Part H Marketing of Services and Retailings3.amazonaws.com/.../Part_H_Winter_Proceedings_2015.pdf · H-4 2015 AMA Winter Educators’ Proceedings impaired consumers based upon atmospherics

2015 AMA Winter Educators’ Proceedings H-1

Part HMarketing of Services and Retailing

Track ChairsXueming Luo, Temple University

Michelle Andrews, Temple University

Sensory Effects in the Retail SpaceEffectiveness of Retail Atmospherics: A Comparative Study Between Normally Sighted and Visually Impaired

Consumers H-3Alex H. Cohen, Rolph E. Anderson

Tipping Behavior: The Impact of the Bill Folder Color H-5Na Young Lee, Stephanie M. Nobel

The Influence of Visual Representations on Consumers’ Selection of Intangible Experiences H-7Ying Zhu, Eric Li

Do Touch Screen Users Feel More Engaged? The Impact of Touch Interfaces on Online Shopping H-9Sorim Chung

Brand Value and Customer BehaviorsThe Customer Shopping Experience: A Love/Hate Relationship H-11

Sarah Alhouti, Erin Adamson Gillespie, Woojung Chang, Lenita DavisInvestigating Reciprocal Effects Between Retail Brand and Perceived Value H-12

Bernhard Swoboda, Julia Weindel, Frank HaelsigOverall Restaurant Brand Image: An Informational Antecedent to Customer Loyalty and Behavioral Intentions H-14

Jennifer A. Espinosa, Lisa Monahan, David J. OrtinauRetail Patronage as a Network: An Alternative Approach to Customer Segmentation H-16

Natalie David, Hanna Schramm-Klein, Olaf Rank, Gerhard Wagner

Retail Pricing and ReturnsHow to Provide an Efficient Payment Offer in B2C E-Commerce? H-17

Jan Kemper, Robert Maximilian Grüschow, Malte BrettelDon’t Remove That Tag: A Look at Customer Motivation for Product Returns H-19

Jennifer A. Espinosa, Lisa MonahanCharity at Checkout: The Implications for Retailers H-21

Efua Obeng, Casey Newmeyer

Frontline Employees and Service ProductivityTesting Competing Models of Frontline Employee External Customer Mindset H-23

Rajesh Iyer, Mark C. JohlkeA Different Perspective on Service Productivity in Manufacturing Firms H-24

Mirjam Velleuer, Jens Hogreve, Alexander HübnerA Typology of Customer Territorial Responses to Closing Time Intrusions by Frontline Employees H-25

Christy Ashley, Stephanie M. NobleDual-Objective Incentives and Marketing Employee Performance: Evidence from Laboratory and Call Center

Field Experiments H-26Sung H. Ham, Chanho Song

Price Strategies and Consumer Responses“Dear Customer, We Must Increase Our Prices …” How Service Firms Utilize Types of Price Increase

Communications H-28Doreén Pick, Stephan Zielke

How Customers Manage Purchase When They Lost or Gain? Effects of Price Surcharges and Savings on Expenditures H-30Yiyuan Liu, Sanjoy Ghose

Time Marches On: Effects of Temporal Orientation, Time of Release, and Discount Sizes on Purchase Intentions H-32Amaradri Mukherjee, Subhash Jha, Ronn J. Smith

Determinants of Consumers’ Response to Pay-What-You-Want Pricing Strategy on the Internet H-34Fei L. Weisstein, Monika Kukar-Kinney, Kent B. Monroe

Customer Orientation and ReferralsReferral Engineering in Service Markets: Initial Evidence and Consumer Motivations H-36

Ina Garnefeld, Sabrina V. HelmHow and to What Extent Customer Orientation Leads to Deep Acting: The Roles of Emotional Sensitivity

and Dysfunctional Customer Behavior Severity H-38Yu-Shan Huang

The Impact of Personality Traits on Customer Orientation Among Call Center Workers: The Moderating Effect of Work–Family Conflict and Role Conflict H-40Sunil Sahadev, Sudarshan Seshanna, Keyoor Purani, Bradley Barnes

High-Tech ServicesIntertemporal Demand Effects in Fashion E-Commerce H-41

David Heuer, Malte BrettelOptimal Distance Between Franchising Outlets and Intra-Brand Competition H-43

Pui Ying “Yoshi” Tong, Christopher Yencha

Service Experience, Failures, and RecoveryUnintended Effects of Customer Participation in Recovery: Can Choice Availability Be a Remedy? H-44

Nicola Bilstein, Shashi M. Matta, Jens HogreveConceptualizing Service Failures Through the Lens of Service-Dominant Logic: A Value-Based Approach H-46

George Skourtis, Jean-Marc Decaudin, Ioannis AssiourasRecovery Strategies Involving Bundled Products H-48

Patrick Fennell, Matthew M. Lastner, Dan Hamilton Rice, Ronald W. NiedrichThe Impact of Tri-Dyadic Fit on the Service Experience H-50

Sidney Anderson, Jeffery Smith

Customer and Employee Surveys: Development, Participation, and UseCustomer Inspiration: Conceptualization, Scale Development, and Validation H-51

Thomas Rudolph, Tim Boettger, Thilo Pfrang, Heiner EvanschitzkyCustomer Relationship Management: Should Absence of Attitudinal Data Prevent Designing Effective

Consumer Promotions? H-52Srinivasan Swaminathan, Anubhav Aggarwal

Nonlinear Effects of Frontline Store Managers’ Entrepreneurial Role Performance: Retail Profit and Revenue Analysis Using Item Response Theory H-54Yuechen Wu, Jagdip Singh, Gary K. Rhoads, Detelina Marinova

Turning to the Role of Propensity to Participate in the Participation–Satisfaction Link H-56Jakob Braun, Mohammadali Zolfagharian

H-2 2015 AMA Winter Educators’ Proceedings

Research QuestionThe objective of this research is to preliminarily investigatethe relative effectiveness of retailer atmospheric cues oneach of the human senses individually through the analysisof consumer satisfaction, repurchase intention, positiveword-of-mouth communications, and information utilitywhere the consumer’s sense of sight is either absent ordulled through disability. We seek to determine whether theuse of different retail atmospherics can provide a signifi-cantly more favorable and inclusive retail purchasing envi-ronment for visually impaired consumers.

Method and DataThe effectiveness of atmospheric strategies is gauged by acomparison of perspectives between visually impaired con-sumers and normally sighted consumers. Participants forthis test study were recruited using an electronic snowballsampling technique from the local chapters of the Founda-tion Fighting Blindness and the National Federation of theBlind, as well as from the office of disability resources of alocal university. We received 158 fully completed question-naires (74 normally sighted and 84 visually impaired). Iden-tity salience and distinctiveness theory were used as primingmechanisms to cause the visually impaired identity of thisconsumer group to become most salient for the purposes ofthis study. Previous analysis of visually impaired consumershas shown that this identity is made salient in the actual mar-ketplace as a result of attempted participation in the market-place. This priming mechanism for the visually impairedgroup was necessary as we were interested specifically intheir opinions as visually impaired consumers in the retail

environment, and not their opinions based upon their otheridentities (e.g. man, woman, student, parent).

Summary of Findings An exploratory factor analysis produced a two factor solu-tion (satisfaction and its correlated factors and informationutility) for the senses of smell, touch, and hearing, and thisdistinction for the two factors was made even more appar-ent for the visually impaired consumer group than for thenormally sighted consumer group when the groups wereanalyzed separately. A between groups comparisonshowed atmospheric effectiveness to be stronger for thevisually impaired consumer group when atmospheric cuestargeted the senses of smell and touch, but were equallyweak for the sense of taste, and equally strong for thesense of hearing.

Key ContributionsFrom the promising initial results of this preliminary studywe are encouraged that the concept of atmospheric effective-ness is viable and can be operationalized through testingindividual senses, especially for visually impaired con-sumers. The normally sighted consumer experience providespositive effects from atmospheric cues as well, particularlywith the olfactory and auditory senses, which unlike the tasteand tactile senses that must be purposefully experienced,occur without choice or deliberate action. The notion thatatmospherics can provide competitive differentiation iscommonly referenced in the atmospherics literature; how-ever, to the best of our knowledge the concept of informationutility and the ability to differentiate retailers for visually

Effectiveness of Retail Atmospherics: AComparative Study Between NormallySighted and Visually Impaired ConsumersAlex H. Cohen, Drexel UniversityRolph E. Anderson, Drexel University

Keywords: atmospherics, sensory marketing, visually impaired, information utility, identity salience

EXTENDED ABSTRACT

For further information contact: Alex H. Cohen, Lebow College of Business, Drexel University (e-mail: [email protected]).



impaired consumers based upon atmospherics is unique tothis study. By illuminating which atmospheric strategies aremore likely to succeed or fail based upon the absence of con-sumer sight, retailers may better serve their visuallyimpaired customers as well as their sighted customers sinceprevious findings have shown retail atmospherics to directlycause positive consumer behavior. Finally, by enhancing the

quality of information utility and increasing satisfaction withpurchasing experiences, retailers may be able to convert thisoften overlooked visually-impaired market segment (esti-mated by the 2010 U.S. Census to be over eleven millionpeople) to more profitable, repeat customers.

