andreasen.1985)
Complaining is
generally considered
inappropriate
(Andreasen 1984)
Operationalization
of the Loose M onopoly Construct and
ResearchDesign
Initially 18 items were developed (based on definitions in Table 1)
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2 8 THE JOURNAL OF CONSUMER AFFAIRS
nonrandom sample of faculty and staff (excluding marketing faculty).
Two reasons suggest why this sample may not produce overly biased
results: (1) as household members, the focal sample has had some
experience with the three service categories selected, and (2) giving
equal representation to staff and faculty reduces, to some extent, the
effect of certain systematic biases (e.g., highly educated sample).
Nevertheless, the limitation of a systematic sample is recognized. A
total of51 responses were received (90 percent response rate). None
had missing values. All responses were confidential. A five-point
Strongly Agree-Strongly Disagree Likert scale was utilized, with
higher numbers representing greater agreement with the prevalence
of a loose monopoly characteristic.
Findings andDiscussion
Several conclusions can be drawn from the results of pilot study
(Table 3). First, the null hypothesis that the mean values are equiva-
lent for the three service categories is rejected for the overall measure
(F = 54.33,p < .001) as well as for the various dimensions (F-values
range from 5.79 to 52.46) of the loose monopoly construct. The only
exception is the AALT dimension for which the F-statistic is border-
line.This suggests that the service categories differ significantly along
the loose monopoly continuum. Second, medical care depicts the
highest mean value for individual dimensions as well as overall sum-
mary measure, with the only exception lack-of-impact (LIMP)
dimension. This pattern supports the contention that, of the three
industries investigated, medical care service is most like a loose
monopoly.
Third, the lowest mean values occur consistently for grocery ser-
vice category. For the summary measure and five of the six dimen-
sions, consumer perceptions concerning grocery industry were low-
est. The only exception is CKNO, for which the mean value for
grocery category is higher in magnitude than that for automotive
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25,
NUMBER1 3 1
H i: The incidence of voice actions will vary significantly across the
three service industries investigated.
H2:
The incidence of voice actions will be the lowest in medical care
industry, and the highest in grocery retailing. For autoniotive
repair, the use of voice would lie somewhere in hetween the pre-
ceding extremes.
It can be deduced from Hirschman's theorythat privateresponses
(i.e.,
exit and negative W-O-M) would tend to be more frequently
utilized the less a given industry manifests loose monopoly condi-
tions.When dissatisfaction involves grocery products, exit is a likely
response. This is so because better alternatives (e.g., competing
grocery stores) are available and psychological inhibitions for exit are
absent. Negative W-O-M responses are generally uninhibited for
markets such as grocery retailing. By contrast, private responses are
likely to be less prevalent in medical care dissatisfaction because the
nature of the industry presents few payoffs from such actions. Thus,
the following hypotheses were proposed.
H3:
The incidence of private action s will vary significantly across the
three service industries investigated.
H4:
The incidence of private actions will he lowest in the medical
care industry. For grocery retailing industry, private actions
would he the most frequent response, and somewhere in be-
tween for automotive repair.
In the preceding hypotheses, private actions are considered as a
combination of exit and negative W-O-M CCB, Although consistent
with previous research (Singh 1988), important differences between
these CCB should be noted in terms of m arket signals.^ Exit provides
a direct market signal to the seller via loss of market share. In con-
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3 2 THE JOURNAL OF CONSUMER AFFAIR
W-O-M is likely to be powerful market signal. Because of these di
ferences, hypotheses H3 and H4 were examined separately for ex
and W-O-M actions.
Unfortunately, Hirschman did not consider third-party action
Key concepts in his model can be extended to subsume such action
Most likely consumers will utilize third-party channels for resolvin
their dissatisfaction when direct mechanisms (e.g., voice) are n
fruitful or are perceived to be unresponsive. It follows tha t con
sumers would tend to use more third-party actions the more a give
industry displays loose monopoly conditions. This is because voic
actions in such industries are either discouraged or lack much impac
Consequently, third-party actions provide an alternative, and i
some circumstances, the only avenue for redress. Previous studi
have not focused on the variation in third-party behaviors acros
industries with different market structures. Therefore, the followin
hypotheses were proposed.
H5:
The incidence of third-party actions will vary significan
across the three service categories.
Hfi:
The incidence of third-party action s will be highest in the med
cal care industry. For grocery retailing industry, third-par
actions would be the least frequent response, and somewhere
between for automotive repair.
Perceived Responsiveness
The extent of loose monopoly conditions in an industry is also lik
ly to impact on consumers' perceptions about the responsiveness o
providers to their just complaints. Specifically, in industries depic
ing high levels of loose monopoly conditions (e.g ., medical care), di
satisfied consumers might perceive that providers are not general
receptive to complaints, and the likelihood of obtaining redress
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1991 VOLUME 25, NUMBER 1 3 3
monopoly conditions (e.g., grocery retailing) are more likely to foster
a sense of responsiveness to customer complaints in order to survive.
Unfortunately, the preceding aspect of H irschman's theory has not
been directly tested. Instead, there is considerable indirect evidence.
In many service and product industries, managers have attempted to
thwart the threat of increasing competition with increasing respon-
siveness to customer com plaints. The autom obile industry is a case in
po int. After several years of languishing in a state of
loose
monopoly,
this industry was awakened by increasing foreign competition. In
response to this competition, the U .S. auto industry focused on con-
sumer satisfaction and responsiveness to customer problems as the
pivotal point for a co m eb ac k strategy (e.g., M urtha 1989). Sellers
(1988,
94) documents similar changes in other industries and con-
cludes, with consumers smarter, choosier, and more demanding
than ever before, courting the complainers has become an essential
part of bus iness. Based on the preceding discussion, the following
hypotheses were examined.
H?: The perceived responsiveness of providers to consum ers' com -
plaints will vary significantly across the three service industries
investigated.
Hs: The responsiveness of providers to consum ers' complaints were
perceived to be the lowest in medical care industry, and the
highest in grocery retailing. For automotive repair, providers'
responsiveness would lie somewhere in between the preceding
extremes.
Satisfaction with Response
Consistent with the preceding arguments, it follows from Hirsch-
m an 's model that the more an industry displays loose monopoly con-
ditions, the greater the likelihood that consumers will remain dissatis-
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3 4 THE JOURNAL OF CONSUMER AFFAIR
satisfaction (than the case for loose monopolies) in customers wh
voice their dissatisfaction.
Research has not systematically evaluated the preceding hypothe
sis.
However, some early studies are suggestive of empirical suppo
for these arguments (Andreasen 1988). Best and Andreasen (1977
report that far fewer people (34.5 percent) perceived that their voice
problems were satisfactorily addressed for medical/dental problem
when compared to other services (44 percent). Consequently, th
following hypotheses were proposed.
H9: The consum ers' satisfaction w ith providers' response to vo i
will vary significantly across the three service industries inves
tigated.
Hio: The consum ers' satisfaction level w ith providers' respons
would be the lowest in m edical care industry, and the highest i
grocery retailing. For automotive repair, this satisfaction leve
would lie somewhere in between the preceding extremes.