References are available on request.

Research QuestionColors have been used in marketing to increase consumptionbehavior in various situations. Building on symbolic interac-tionism, this study investigates the effect of the color gold ontipping behavior in a restaurant. Restaurant tipping behaviorwas chosen to study the influence of the color gold due tostaggering statistics on tipping revenue (Azar 2007) and thenature of tipping situations upon which social statusdemands are made (Lynn 1997; Shamir 1983).

The color gold is a status-laden color that conveys symbolicmeaning of rarity and high socio-economic status (Drèzeand Nunes 2009; Price and Arnould 2004). Based on this, weposit that the color gold will influence increasing tipamounts. Factors that might influence status perceptionssuch as a bill size or party size are investigated as a boundarycondition. Having this as a background, our study seeks toanswer the following research questions:

Does a gold [versus black] colored bill folder influence tip-ping behavior?

Does the bill size and the number of people at the tableheighten the effect of the gold-colored bill folder on tippingbehavior?

Method and DataWe conducted a two-week-long field experiment at a family-run restaurant. All customers who had lunch at this restau-rant over the course of the study were subjects of this study,for a total of 288. Before conducting the field experiment,we trained restaurant servers on how to present the bill fold-ers to avoid potential bias or changes in servers’ attitudewhen presenting it to customers.

In the first week of the field experiment, which included 146patrons from Monday through Saturday, only gold bill fold-ers were presented. In the second week, only black bill fold-ers were presented, this time to 142 patrons. In this way, theday of the week was not a major factor in the tipping results.No special events or holidays occurred during these twoweeks. To control factors that could influence the coloreffect such as design and texture of the bill folder, both billfolders were identical except for their color.

All customers’ receipts were collected for analysis. The dataon the merchant copy of each receipt included meal price,dining party size at a table (to measure the impact of pres-ence of others on tipping), tip dollar amount, paymentmethod (credit card or cash), and the name of the serverwere collected and analyzed.

Summary of FindingsWe analyzed the data using ANCOVA, with tip percentageas the dependent measure and the color of the bill folder asa predictor. Based on literature (Lynn and Zinkhan 1993),we controlled factors that could potentially influence tip-ping: server, payment method, and day of the week. Tip per-centage was calculated by tip dollar amount divided by mealprice. An ANCOVA revealed the main effects of bill foldercolor. Customers presented with the gold bill folder gave sta-tistically significantly larger tips than those presented withthe black bill folder (M black = 18.9% vs. M gold = 21.4 %; F(1,233) = 4.76, p <.05). For a moderating effect, anANCOVA revealed significant interaction between color andparty size (F(1, 224) = 4.66, p < .05). Tip percentage fromcustomers presented with the black bill folder decreased asdining party size increased. This inverse relationship wasbuffered when customers were presented with the gold bill

Tipping Behavior: The Impact of the BillFolder ColorNa Young Lee, University of Tennessee, Knoxville Stephanie M. Nobel, University of Tennessee, Knoxville

Keywords: color, gold, tipping, payment

EXTENDED ABSTRACT

For further information contact: Na Young Lee, doctoral student, Department of Marketing and Supply Chain Management, College of Business Administra-tion, University of Tennessee (e-mail: [email protected]).



folder such that tip percentage for customers presented withthe gold bill folder did not decrease with the increase of din-ing party size. There was no significant interaction betweencolor and the bill size (F(1, 224) = 1.87, NS). In summary,the results of our study show that encountering the colorgold at tipping increased tipping amount in a restaurant andthe number of accompanying guests in a tipping situationmoderated this relationship.

Key ContributionsWe endeavor to make three important contributions with thisresearch. First, we demonstrated the effect of the color goldon actual payments in a restaurant tipping context. By focus-ing on actual payments, we contributed literature on colorsin marketing, which mainly focus on the influence of coloron consumers’ perceptions of product (Chebat and Morrin2007), brand (Bottomley 2006), and willingness to pay(Bagchi and Cheema 2013).

Second, our study sheds light on the influence of color froma sociological perspective. Our study suggests that the colorgold that conveys symbolic meaning of high status and rarityincreases tipping. Its influence is heightened when cus-tomers are with more people.

From a managerial perspective, this research suggests theimpact of color on tipping revenue in a restaurant business.Presenting a gold (versus black) colored bill folder to cus-tomers would increase tipping. For a restaurant that has largeparty sized customers, gold (versus black) colored bill fold-ers would increase tip amounts per table by buffering theinverse relationship between dining party size and tipamount per customer.


Research QuestionWhile visual effect has been intensively studied in the contextof advertising (Danaher, Bonfrer, and Dhar 2008), branding(Macklin 1996), and product purchase (Bloch, Brunel, andArnold 2003), the above literature, however, does not accountfor situations where the consumers are neither using visualcues to assist purchasing tangible goods nor using them toassess physical evidence to infer the service quality. For exam-ple, when consumers choose a travel destination by evaluatingdifferent images of natural attractions, they are making deci-sions based on their imagined experiences. The question ofhow visual images influence consumers’ decisions in suchexperiential context remains unanswered. The lack of deeperunderstanding of the role played by visual images in the con-text of intangible experiences encourages this research.

This research aims to extend the current literature of sensorymarketing by addressing the following research questions:

1) How do visual representations facilitate consumers’ deci-sions on intangible experiences, such as choosing a traveldestination?

2) What are the key visual themes and components that con-struct a representative place identity in consumers’ eyes?

3) Given the wide ranges of visual representations that areavailable to marketers, how can the most appealingimages for tourists be selected and packaged?

Method and DataWe chose tourism as our research context as it perfectly rep-resents a situation where consumers form their decisions onfuture intangible experiences mainly on the visual images

they saw in a digital or printed form. In addition, tourism isone of the world’s fastest-growing businesses. Tour agentsemploy different strategies to promote their countries or citiesto potential tourists. Unlike the traditional product market, thetourism industry offers goods, services, and unique experi-ences combined to consumers. Promoting a tourist site is morechallenging than ever before given the growing number ofdestinations, more informed consumers, and increased con-sumers’ expectations due to the Internet and social media.

For this research we chose a medium-sized tourist-orientedregion in Canada as the research site. The survey techniquewas employed to examine how consumers decode and eval-uate visual representations that are generated by either pro-fessional photographers or amateurs. The researchers admin-istered a self-report questionnaire to 145 (52% female)university students from a Canadian university. The ques-tions asked participants’ perceptions of eight images thatrepresent tourist activities and experiences (e.g., adventuringin nature, wine tourism, sports activities such as skiing andwater rafting, and cultural exploration) that are relevant tothe region.

Summary of FindingsOur findings identified four visual themes that contribute tothe formation of an effective visual representation, which inturn helps to form a unique place identity that can be easilyrecognized by consumers. They are visualizing physicalityof a place, visualizing culturality of a place, visualizingsocializability of a place, and technicality of the image.

Visualizing physicality refers to the presentation of physicalappearance of a place. For example, landscape is both a rep-

The Influence of Visual Representationson Consumers’ Selection of IntangibleExperiencesYing Zhu, University of British Columbia–OkanaganEric Li, University of British Columbia–Okanagan

Keywords: visual representation, visual elements, place identity, intangible experiences

EXTENDED ABSTRACT

For further information contact: Ying Zhu, Assistant Professor, Faculty of Management, University of British Columbia–Okanagan (e-mail: [email protected]).



resentation and materiality of the place (Mitchell, 1996).Visualizing culturality of a place refers to the visual presen-tation of the history, myths, and cultural heritage that areattached to and bounded by the place (Low, 1992;Schroeder, 2002). Visualizing socializability of a placerefers to the perceived social environment that consumerscould participate in. Finally, technicality refers to the pro-duction values of the images (Kozinets and Belk 2007), forinstance, photographic techniques and the selection of iden-tity symbols in the images.