Evaluating Hypotheses Hi to Ho
Under
Different Contingencies
The results obtained for the preceding hypotheses were furthe
evaluated by exploring the effects of several contingencies. In pa
ticular, effects due to sex, age, education, income, and level of per
ceived dissatisfaction were examined. These variables were selecte
because previous CCB research suggests that they have importan
influences on consumers' responses to dissatisfaction (e.g., Sing
and Howell 1985). For each variable (e.g., sex), the sample wa
divided into two groups (e.g., male and female), and the variou
hypotheses were then tested individually. Differences in results acros
the two groups for each hypothesis were noted. This offered a
opportunity for deeper understanding since the vjiriability in result
due to different contingencies can be empirically ascertained. I
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SUMMER
1991
VOLUME25,NUMBER
1
3 5
under different contingencies (e.g., for males and females separately
in the case of sex contingency) for each hypothesis. If results
under different contingencies are generally consistent with aggregate
results, then they imply that the underlying process is relatively insen-
sitive to variation in individual differences; instead, they may reflect
stable characteristics of the industries investigated. In this instance,
the underlying process is categorized as macro-driven. On the other
hand, if results are highy sensitive to individual differences (i.e.,
aggregate results are largely inconsistent with those obtained under
each of the different contingencies), the underlying process is cate-
gorized as
micro-driven.
Finally, where aggregate results are consis-
tent with findings for some, but not all, of the contingency variables,
the underlying process is thought to reflect a combination of indi-
vidual and industry characteristics; in this sense, it ismixed.It should
be noted that the preceding categorization is based on the contin-
gency variables investigated. Use of other contingency variables
might yield different categorizations. Because it is nearly impossible
to include all potential contingency variables in a single study, read-
ers should note this as a limitation of the study and a point for fur-
ther research.
THE STUDY
Data Collection
Different mail questionnaires were developed for each of the three
service industries. Per usual practice, items (see measures below)
were modified somewhat to be relevant to each industry. The popula-
tion of interest was defined as households that had a dissatisfying
experience with a given service category (e.g ., medical care). Because
sampling frames of such a popu lation are not easily available, a sub-
stitute procedure, suggested by Robinson (1979) where a random
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3 6 THE JOURNAL OF CONSUMER AFFAIR
Response rates cannot be precise because this involves estimatin
the proportion of the number of respondents to the number o
households who had experienced a dissatisfaction with a specific ser
vice category. The denominator of this proportion, households tha
had a dissatisfying experience, is an elusive number. However, tele
phone callbacks provided some estimate for this term. In all 1,50
telephone callbacks were made, 500 for each service category. Tele
phone numbers were obtained from the crisscross directory. A con
tact rate of about 80 percent was achieved (up to three calls wer
made to those not initially reached). Of those contacted, at least 7
percent stated that they had not responded because they could no
recall a dissatisfying experience with the specific service category. I
contrast, those who had experienced a recen t problem were eage
to participate and let some one kn ow about their dissatisfaction
The dissatisfaction experience rate of 30 percent based on telephon
callbacks is consistent with research (Best and Andreasen 1977). Bes
and Andreasen (1977) report that 21 percent of their sample ha
experienced some dissatisfaction with automotive repair. For othe
categories, the rate was much lower. Thus, the 30 percent estimat
appears to be rather liberal. Based on this liberal estimate for the per
centage of households that had experienced some dissatisfaction,
pessimistic estimate of response rates for the three surveys are auto
mobile repair = 52 percent; medical care = 54 percent; and grocer
shopping = 59 percent. Some responses had to be excluded becaus
of incomplete data. Usable responses range from 116 in automotiv
repair to 125 in medical care. Table 4 summarizes the demographi
characteristics from the three surveys.
Measures
Respondents were asked to describe a dissatisfying experience i
the service category that they remembered most clearly. Measures fo
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3 8 THE JOURNAL OF CONSUMER AFFAIR
plained to the store on my next trip , (2) went back to the store imme
diately and asked them to take care of the problem, (3) called up th
store and told them about the problem); private actions by two item
(e.g ., for auto repair: (1) decided never to shop again at that store, (2
told friends and relatives about my bad experience); and third part
actions by two items (e.g., for auto repair: (1) complained to a con
sumer agency (e.g.. Better Business Bureau), (2) took some forma
action against the store). For all seven items, a dichotomous (Yes
No) scale was utilized. Multiple responses were allowed. Response
were coded as either 0 (No) or 1 (Yes). Specifically, if an individua
reported Y es to any one or more voice items, the voice measur
was coded as 1, otherwise a zero was recorded. Similar coding wa
implemented for private and third-party measures.