All four themes are essential to construct effective visualrepresentations of a place and to form a unique place iden-tity. They are not mutually exclusive. The right combinationof the four themes will enhance the communication power ofthe images.

Key ContributionsThe four themes that were identified demonstrate what makes“a sight a site” (Webb, 2002). The research findings offer adeeper understanding of the key visual elements that con-sumers use to evaluate images, while simultaneously shedding

light on the literature of place identity by disentangling impor-tant factors that consumers value in terms of conveying a placeidentity such as culturality and socializability of a place. Visualrepresentations are powerful tools to form the impression of atourist site (Schmitt, 1999). This research shows the impor-tance of the content of an image in symbolizing the place iden-tity. Furthermore, the technicality theme highlights the impor-tance of aesthetic value in visual representations.

The current research advances knowledge in the area of sen-sory marketing and place identity. This research makes sev-eral contributions to the literature. First, this study identifiedthe factors that consumers value when they evaluated visualrepresentations of a place. Second, it categorized partici-pants’ responses into four visual elements. Last, with suchimportant elements in hand, marketers are able to constructa better place identity and images, thus making the traveldestination more appealing through visualizing physicality,culturality, and socializability of a place, as well as the tech-nicality of a visual representation.


Research QuestionOnline shopping environments have changed dramaticallyduring recent years, and one of the fundamental changes hasbeen to the input device, namely moving from a mouse to atouch interface. However, most studies still view the onlineenvironment as no broader than website design.

Touch is an important cue for purchase intentions and atti-tudes in offline retail environments (Peck and Childers 2003).In online shopping, touch (i.e. touching computer interfaces)has a positive impact on perceived ownership (Brasel andGips 2013), students’ engagement and performance (Enriquez2010). Engagement leads to higher recall of commercials(Moorman, Neijens and Smit 2007) and enhances satisfaction,trust and commitment in a virtual brand community (Brodie etal. 2011). Product involvement level also affects consumerevaluations (Solomon 2013). However, the degree to whichthe use of touch interfaces is associated with shopper engage-ment and purchase decisions, which are of direct concern toonline retailers, remains unknown.

This study proposes a positive association between a touchinterface and 1) shopper engagement among low involve-ment product shoppers and 2) purchase decision measures(product information recall, purchase intentions, productevaluations and satisfaction). It also expects a mediationeffect of engagement between a touch interface and purchasedecision measures.

Method and DataThe experiment had a 2 × 2 between-group design (touchinterface and mouse × cameras and sweatshirts). The study

analyzed 127 participants aged between 18 and 35 years oldrecruited through e-mail.

Experimental sessions were held in a research lab, whereeach partitioned desk had a 22-inch touch screen monitor,mouse and keyboard. All subjects were randomly assignedto four groups of 30–35 subjects. Conditions 1 and 2browsed a camera website, and each condition used a differ-ent input device, either a touch interface or a mouse, to nav-igate the site. Conditions 3 and 4 browsed a sweatshirt web-site, using either a touch interface or a mouse as inConditions 1 and 2. All conditions were given one of twoshopping scenarios according to the product category. Prod-uct types and website details were decided based on theresults of a pilot study and on the findings of previous stud-ies of touch interfaces (Brasel and Gips 2013). Sweatshirts(cameras) were chosen as low (high) involvement products.After browsing the site, participants completed a question-naire on engagement, purchase decision measures and a fewmanipulation checks.

Summary of FindingsTouch interface users were clearly more engaged with theirshopping session than those who used a mouse, but as pro-posed, this effect was significant among sweatshirt (lowinvolvement product) shoppers only. Compared with thosewho were less engaged, shoppers with higher engagementshowed higher satisfaction with shopping, higher purchaseintentions and more positive product evaluations of productdesign and product availability. However, engagement levelwas not significantly associated with product informationrecall or product evaluation of prices.

Do Touch Screen Users Feel MoreEngaged? The Impact of Touch Interfaceson Online ShoppingSorim Chung, University of California–Riverside

Keywords: engagement, memory, retail environment, touch screen, online shopping

EXTENDED ABSTRACT

For further information contact: Sorim Chung, PhD candidate and Associate Instructor, University of California–Riverside (e-mail: [email protected]; [email protected]).



Using a touch interface also resulted in significantly lessaccurate brand name recall than using a mouse when shop-ping for cameras (high involvement product), but there wasno significant impact on recalling other types of information.For the other purchase decision measures (purchase inten-tions, product evaluations and satisfaction), there was nosignificant difference between touch interface and mouseusers. Finally, the mediation test (the Sobel test) resultsshowed that shopper engagement had no significant media-tion effect between a touch interface and purchase measures.

Key ContributionsThe findings of this study highlight the role of a touch inter-face as a new retail cue for shoppers’ engagement beyond tra-ditional retail cues. The study suggests that to maintain a highlevel of shopper engagement, online retailers need to be awareof the device type that customers use to ensure the best possi-

ble shopping experience. Device type also matters to brandname recall when shopping for a high involvement productsuch as a camera. In addition, the presented findings highlightthe role of product type in engagement when using a touchinterface. Online shoppers who use a touch interface are moreengaged with shopping than those who use a mouse, but theeffect differs by product category, especially product involve-ment level. Lastly, the findings confirm that neither a touchinterface nor a mouse has a direct impact on purchase decisionmeasures except brand name recall. Given the associationsbetween a touch interface and engagement, the lack of a directimpact implies that device type alone does not work as astrong retail cue. Further, the role of computer devices inonline shopping is salient when viewed with other relevantfactors such as shopper engagement and product type.


Research QuestionWhat are the outcomes of a salesperson’s varying level ofattentive behavior on a customer’s attitude and behaviortoward the retailer?

Method and Data A critical incident technique (CIT) study is conducted toexamine the customer’s shopping experience through theperception of attention received and to assist in the develop-ment of items for the quantitative study. Data was collectedthrough snowball sampling. Seven hundred and thirty-twoparticipants responded to the CIT questionnaire. A series ofquantitative research including new scale development pro-cedures was conducted to validate the four types of attentiontaxonomy (i.e., bonding, negligence, autonomy, and stalk-ing) that have emerged from the CIT study. In total, 418 sub-jects participated in this survey, and we analyzed data from322 surveys to test the proposed model after deleting the sur-veys with incomplete information. The sample is 64% offemale, with an average age of 51 years old and a range from20 to 83 years old.

Summary of Findings The responses from the CIT study revealed that the level ofattentiveness sought varied with the relational needs of thecustomer. The comments represented two ends of a contin-uum of desirability and respect. Customers needed acknowl-edgement and to be seen as desirable (bonding) while beingrespected as an individual (autonomy). The other end isactive disregard and withholding of attention (negligence)and unwanted pursuit and ignoring need for autonomy

(stalking). The findings from the quantitative study demon-strate that customers experience the four shopping situationsfound in the CIT study (bonding, autonomy, negligence, andstalking). The four experiences are the result of the attentiongiven by the salesperson. Furthermore, bonding and auton-omy both have a positive effect on customers’ repatronageintention, but the positive effect of bonding are greater interms of positive word of mouth and satisfaction. Thus,bonding and autonomy are equally important in creatingcustomer’s direct behavioral intention but different in gener-ating positive affect and more proactive behavior that havean ability to influence other customers. On the other hand,negligence and stalking both have an equally strong negativeeffect on customers’ attitude and intentions.

Key ContributionsGiven the predominant role of technology in how customersshop and acquire information (Ahearne and Rapp 2010),there is a need to reexamine the right amount of attention toprovide customers at brick and mortar stores. This studyfinds that consumers do not always want an attentive sales-person but want to know that their autonomy is respectedwhile being seen as desirable by the salesperson. This exam-ination of customer’s perception of the salesperson’s atten-tiveness led to the identification of four possible shoppingexperiences: stalking, bonding, autonomy, and negligence.Understanding these experiences and the types of customersthey apply to can help managers reevaluate the salesperson’srole in the retail setting.


The Customer Shopping Experience: A Love/Hate Relationship Sarah Alhouti, Providence CollegeErin Adamson Gillespie, Elon University Woojung Chang, Illinois State UniversityLenita Davis, University of Alabama

Keywords: retail, salespeople, attention, shopping experience, retail consumer behavior

EXTENDED ABSTRACT

For further information contact: Sarah Alhouti, Assistant Professor, Providence College (e-mail: [email protected]).


Research QuestionThe purpose of this paper is to examine first, how the reci-procity between retail brand equity (RBE) and perceivedvalue is characterized and to determine whether RBE or per-ceived value has a stronger effect on store loyalty. Perceivedvalue is defined as customers’ evaluations of received retailoffers in terms of utility and expectations (Zeithaml 1988),whereas retail brand equity (RBE) refers to consumers’ per-ception of a retailer as a strong, attractive, and unique brand(Hartman and Spiro 2005). Our assumption that RBE andperceived value interact in influencing store loyalty enhan-ces the existing unidirectional studies. Second, it is questio-nable whether the effects of the reciprocity between brandand value perceptions on loyalty are stable or whether theyvary between retail sectors. We illuminate the reciprocalmechanisms of utilitarian/hedonic value and retail brand bycomparing two important retail sectors.

Method and DataWe conducted two longitudinal studies in two retail sectors(fashion and grocery retailing) employing quota sampling(national distribution of population according to gender andage) which resulted in 240 and 241 observations (fashion andgrocery). Trained interviewers conducted the sampling inthree waves in one mid-sized city over a nine month periodusing a standardized questionnaire and face-to-face inter-views. The respondents were first asked to list local fashion orgrocery retailers and then to name four retailers from whichthey frequently purchased either fashion or groceries. In thefirst wave, we randomly chose one of those retailers for eachrespondent to evaluate in all subsequent waves. To reduce thecomplexity of the six models—two general and four utilitarian

versus hedonic value models in the retail sectors—we useditem parceling for perceived value. Prior to testing our hypo-theses we ensured reliability and validity and determinedwhether the measurements were invariant over time. We fol -lowed the three steps proposed by Raykov and Amemiya(2008) and did attain partial measurement invariance. We alsotested for exogeneity using a Hausman test. To test our hypo-theses, we applied a cross-lagged design for SEM usingMplus.

Summary of FindingsThe results underline a positive reciprocal relationship bet-ween RBE and perceived over time in both retail sectors.We find that the total effect of RBE on store loyalty is stron-ger than the total effect of perceived value however theunderlying mechanism behind these effects varies whencomparing fashion and grocery retail sectors. In the fashionsector, for example, RBE dominates the path in the modelby directly influencing loyalty more than or as strongly asperceived value at both time points and particularly byinfluencing value perceptions much more strongly than viceversa. By contrast, in the grocery sector, RBE directlyaffects loyalty more strongly than value at all time points,but with regard to the reciprocal relationship, the paths arenearly equal. When detangling the value construct, we findthat the total effects of hedonic value on loyalty are strongerthan those of utilitarian value in fashion retailing. Thisobservation holds even when observing the value-loyaltypaths at each time point. In the grocery sector, the totaleffects of utilitarian value have stronger effects on storeloyalty than hedonic value. However, when observing the

Investigating Reciprocal Effects BetweenRetail Brand and Perceived ValueBernhard Swoboda, University of TrierJulia Weindel, University of TrierFrank Haelsig, University of Applied Sciences Saarbruecken

Keywords: reciprocity, perceived value, retail brand equity, fashion and grocery retailing

EXTENDED ABSTRACT

For further information contact: Bernhard Swoboda, Chair of Marketing and Retailing, University of Trier (e-mail: [email protected]).



value-loyalty paths at each time point, we find that hedonicvalue loses significance.

Key ContributionsThis study offers two contributions to the extant literature.First, we propose a framework to explain the reciprocal rela-tionship between RBE and perceived value and their jointinfluence on loyalty. Thus, we contribute to the frequentlystated conceptual references to reciprocity in retailing (e.g.,Jacoby and Mazursky 1984) and enhance the few empiricalinsights in the literature. Second, we study the reciprocaleffects of RBE and utilitarian/hedonic value in different con-texts (referring to calls, e.g., Carpenter 2008). With respectto our first research aim, the results show a reciprocal rela-tionship between both constructs and generally indicate that

RBE and value determine store loyalty; however, theinfluence of RBE is stronger. We believe that these observa-tions are notable as they underline the importance of thereciprocity of both constructs and as they are stable in bothsectors, although the extent of the effects varies between theretail sectors. With respect to our second research aim, wehave responded to calls in the literature (e.g., Carpenter2008) to determine whether the loyalty effects from the reci-procity of RBE and utilitarian and hedonic value are stableor whether they vary in retail sectors. We disaggregate theoverall value conceptualization used above and extend theunderstanding of the bidirectional relationships of successfulpaths in both retail sectors.

References are available upon request.

Research Questions• Among recent experienced customers, what is the rela-

tional linkage between overall restaurant brand image andperceived feelings of restaurant loyalty?

• Among recent experienced customers, what are the rela-tional linkages between overall restaurant brand image andoverall intentions to recommend, overall intentions torevisit, and overall restaurant satisfaction?

• Among recent experienced customers, what are the rela-tionship linkages between perceived feelings of restaurantloyalty and overall intentions to recommend, overall inten-tions to revisit, and overall restaurant satisfaction?

• Among recent experienced customers, to what extent doesperceived feelings of restaurant loyalty mediate the rela-tionships between overall restaurant brand image andintentions to recommend, intentions to revisit, and overallrestaurant satisfaction?

Method and DataThe current research employed a multi-method researchmethodology consisting of focus group interviews and anonline, self-administered restaurant survey. First, we con-ducted a focus group with adults who eat out at casual-diningrestaurants from a major Southeastern market of over 3.5 mil-lion people. The main goals of the focus groups were to gatherinitial insights on how customers evaluate casual-dining

restaurants, as well as how those customers judge their satis-faction, intentions and loyalty to casual-dining restaurants.

Second, we conducted an online survey with 609 randomlyselected restaurant patrons within the United States. Wescreened those 609 restaurant patrons for familiarity andexperience with our focal restaurants (Applebee’s andChili’s), so that we can focus on only known, experiencedrestaurant customers. This screening procedure reduced oursample size to 400 useable respondents, but also enhancesthe quality of the data. ). The self-administered survey con-sisted of pre-tested direct rating scales and standardized rat-ing scales. A combination of correlation analysis, path analy-sis and multiple regression analysis procedures were used totest the study’s main hypothesized relationship linkagesamong the model’s constructs.

Summary of FindingsH1 finds that overall restaurant brand image (ORBI) has astrong positive influence (β = .56, p < .01) on creating cus-tomers’ perceptions of restaurant loyalty. H2 finds thatORBI has a strong positive influence (β = .72, p < .01) oncreating customers’ overall restaurant satisfaction. H2a findsthat customers’ overall restaurant loyalty is a strong positiveinfluence on customers’ overall restaurant satisfaction (β =.62, p < .01). H3 finds that ORBI, overall restaurant loyalty,and overall restaurant satisfaction have moderate positiveinfluences on intentions to recommend (βORBI = .32, βORL =.35, βORS = .17, all p < .01). H4 finds that ORBI and overall

Overall Restaurant Brand Image: An Informational Antecedent to CustomerLoyalty and Behavioral IntentionsJennifer A. Espinosa, University of South FloridaLisa Monahan, University of South FloridaDavid J. Ortinau, University of South Florida

Keywords: overall restaurant brand image, overall restaurant loyalty, intentions to recommend, intentions torevisit, overall restaurant satisfaction

EXTENDED ABSTRACT

For further information contact: Jennifer A. Espinosa, PhD candidate, University of South Florida (e-mail: [email protected]).



restaurant loyalty have a moderately strong positive influ-ence on customers’ undertaking intentions to recommend,respectively (βORI = .16, βORL = .57, all p < .01). However,overall restaurant satisfaction was not found to significantlyinfluence intentions to revisit the restaurant (βORS = .10, p >.05). H4a finds that overall restaurant loyalty serves as par-tial mediator to the relationships between ORBI and each ofthe outcome constructs. That is to say some of the influenceand predictability of ORBI on intentions to recommend,intentions to revisit, and customers’ overall satisfaction ofthe casual restaurant is partially redirected through restau-rant loyalty (p < .01).

Key ContributionsThis study’s findings provide several meaningful contribu-tions to the retailing, brand image, retail/customer loyaltyliteratures. First, conceptualizing ORBI as a reflective attitu-dinally-based informational antecedent offers researchers adifferent perspective for understanding the role ORBI plays

with customers’ feelings of restaurant loyalty. Moreover, theattitude-oriented conceptual framework emphasizes captur-ing an overall global attitude and behavioral data rather thanindividual detailed attribute data, making scale measurementdesigns simpler and easier to administer. Second, thisresearch conveys the importance of using respondents thathave actual first-hand experience with whatever object iscontextually under investigation when conducting brandimage research. Brand image researchers need to realize thata perception toward an object of interest is significantly dif-ferent than attitudes toward the object. Third, once restaurantcustomers establish their ORBI, it serves as an importantantecedent that influences restaurant loyalty and not just anoutcome of loyalty. Lastly, ORBI directly and indirectlythrough restaurant loyalty positively influence customersevaluative judgments of not only customers’ ORS but alsoimportant behavioral intentions.