Perceived responsivenesswas assessed by asking the respondent
rate the likelihood that the provider would take remedial actio
assuming the respondent had complained to the provider (i.e., voic
action). In all, four items were used to assess this measure utilizing
six-point Very Likely-Very Unlikely Likert scale. These items ar
listed in Table 7 (first column).
Satisfaction with response was measured by utilizing a ten-poin
N ot Satisfied at Ail-Completely Satisfied scale. Respondents wer
asked to record how they felt about the whole incident after they ha
taken a complaint action.
Perceived level of dissatisfaction
with the reported unsatisfacto
experience was assessed by utilizing a ten-point N ot at All Satisfied
Completely Dissatisfied scale. Respondents were asked, Overal
how dissatisfied were you
before
you did anything about the prob
lem? (emphasis original). Finally, information regarding severa
demographic variables (e.g., age, sex, education, and income) wa
obtained for classification purposes. The specific variables utilize
and the distribution of respondents across these variables is provide
in Table 4.
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SUMMER 1991 VOLUM E25,NUMBER 1 3 9
ing a contingency table. A x^ statistic provided a basis to test these
hypotheses. In addition, Cramer's V was calculated to obtain mea-
sures of association in the contingency tables (Kendall and Stuart
1979,588). Followingthis,hypotheses Hz, H4, and
He
were tested by
examining frequency counts for each service category. This testing
focused on ascertaining the match between the pattern of variation
for actual CCB with the hypothesized pattern based on Hirschman's
theory.
Results are summarized in Table 5. For voice and private re-
sponses, the variation across three service categories is significant (x^
values of 41.2 and 32.04, p
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SUMM E R 1991 VOL U ME 2 5 , NUM BE R 1 4 1
ferent levels of dissatisfaction, age, educational background, income
levels, and sex of the respondents are summarized in Table 6. In this
table, the support for the individual hypothesis is evaluated as being
consistent (indicated by Y ES ) or as being inconsistent ( N O )
with the aggregated results of Table 5. In terms of overall support
(see Table 6), hypothesis Hi is strongly supported because, under all
contingencies, the results are consistent with aggregated results.
Variation in
voice
response across the service categories appears to
stem from systematic differences in the three industries, rather than
as an effect due to individual differences. Likewise, results for
hypothesis Hs (Table 5) also evidence strong support under different
contingencies. In this case, lack of systematic variation across the ser-
vice categories is reaffirmed. For/>r/vfl/e responses, results are mixed.
In three of the ten levels of contingencies (i.e., low level of dissatis-
faction, high age group , and male respondents), the results for
H3
are
inconsistent with aggregated data. Similar results emerged when exit
and W-O-M were analyzed separately (for this reason, they are not
shown in Table 6). Variation in private responses appears to be a
joint function of underlying structural factors of industries and sev-
eral individual variables.
In order to further understand these joint effects. Table 6 also
evaluates the overall effect of different contingencies. The effect is
categorized as s tr ong if the results differ substantially for low and
high levels of a contingency variable. For instance, the effects for
level of dissatisfaction are s tr ong since while H3 is not supported
under low dissatisfaction (x^ = 1.2, p = .54), it is strongly sup-
ported when dissatisfaction is h ig h (x^ = 32.0, p < .01). In addi-
tion , the effects for H , are much stronger under h ig h dissatisfac-
tion (x^ = 37.7, p < .001) than under the low condition (x^
= 9.4, p < .01). This suggests that under h ig h dissatisfaction
level, the hypothesized effects of loose monopolies become more
prominent.