Research QuestionWe investigate how multiple-store patronage behavior givesrise to distinct retail brand portfolios and how different cus-tomer groups using these portfolios can be characterized.

Method and DataWe combine methods from two fields: blockmodel analysis,a method from social network analysis, which constitutesclusters of actors based on similarity of their relationshippatterns, and multivariate statistical analysis on differentsociodemographic and purchasing behavior variables. Thefirst enables us to identify homogeneous groups of cus-tomers being characterized by similar patronage patterns.With the second, we examine if customers with similarpatronage patterns also share common characteristics,thereby allowing for customer segmentation.

To perform our analyses, we use a random sub-sample of500 households out of a panel data set of 36,502 Germanhouseholds in the fast moving consumer goods sector. Thisdata comprises full information about all purchases realizedby households including the retail brand, product categories,price, as well as sociodemographic data on households suchas age, income, household size.

Summary of FindingsThe findings of our study show that by grouping customerswith similar patronage patterns, distinct retail brand portfoliosemerge. This signifies that customers do not randomly com-

bine different stores, but assort portfolios of certain retailbrands. The results of multivariate analyses confirm ourunderlying assumption that customers’ characteristics areimportant with respect to the selection of their retail brandportfolio in two ways. First, customers seem to combine dif-ferent retail brands depending on attributes such as age, theirincome, and the size of their household. And secondly, cus-tomers in the different clusters demonstrate common traits inbehavior concerning the number of retail brands they patron-ize, their propensity to purchase special offer items, their loy-alty to different retail brands and the part of their income theydevote to FMCG shopping. We suggest that the combinationof relational and psychometric analytical techniques providesa fruitful avenue when analyzing multiple-store patronage.Specifically, the method of combining network analyticaltechniques with the analysis of customers’ attributes allowsfor a more complete investigation of customers’ purchasingstrategies with respect to their FMCGs purchases.

Key ContributionsWe develop an alternative methodological approach by analyz-ing the structural properties emerging from customers’ multi-ple-store patronage in order to deduce customer segmentationfrom it. Focusing on relational and network-based analyticaltechniques and complementing them with psychometricmethodologies yields better insights into customers’ strategieswhen combining purchasing acts at different retail brands.


Retail Patronage as a Network: An Alternative Approach to Customer SegmentationNatalie David, Albert-Ludwigs-University of Freiburg Hanna Schramm-Klein, University of SiegenOlaf Rank, Albert-Ludwigs-University of FreiburgGerhard Wagner, University of Siegen

Keywords: multiple-store patronage, customer segmentation, purchasing strategies, retail brands, social network analysis, blockmodeling

EXTENDED ABSTRACT

For further information contact: Natalie David, Research Associate, Albert-Ludwigs-University of Freiburg (e-mail: [email protected]).


Research QuestionThe payment offer towards customers represents an impor-tant aspect for both a retailer’s marketing- and financialobjectives with direct implications for firms’ profitability(Ingene and Levy 1982). Especially the increasing volumeof worldwide transactions, substantial innovations in pay-ment technology and infrastructure (Kahn and Roberds2009) as well as significant changes in consumers’ paymenthabits (Pimentel 2013; Schuh and Stavins 2010) require newways of handling payments in business-to-consumer mar-kets in e-commerce (Stroborn et al. 2004).

So far, existing studies on payment costs report a wide vari-ance in cost rankings, contradicting results as well as diver-gent managerial conclusions (Shampine 2007, 2009), hence,scholars recognize this topic as a fruitful area for furtherresearch (Koivuniemi and Kemppainen 2007; Schmiedel,Kostova, and Ruttenberg 2012). Especially the question ofwhich payment instrument turns out to be least expensivedepending on the transaction size still remains to beanswered (Humphrey 2010). Therein, researchers call fornew studies involving detailed data on individual consumer-or bank level to investigate the complexity of financial pay-ment instruments and consumer behavior (Scholnick et al.2008).

Method and DataIn order to estimate retailer’s transaction costs, we executeordinary least squares regression individually for each of thepayment instruments invoice, credit card, PayPal and pre-payment. This approach is well in line with the studies ofBoeschoten (1998) and ten Raa and Shestalova (2004) who

also estimate separate cost functions for each transactioninstrument. We follow Whitesell’s (1989) theory and incor-porate the transaction value as a key variable in our researchmodel. Subsequently we add transaction-instrument-specificvariables, e.g., controls for payment default of fraudulentcustomers or type of credit card provider. To quantify work-ing capital differences across payment methods, we calcu-late cost of capital of each order position as presented byIngene and Levy (1982).

We use a unique set of transaction-level data from a leadingEuropean e-commerce company selling shoes- and apparelproducts. The sample covers the period from January toDecember 2013 and consists of more than ten million salestransactions including information on the merchants’ costsof providing payments, order- and payment date, transactionvalue, number of payments per order, type of credit cardused as well as additional online shopping trip specific infor-mation, e.g., number of sold and returned items.

Summary of FindingsApplying a cost-based approach to evaluate retailers’ effi-cient payment provisions the empirical results show a sig-nificant positive influence of the transaction size on retail-ers’ payment costs in e-commerce. This finding reaffirmsWhitesell’s (1989) theory implying that the transaction valueis an important determinant in predicting transaction costs.Furthermore, we identify allowance costs due to fraud andpayment default as well as the type of credit card provider tohave a significant influence on retailers’ payment costs.More precisely, regression results reveal that for small trans-action sizes invoice is the most cost-efficient payment

How to Provide an Efficient PaymentOffer in B2C E-Commerce?Jan Kemper, RWTH Aachen UniversityRobert Maximilian Grüschow, RWTH Aachen UniversityMalte Brettel, RWTH Aachen University

Keywords: e-commerce, retail payments, transaction costs, working capital

EXTENDED ABSTRACT

For further information contact: Robert Maximilian Grüschow, Center for Entrepreneurship, RWTH Aachen University (e-mail: [email protected]).



method while prepayment dominates for large transactionsizes. Interestingly, electronic payments in terms of bothcredit card and PayPal cause higher transaction costs and donot show scale efficiency in e-commerce. In addition, wefind significant differences in collection time of accountsreceivables across payment methods implying cost of capitalarising to the retailer. Our results disclose prepayment andPayPal to induce the lowest cost of capital. Especiallyinvoice payments require a remarkably higher level of work-ing capital since collection time crucially depends on cus-tomers’ moral to pay immediately as well as retailers’ per-formance in dunning management.

Key ContributionsOur study enhances the understanding of how retailers cost-effectively provide payments in e-commerce. We apply the“transactions demand for cash” framework developed byBaumol (1952) and Tobin (1956) to e-commerce and followthe call of Santomero (1984) for further research on the rela-tionship between different payment instruments, deposit

reaction and profitability in a real-world environment. Webelieve to be the first to empirically investigate cost rankingsof the payment instruments invoice, credit card, PayPal andprepayment using a large data set of actual sales transac-tions. This approach is unique since existing studies on theretailers’ transaction costs are limited to surveys and aggre-gate statistics (Scholnick et al. 2008) and do not focus onelectronic payment instruments (ten Raa and Shestalova2004). In addition, to the best of the authors’ knowledge thisresearch is the first to explore differences across paymentmethods in the collection time of accounts receivables andthe respective influence on firms’ profitability.

From a managerial perspective, the findings provide guid-ance to online retailers as to refine their payment provisionin order to direct customers towards more efficient pay-ment instruments regarding costs and working capitalrequirements.


Research QuestionsWhat factors shape a customer’s return intentions of a product?

How does the nature of the return (honest vs. devious) influ-ence return outcomes?

How does a relationship between the customer and retailerchange, if at all, intentions to return a product?

Method and DataThe current research employed a multi-method researchmethodology consisting of in-depth interviews and an onlineexperiment. First, we conducted in-depth interviews with 30randomly selected US consumers from a national panel. Par-ticipants were qualified based on their return habits over thelast 9 months. The goal of the in-depth interviews was togain preliminary insight on how customers perceive returnpolicies.

Second, we conducted an online experiment with 472 US con-sumers recruited from a national panel. The type of the returnpolicy, the level of trust, and the nature of the return wereexperimentally manipulated, thus a 3 (type of return policy:lenient, moderate, strict) by 2 (level of trust: low, high) by 2(nature of return: dishonest, honest) between-subjects designwas employed. Participants saw a randomly assigned sce-nario about a fictional character, Sam, who needed to returna product. To test the study’s main hypotheses, we used apath analysis exploratory approach. Exploratory path analy-sis is an appropriate approach as it permits the researcher toidentify the important variables and processes influencingan outcome by estimating the magnitude of the predictedpathways.

Summary of FindingsTo test our hypotheses, we examined the magnitude of thepath coefficients in our conceptual framework to determinetheir relative contribution to explaining the focal constructs.H1A predicts that overall liking of the return policy posi-tively shapes customer’s instrumentality of the return policy,while H1B predicts that customer-retailer relational trustpositively shapes instrumentality of the return policy. BothH1A and H1B were supported (βLIKE = .72 t = 21.85, p =.000; βCRRT = .10, t = 3.04, p = .002). H2A predicts thatinstrumentality of the return policy positively shapes returnintentions, while H2B predicts that the customer’s instrumen-tality of the return positively shapes return intentions. H2Bwas supported (βIR = .82 t = 31.07, p = .000), however, con-trary to our prediction, H2A was not supported (βIRP = .04 t = 1.64, p = .101). H3A predicts that instrumentality of thereturn policy positively shapes perceptions of the overallreturn outcome, while H3B predicts that instrumentality ofthe return positively shapes perceptions of the return out-come. Both H3A and H3B were supported (βIRP = .09 t =3.80, p = .000; βIR = .84, t = 33.74, p = .000).

Key ContributionsThe main implication of this holistic look at productreturns is the limited role the instrumentality of the returnpolicy plays in shaping a customer’s overall intention toreturn a product. Even if a retailer creates an optimal levelof restrictions and hassles in the return policy, the overalleffectiveness of the return policy in reducing productreturn intentions appears to be minimal. The instrumental-ity of the return has a much larger influence on participantreturn intentions and return outcome. Thus, managers ofretail stores hoping to reduce product returns may need to

Don’t Remove That Tag: A Look at Customer Motivation for Product ReturnsJennifer A. Espinosa, University of South FloridaLisa Monahan, University of South Florida

Keywords: product returns, customer motivation, expectancy theory, customer retailer relational trust, return policies

EXTENDED ABSTRACT

For further information contact: Jennifer A. Espinosa, PhD candidate, University of South Florida (e-mail: [email protected]).



focus on customer education instead of return policyrestrictions. Since the customer’s instrumentality of thereturn represents his/her association between the type ofthe return and likelihood of the retailer accepting a productreturn, retail stores who educate customers on honest anddevious returns have a larger probability of reducing devi-ous product returns than those retail stores focusing onreturn policy restrictions. Even though retail stores attemptto define for consumers what constitutes an acceptablereturn, getting customers to see a devious return as such,

may require education beyond the stipulations of the returnpolicy. If Sam can wear the dress shirt once, return it, andstill meet all the requirements of the return policy, Sammay feel that such a return is fair and acceptable. Such areturn is only fraudulent from the retailer’s perspective,and thus, the challenge that remains is to close the gapbetween the retailer and customer perspectives and defini-tions of return fraud.


Research QuestionDramatic changes in the macro-economy have impacted theonce vibrant retail industry (e.g., Jia 2008). For example,fluctuations in gas prices, the unpredictable real estate mar-ket, and high rates of unemployment have forced many toshop more carefully and deliberately than before. In addi-tion, the growing popularity of discount chains has pressuredmany retailers to adopt low cost models that are further erod-ing their already small profit margins (e.g., Neumann 2008).Needless to say, retailers are in constant search of sources ofcompetitive advantage (e.g. Wade and Hulland 2007).Retailers like Wal-Mart use lean networks to achieve advan-tage, while Nordstrom and other premium retailers have cre-ated advantages by increasing the value of their offerings.Even still, some retailers like PETCO, Macy’s, and HomeDepot participate in cause related marketing (CRM) to dis-tinguish themselves from competitors (e.g., Smith 2010).

Despite their growing popularity, the implications of CRMactivities are unclear. It is specifically unclear if point-of-purchase charitable solicitations boost retailers’ reputations,sales, shopper loyalty, or result in any other competitive lift.We fill this gap by studying how point-of-purchase charita-ble solicitations impact retail financial performance.

Method and Data To determine the impact of point-of-purchase charitablesolicitations on retail performance we conducted an experi-ment and ran a regression analysis.

Data was obtained from 131 students from Midwest univer-sities. Subjects were randomly assigned to one of the follow-ing conditions: (1) “Imagine that you are on a typical shop-

ping trip to the grocery store. You have completed yourshopping and are being checked out by a cashier.” or (2) “Imagine that you are on a typical shopping trip to thegrocery store. You have completed your shopping and arebeing checked out by a cashier. The cashier asks you todonate to a charity.” After reading their scenario, subjectscompleted Aquino and Reed’s (2002) Moral Identity Scale,and rated the retailer’s image and their satisfaction.

To conduct the regression analysis, we rely on three datasources. Announcements were gathered from corporate web-sites, and shopper satisfaction scores and retailer type weregathered from The American Customer Satisfaction Index(ACSI). To note, MBA students coded donation types asmonetary, vote, product, purchase, or incentive after readingannouncements. Using this information, we modeled shop-per satisfaction as a function of retail format, fit between thecharity and retailer, and donation type.

Summary of FindingsThe survey results suggest that subjects not asked to donateto charities rated their shopping experiences significantlyhigher than those asked to donate (Mcontrol = 5.08, Mdonate =4.58, p < .05). We analyzed the data further, to account forsubjects’ Moral Identity ratings and gender. This fullermodel is significant (F = 4.26, p < .01) with adjusted-R2 =.093. Donation solicitation is still significant (F = 4.58, p <.05), along with the Moral Identity variable (F = 10.1, p <.01). A post-hoc analysis reveals that gender interacts withdonation solicitation (F = 3.68, p = .05). Males asked to donateat checkout are less satisfied than their peers (Mcontrol = 5.35,Mdonate = 4.49, p < .01), but no such effect exist for females(Mcontrol = 4.79, Mdonate = 4.78, ns).

Charity at Checkout: The Implications forRetailersEfua Obeng, Howard UniversityCasey Newmeyer, Case Western Reserve University

Keywords: retail, cause related marketing, competitive advantage, customer satisfaction

EXTENDED ABSTRACT

For further information contact: Efua Obeng, Assistant Professor, Howard School of Business, Howard University (e-mail: [email protected]).



Similarly, secondary data from ACSI shows that the type ofdonation retailers solicit is significantly related to satisfaction(β = 2.78, p < .001); shoppers asked to donate products (i.e.canned goods) are more satisfied with their shopping experi-ences than those asked to make other types of donations.Thus, retailers should avoid monetary donation programs.

Key Contributions We demonstrate that shoppers asked to donate to charitiesduring checkout are less satisfied than those not asked todonate. Given what the field already knows about the linkbetween satisfaction and performance (e.g. Anderson et al.1993), this means that retailers that solicit point-of-purchasedonations are likely to underperform relative to peers. Thisis not to say that retailers should avoid CRM activities, butunderstand that the structure of such programs is critical toretail success. For example, retailers may change the point at

which shoppers are asked to donate. It is possible that retail-ers would not suffer such negative satisfaction scores if thepoint of donation solicitation was moved to a different pointin the shopping process or the donation process was notforced upon consumers.

While the managerial implications of this research are quiteclear, it makes key theoretical contributions as well. Bydemonstrating that point-of-purchase donation programsnegatively impact retail performance, we identify a keystrategic adjustment retailers should make to achievecompetitive advantage. We also show that the consequencesof point-of-purchase solicitations vary given donation type,adding to the current research on charitable giving (Sen andBhattacharya 2001; Winterich et al. 2012).


Research QuestionThe purpose of this paper is to extend Zablah et al.’s (2012)findings by (1) further evaluating the psychological andbehavioral model structures by utilizing one such employeeattitudinal construct, external customer mindset (ECMS),that may better reflect the important employee customer-related attitudes necessary for their and their firm’s success,and (2) enhancing the model’s explanatory power by alsoconsidering a set of potential antecedents to the employee’scustomer-related attitudes.