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42 THE JOURNAL OF CONSUMER AFFAIRS
TABLE 6
Effects on the
Results
for Hypotheses
H,, H3,
a nd
H5,
under
Different
Contingencies
Contingency
LeveP
Level of
Dissatisfaction
Low
High
Age
Low
High
Education
Low
High
Income
Low
High
Sex
Male
Female
Overall
Support
H ,
Support
Yes
(
Yes
(
Yes
(
Yes
Yes
(
Yes
(
Yes
(
Yes
(
Yes
(
Yes
(
Strong
x
9.4
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44 THE JOURNAL OF CONSUMER AFFAIR
TABLE7
Results for Variance
in
Perceived Responsiveness
(Test of Hypotheses
H,and H,)
Responsiveness Item F-value''
Mean Values'
Grocery
Assume you reported the incident to the store.
how likely is it that the store
1. apologize but do
nothing
^
2.
take appropriate action
to take care of your
problem
3. solve your problem and
give better service to
you in the future
4. be more careful in
future and everyone
would benefit
Multivariate Results
Wilks'X
F-value
p-value
'would. .
12.21
(
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SUMMER
1991
VOLUME25,NUMBER1
45
o
X
I
2
o o
z z
o
O
>-z
* *
s
I
I
U3
a
^- a
g a
I 5
3 I
-a
3
s
g'.g I 5
ill
1-2 I
If
H I .2
11
S Sb
9
o
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4 6 THE JOURNAL OF CONSUMER AFFAIRS
of overall support, the results for item 2 (i.e., take appropriate
action to take care of your problem ) are strongly supported, while
item
1
(i.e., apologize but do no thing ) receives mixed support. I
contrast, support for item 3 is weak since in four of the ten levels the
results are inconsistent with aggregate data. Likewise, for item 4,
results are inconsistent for six of the ten levels, indicating weak sup-
port. Note that items 3 and 4 pertain to responsiveness in the future
(for instance, item 4 is, be more careful in future and everyone
would benefit ; Table 7), unlike items
1
and 2 which focus solely o
perceived responsiveness to the specific problem. This indicates that
perceptions of providers' responsiveness to a specific problem are
robust and stable reflections of underlying structural factors of ser-
vice categories. However, for providers' responsiveness to future
problems, these perceptions appear to reflect individual differences
as well as underlying structural factors.
Results for overall effects (Table 8 last column) provide greate
insights into these joint relationships. These effects are mostly due to
differences in the support for items 3 and 4 for different contingen-
cies.
For items
1
and 2, such differences are marginal, with educatio
and dissatisfaction levels as the exceptions. As such, the analysis
focuses on items 3 and 4.
Strong effects are obtained for age and sex of the respondent
Younger respondents are more likely to depict variability in pro
viders' responsiveness to future problems (i.e., items 3 and 4) across
industries (F = 5.2 and 6.58, p < .01) than older consumers (F =
1.93 and 0.8 , p > .05). Females perceive greater differences in pro
viders' responsiveness (F = 5.6 and 6.7, p < .01) than their male
counterparts (F = 2.7 and 1.5, p > .05). Consistent with the effects
for age and sex, consumers with lower income level perceive greater
variation across service categories. This effect is categorized as
w ea k because the variation in items 3 and 4 for low income
respondents is borderline (statistically). Finally, mixed effects are
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SUMMER1991 VOLUME
25,
NUMBER1 4 7
various alternatives and sellers' responses to marketplace dis-
satisfaction.
Satisfaction with Response
Consistent with the preceding analyses, hypothesis Hg was tested
utilizing an ANOVA design with satisfaction as the dependent varia-
ble and service categories as the three-level treatm ent. Following this,
hypothesis H,o was tested by implementing three-pairwise compari-
sons with per comparison error rate set at .0167 in accord with the
preceding discussion.