Method and DataData were gathered from a sample of frontline employees ofa variety of firms located in a mid-sized southeastern UnitedStates city. All items used in the analysis were adapted fromestablished scales. Based on the recommendation of Ander-son and Gerbing (1988), the measurement model was firstrefined before testing the structural component of the model.Every factor in this study was submitted to a confirmatoryfactor analysis and all factor loadings were significant at the0.01 level (Bagozzi and Baumgartner 1994). The final set ofitems included in the study had acceptable discriminant andconvergent validity, internal consistency, reliability and par-simony. Based on the results, we found the measures to havesufficient validity and reliability and so allow testing the twocompeting models.

Summary of FindingsThe results support Zablah et al’s (2012) finding thatemployee customer-related attitudes are best considered as apsychological construct directly associated with their levelsof role stress and job engagement and indirectly associatedwith their job outcomes. Furthermore, these results confirmthat the general “employee attitude → role stress/jobengagement → job outcomes” structure suggest that ECMSnot only adequately represents frontline employee customer-related attitudes but since it is more consistent with a psy-chological conceptualization of these important employeeattitudes it is actually a superior means to do so.

Key ContributionsManagers should consider ECMS as an important tool whendealing with decisions associated with the front line employ-ees. ECMS provides an opportunity for managers to under-stand the attitudes of front line employees when there is lim-ited interaction with the customer. ECMS reduces the stressrelated (role ambiguity) aspect of the job which results inbetter engagement in the job. This is beneficial to the man-agers as company resources invested in attracting, selectingand retaining frontline employees may offer returns in theform of better performance and lower attrition.


Testing Competing Models of FrontlineEmployee External Customer MindsetRajesh Iyer, Bradley UniversityMark C. Johlke, Bradley University

Keywords: external customer mindset, organizational commitment, turnover intention, role ambiguity, job characteristics

EXTENDED ABSTRACT

For further information contact: Rajesh Iyer, Associate Professor of Marketing, Bradley University (e-mail: [email protected]).


Research QuestionWhat are determinants of service productivity? How dothese determinants interact within service organizations?How can an optimum level of service productivity beachieved?

Method and DataWe use qualitative research techniques in order to identifydeterminants of service productivity. More, insights into themanagement of service productivity in manufacturing firmswere gained. In the empirical study, 29 expert interviews,resulting in 23 hours audio and 422 pages transcript, andthree focus group sessions were conducted. Using theseinsights for further research, a generic approach was fol-lowed to further develop a decision theoretical optimizationmodel.

Summary and FindingsWe examine the relevance of understanding and managingservice productivity. We identify several internal and externaldeterminants that are key determinants of service productivity,such as employees, IT and software, customers, suppliers, andknowledge. Using these determinants identified, we present adecision model to optimize the level of service productivity.The objective is to maximize manufacturers profit underresource constraints whilst we assume demand depending onservice quality and availability of service determinants. A sto-chastic model that balances over- and underestimations ofcustomer demand and resource investments is developed. Wecontribute to prior research as presented in detail above.

From a a managerial perspective, these insights guide man-agers when implementing systems to enhance service pro-

ductivity. The knowledge on key determinants of serviceproductivity provided here is necessary for the cost man-agement of services. More, a decision model is necessaryto help managers when deciding on which and how manyof their resources to invest to provide services efficientlyand effectively. Ultimately, manufactures can use themodel for their decision making process of resource invest-ments into service determinates. This will help to improveprofitability for manufactures during processes of servicetransition.

Key ContributionsWe contribute to prior research by providing a detailed viewon determinants of service productivity by identifying inter-nal as well as external determinants of service productivity.More, we gain insights on how these determinants influenceservice productivity and how the determinants itself interact.Finally, existing literature on the management of serviceproductivity is enhanced by providing a stochastic optimiza-tion model that balances customer demand and the resourceinvestments of multiple antecedents. Doing so, we provide adeeper understanding of the interaction of the determinantsof service productivity and how to allocate them optimallyin service production processes. Doing so, we add to thestream of research that tries to identify the optimal level ofservice productivity.

AcknoledgmentsThis research project has been funded by the German Fed-eral Ministry of Education and Research (registration num-ber: 01FL12002).


A Different Perspective on Service Productivity in Manufacturing FirmsMirjam Velleuer, Catholic University of Eichstaett-IngolstadtJens Hogreve, Catholic University of Eichstaett-IngolstadtAlexander Hübner, Catholic University of Eichstaett-Ingolstadt

Keywords: service productivity, decision theory, stochastic optimization, substitution

EXTENDED ABSTRACT

For further information contact: Mirjam Velleuer, Catholic University of Eichstaett-Ingolstadt (e-mail: [email protected]).


Research QuestionsHow do customers respond to perceived territory infringe-ments by retail employees? How does rapport with the retailemployees affect these responses?

Method and Data The paper includes two exploratory studies and one mainstudy. The first exploratory study utilized critical incidenttechnique interviews (N = 21). The second exploratory study(N = 200) and the main study (N = 220) utilized surveys.

Summary of FindingsThe results indicate a new category of territorial responses,deferential verbalizations, along with deferential actions,retaliatory verbalizations, retaliatory actions, and abandon-ment, are responses to perceived intrusion by front-lineemployees. The results also indicate that employee rapporthas a positive moderating effect on the relationships betweenintrusiveness and all of the responses except abandonment,

such that rapport amplifies the effects of intrusiveness on theoutcomes of territory infringements.

Key ContributionsThe manuscript presents a typology of customer responses toterritory infringements. The typology, which was developedin the context of closing time boundary infringements, sug-gests a new category of territorial responses, deferential ver-balizations, where a customer verbally acknowledges theinfringer but continues to pursue his/her goals. It also sepa-rates retaliatory actions from retaliatory verbalizations, whichis important because the two responses have different costs tothe retailer. Finally, it establishes a role for customer rapportwith employees, which may increase the likelihood a cus-tomer will give up the domain, but may also increase the like-lihood that the customer will retaliate. The results have impli-cations for managers and the theory of human territoriality.


A Typology of Customer TerritorialResponses to Closing Time Intrusions by Frontline EmployeesChristy Ashley, East Carolina UniversityStephanie M. Noble, University of Tennessee

Keywords: services, human territoriality, service failure, retail

EXTENDED ABSTRACT

For further information contact: Christy Ashley, Associate Professor of Marketing, East Carolina University (e-mail: [email protected]).


Research QuestionMarketing services employees are commonly incentivizedon both quantity and quality performance (i.e. dual objec-tives) where the prescriptions for incentive design with sin-gular objectives may not fully extend to dual objectives.Although the theoretical literature (Hauser, Simester andWernerfelt 1994; Holmstrom and Milgrom 1991) offerssome clarity on how to design dual-objective incentives, theempirical literature is surprisingly dearth and the prescrip-tions are inconclusive. Consequently, we address two mainquestions in this research by constructing a comprehensive,empirical test. First, we examine whether managers are ableto utilize incentives to manage service quantity and qualityperformance and second, we assess whether managersshould incentivize one or both objectives to boost marketingservice employee performance.

Method and DataOur empirical analysis consists of one laboratory experimentand two field experiments conducted in a large Asian callcenter. Across the lab and field settings, we exogenouslymanipulate the incentives across the dual objectives toexamine our research questions and test theory. In the labo-ratory, we employ the experimental economics methodologyand investigate whether participants from a large researchuniversity allocate effort consistent with the dual-objectivetheory of incentives. Similarly, in the two field experiments,we extend our investigation to employees at a large,inbound, call center in Asia who solve troubleshooting prob-

lems. The call center representatives were measured andcompared across the conditions on quantity (the number ofcalls completed) and quality (the customer satisfactionscores obtained for each employee) performance.

Summary of FindingsThe results of the laboratory experiment and the two fieldexperiments show ample support for the dual-objectiveincentive theory. First, we find significant differences inmarketing service employee performance across the condi-tions. Hence, we confirm that managers can indeed useincentives to manage service quantity and quality. Second,our results indicate that incentivizing one or both objectivescan lead to varied outcomes. Incentivizing one objectiveleads to the greatest improvement in performance for thefocal objective and a concurrent loss in performance for thenon-focal objective, while incentivizing dual objectives pre-vents performance drops, but results in only modest gains inperformance. Consequently, managers can utilize the incen-tive program to pursue either a specialization or a balancestrategy to achieve the firm’s service goals.