Consumers' satisfaction with providers' response to their voiced
problem s varies significantly across service categories (F = 15.82, p
< .001). This strongly supports hypothesis Hg. In addition , con-
sumers are most satisfied with grocery retailers' response (mean =
7.01,
standard error - .33), and least satisfied with medical care pro -
viders (mean = 4.42, standard error = .33). For automotive repair,
consumers are moderately satisfied (mean = 5.53, standard error =
.33). The pairwise comparison between grocery retailers and each of
the other categories is significant at p = .0167. However, the com-
parison between automotive repair and medical care is borderline (p
= .0179). These results generally support hypothesis Hio. It appears
that the extent of consumer satisfaction, even when they voice their
problems, is intimately linked to structural factors within an
industry.
Additional evidence in support of preceding results follows from
the analysis of different contingencies (see Table9).In terms of over-
all support. Table 9 suggests that the aggregated results presented are
upheld in nine of the ten contingencies, indicating strong support.
The only exception is low dissatisfaction level, for which the satisfac-
tion evaluations do not differ significantly (F = 0.67, p = .51). The
manifestation of structural factors (of industries) in consumers' satis-
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SUMMER1991 VOLUME25,NUMBER1 4 9
DISCUSSION AND IMPLICATIONS
Certain limitations of this study should be noted. The findings are
based on responses from households in the Southwest United States.
To the extent that these respondents are idiosyncratic, the generaliza-
bility of results may be affected. The test of hypotheses was limited
to dissatisfactions resulting from grocery, automotive repair, and
medical care problems. For a more rigorous examination, more
product/service categories need to be examined. Purposive selection
of service categories with varying loose monopoly conditions
afforded a reasonable basis for examining the key propositions. At
the same time, it is recognized that the results obtained not only
reflect the effects of greater or fewer loose monopoly conditions
(which was intended) but also of unique features of the specific in-
dustries selected (which was not intended). Additionally, the research
design adopted (i.e., recall of a dissatisfying experience) is likely to
highlight the more serious dissatisfactions. As such, the results may
not be generalizable to the entire set of marketplace dissatisfactions.
Moreover, the study is based on cross-sectional data. Usual caveats
for determining sequential effects from such data are applicable. One
particular limitation of the cross-sectional design is that behaviors
and cognitions leading up to those behaviors are collected at the same
time. How the complaint was actually handled by the service pro-
vider may have affected responses.
The motivation for this study lies in understanding the impact of
loose monopoly conditions at the industry level on dissatisfaction-
related responses at the individual level. The specific contribution
stems from the fact that while previous studies have been preoccu-
pied with documenting variation in dissatisfaction responses across
industries, this paper examines a theoretical model that attempts to
explain such variations. Based largely on Hirschman's model, it was
hypothesized that certain measurable structural differences among
industries (i.e., loose monopoly conditions) would likely manifest in
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5 0 THE JOURNAL OF CONSUMER AFFAIRS
play a dominant role, and (c)
mixed
responsesboth structural and
individual factors interplay in affecting dissatisfaction responses.
The findings of this study reveal that while voice is largely a macro-
driven response, private actions are probably mixed responses. Dis-
satisfied consumers are significantly less likely to use voice actions
when their problems involve medical care instead of either grocery or
automotive-repair problems, in accord with Hirschman's theory.
Additionally, the variation in voice actions remained significant
under all analyzed contingencies. The notion that the more an indus-
try manifests characteristics of loose monopolies, the m ore it is likely
to be perceived to restrict voice actions, appears to be a valid por-
trayal of real-life processes. For private actions a different picture
emerges. First, variation in private actions, while significant, is in a
direction opposite to that of voice actions and stated hypotheses. In
other words, the findings indicate that the more an industry mimics
a loose monopoly, the more likely consumers would use private
actions. Second, the variation in private actions is influenced by
industry as well as individual characteristics (i.e., mixed response). In
particular, this variation is enhanced (diminished) for the case when
the level of dissatisfaction is high (low), and the respondent is female
(male) or younger (older).
Preceding differences between patterns for voice and private re-
sponses are intriguing. A potential explanation for these patterns
could be that consumers utilize compensatory mechanisms to relieve
their dissatisfaction; that is, where voice is inhibited due to psycho-
logical or external reasons (e.g., as in medical care problems), con-
sumers attempt to compensate for this restriction on voice with
greater use of private (i.e., exit and negative W-O-M) actions. Pre-
sumably this underlies consum ers' motivation to do something
about their dissatisfaction, and hopefully get even with the pro -
vider . Conversely, when voice is uninhibited and serves to redress
dissatisfactions, consumers may compensate by less frequent use of
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SUMMER 1991 VOLUM E 25, NUM BER
1
5 1
Automotive repair presents an anomalous case, with both voice (84
percent) and private (60 percent) responses at a high level (also exit =
34 percent, W-O-M = 57 percent). A likely reason for this anom aly
is that while automotive-repair industry does not present conditions
which might inhibit voice (Tables 2 and 3), consumers neither per-
ceive auto-repair providers as responsive sellers (Table 7) nor are
satisfied with their actual response. As such, while voice is possible, it
lacks potency. Probably this lack of potency interferes in the opera-
tion of a compensatory mechanism between voice and private
responses. Nevertheless, it cannot be ruled out that the selection of
service categories and/o r idiosyncracies stemming from the nature of
the responding sample could be confounding factors. More research
to understand CCB patterns is needed.
If supported, such compensatory mechanisms offer significant
implications. Practitioners may find that the encouragement of voice
has an all around positive effect. When consumers voice their dis-
satisfactions and sellers are responsive, the use of private actions (exit
and negative W-O-M) is likely to be less frequent. By facilitating
voice, managers may not only reduce the indirect impact of negative
W-O-M concerning their products and services, but may also retain
the loyalty of their customer base (i.e., because of reduced exit).
Recent TARP (1986) studies appear to support this prescription. For
instance, over 46 percent of the consumers indicated that they would
not exit when voice was feasible, even though their complaints were
not satisfactorily addressed. In instances where managers were
responsive and tended to satisfy voiced complaints, the portion of
consumers indicating that they would remain loyal (i.e., not exit)
increased to 70 percent. Consequently, the counter-intuitive notion
that the effective encouragement and facilitation of complaints (i.e.,
voice) may actually help increase brand loyalty (and profitability)
and contain the negative effects of other private actions appears to
hold considerable merit.
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5 4 THE JOURNAL OF CONSUMER AFFAIRS
several contitigency variables. The level of dissatisfaction appears to
have a strong effect on voice and private responses, as well as on
satisfaction with response. Much research has suggested tha t the level
of dissatisfaction has a marginal, if any, role in consumers' com-
plaint responses (Day 1984). This study refines previous thinking
because the dissatisfaction level appears as a significant moderating
variable. Likewise, effects of age and sex were significant, especially
for private actions and perceived responsiveness. Researchers may
wish to incorporate such contingencies in attempts to understand dis-
satisfaction responses. Third, clear differences appear to underlie
consumers' choice of voice and private responses. Notably, voice ac-
tions are relatively macro-driven; private actions are mixed. An im-
plication is that researchers are likely to find important differences in
the psychological process that predict (and explain) voice and private
responses (Day 1984). Finally, this study provides sufficient evidence
to conclude that industry characteristics appear to influence con-
sumers' choice of dissatisfaction response. The proposed conceptual
framework provides an initial approach for understanding this pro-
cess.
Future research which enhances this model and seeks to inte-
grate it with other psychological variables appears to prom ise fruitful
returns.
CONCLUSION
This study aimed to empirically investigate several hypotheses that
attempt to tie structural factors in different industries (i.e ., loose
m onopoly conditions) to individual consumers' responses (and per-
ceptions) concerning marketplace dissatisfaction. This hypothesized
manifestation of macrolevel factors in microlevel behavior was based
largely on Hirschman's Exit, Voice and Loyalty framework (1970),
although findings from CCB literature were also incorporated. Sub-
stantively, this study moves away from the usual descriptions of the
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