Key ContributionsOur contributions are threefold. First, this research empiri-cally validates the dual-objective theory of incentives anddemonstrates that managers can use incentives to effec-tively manage marketing service employee performancewhen the objectives are dual. Second, we provide furtherclarity as to how managers should design these incentive

Dual-Objective Incentives and MarketingEmployee Performance: Evidence fromLaboratory and Call Center Field ExperimentsSung H. Ham, George Washington UniversityChanho Song, Kent State University

Keywords: incentives, services marketing, call centers, field experiments, experimental economics

EXTENDED ABSTRACT

For further information contact: Sung H. Ham, Assistant Professor of Marketing, George Washington University (e-mail: [email protected]).



programs to obtain specific goals for service quantity andquality performance. This finding is imperative becauseincentive design with dual objectives is vastly more com-plex than with singular objectives since managers need toaccount for the interrelatedness of the dual objectives toobtain the envisioned results. Third, we adopt an empirical

methodology that relies on the combination of laboratoryand field experiments to test theory. Thus, our findings canbe interpreted without strong threats to internal and exter-nal validity.


Research QuestionBecause price increases often lead to customer switching,managing and implementing them is a key challenge for firms.Firms search for tactics to raise prices for their customers whilesecuring profit margins and also maintain their customer base.Further, many industries are required to explicitly announceincreased prices by sending customers notification letters. Thisascends the question how firms respond to this requirementand try to prevent the undesirable effects on their customerbase such as switching. Therefore, it seems plausible that thesefirms conceptualize their price increase letters according totheir assumptions what factors might impact customers morepositively regarding the price increase and finally preventnegative responses such as complaints toward the firm, nega-tive word-of-mouth and switching. We thus aim to investigatethe following research questions:

How do service firms communicate price increases in oblig-atory notifications?

How do price increase communication practices follow orneglect theoretical and empirical research findings?

Thus, this study focuses on the investigation of how compa-nies deal with obligatory price increase communicationdirected towards customers.

Method and DataFrom prior findings in marketing research on price increasesand theoretical reasoning, we derive a conceptual frameworkof firm communication of price increases as an importantdeterminant of customers perceived switching costs, price

(increase) fairness perceptions and switching behavior andoffer seven propositions on price increase communicationpractices. After developing our propositions, we test ourassumptions by content analyzing 97 mailings of Germanenergy suppliers who communicated price increases towardtheir customers. We selected the firms by randomization andaimed to sample over most federal states in the country. Forall investigated content and across all three coders, we have aninter-coder reliability ranging higher than 94%, signaling ahigh reliability. We examined letters of price increase commu-nication of energy suppliers for a time period of four months,two months before years end, two months after. Our sampleconsists of firms with their head office in eleven out of 16 fed-eral states of Germany. We also calculated the potential size ofthe population which might be affected by the price increaseof these firms. In sum, we investigated firms with an overallcustomer base of about 11.12 million which corresponds toapproximately one fourth of German households.

Summary of FindingsWe find support for several propositions on price increaseannouncements and associated firms’ tactical behavior.These tactical behaviors encompass a usage of selectiveinformation to convince customers maintaining their rela-tionship with the firm. We determine that service firmsimplement several means which have been shown to influ-ence consumers positively (e.g., relating price increases tocosts on which the firm has no control). Thus, 69.1% of thefirms verbally stated having no control over the recent priceincrease. We moreover identified several new phenomena inprice- and relationship-related communication practices. Wefound that only a small number of firms explicitly commu-

“Dear Customer, We Must Increase OurPrices …” How Service Firms Utilize Typesof Price Increase CommunicationsDoreén Pick, Freie Universitaet BerlinStephan Zielke, Aarhus University

Keywords: price increase, price communication, services, qualitative study, content analysis

EXTENDED ABSTRACT

For further information contact: Doreén Pick, Assistant Professor, Freie Universitaet Berlin (e-mail: [email protected]).



nicate price increases in headlines of their mailings. Conse-quently, firms hide price increase information to someextent. Further, 46.3% of the firms increased their pricemore than cost increases. However, findings also suggestthat firms are not highly aware of the chances to communi-cate their investments to customers. They only selectivelycommunicate the quality of their relationships and offeringsor the future relationship by sentences such as “With us, youwill have a fair partner also in the future”. Thus, firms arenot aware of the potential social impact of referring to theintention to continue the relationship.

Key ContributionsOur framework and propositions are the first focusing on thecontent of genuine price increase communication by firmsand therefore contribute to marketing research by enhancingour understanding of potential effects of price increases.

The key contributions of this study provide implications forresearch and practice:

(1) We theorize the content of price increase communicationfrom a firms’ perspective and add to recent knowledgeon pricing tactics limiting negative consequences, suchas perceptions of price unfairness.

(2) We further uncover the communicative content firms usein practice in the context of price increases and our studythus sheds light on price-related persuasion tactics offirms, such as tendencies towards overpricing after acost-increase. To illustrate, we found that every secondfirm increased the price more than cost increases causedby governmental regulation require.

(3) We provide suggestions for future research on priceincrease communication. In particular, we aim to deepeningthe external validity in experimental studies on the effects ofprice increase communication on customer responses, suchas price (un)fairness, switching and loyalty.


Research QuestionDigitization allows firms to set prices with more flexibilityand apply a multi-dimensional price strategy. It also allowsconsumers to learn different components of price offers andmake purchase decisions. Although previous works haveexamined the effects of the form of price partitioning on con-sumer’s shopping pattern (e.g., Lewis, Singh, and Fay 2006),and some studies investigate how price promotion strategiesinfluence decisions (e.g., Lam et al. 2001), little work hasempirically applied price surcharges and discounts jointly toinvestigate the purchase. To fill this gap, we employ a Gain-and-Loss Utility model (Inman, Dyer and Jia 1997) incorpo-rating both gains and losses in prices presented to customersin the transactions to model online purchase behaviors.

In the current study, we associate price surcharge with “Loss”and price discount with “Gain” and show that price surchargeand price discount in an online purchase session would havesignificant effects on consumers’ purchase behaviors. We alsofind the asymmetry in the effects of “Gain” and “Loss”. Inthis way, we introduce a new way of looking at multi-dimen-sional prices that incorporate the studies on price partitioning,loss and gain in prospect theory, as well as works in numericalrepresentations of prices. We contribute to this topic byjointly examining the effects of Loss and Gain on consumers’purchase decisions, as well as how purchased items disperseacross product category and price levels.

Method and DataOur data is a random sample of transaction records of mul-tiple major online retailers in one year time frame in the

United States. Since it is from online channel of brick-and-mortar retailer or pure-play E-tailer, there is no geographiclimit to the purchase. All transactions made are from thewebsites and recorded in the website server of each retailer.When a consumer makes transaction online, she/he couldcomplete the whole session, which starts when the customerenters the website, and ends when the consumer completesthe transaction and closes the web page. The whole transac-tion process is called “purchase session” in the digital mar-ketplace. The data in our current empirical study includes18,715 unique purchase sessions. The data covers totally43,556 different items purchased by 7,696 unique cus-tomers, from eight well-known online retailers. For eachpurchase session, we capture details about the expenditure,including customer’s machine ID, visit duration, pagesviewed in the session, purchase date and time, names andcategories of each items purchased in the session, purchasequantity of each item, price of each item, and total basketprice (how much consumers pay at the end of session).

Following Inman, Dyer and Jia (1997)’s generalized utilitymodel, which incorporates intuitively appealing notions ofdisappointment and regret jointly, we model consumers’losses and gains on price when we observe the differencesbetween product total price (the total dollar amount of allitems they purchase in a session) and basket price (the totalexpenditure they need to pay in a session). Both positive andnegative gaps are captured in the panel data, and thus weapply a piecewise linear model to incorporate the effects oflosses and gains, operationalized by the positive and nega-tive gaps and relative gaps we develop in two models.

How Customers Manage Purchase WhenThey Lost or Gain? Effects of Price Surcharges and Savings on ExpendituresYiyuan Liu, Otterbein UniversitySanjoy Ghose, University of Wisconsin–Milwaukee

Keywords: price partitioning, multi-dimensional pricing, price surcharges, shipping and handling fees, price dispersion, online pricing

EXTENDED ABSTRACT

For further information contact: Yiyuan Liu, Assistant Professor of Marketing, Otterbein University (e-mail: [email protected]).



Summary of FindingsEmpirical results show asymmetry in the effects of (bothabsolute and relative) price surcharge and price discount,which implies that customers are managing their purchasesdifferently when they lose or gain. Specifically, given onedollar amount customers save in the basket, they tend tomake more expenditures for their total purchase products,for their total basket, tend to buy more items, spend more onthe average expenditure per item, buy products with largerprice dispersions and more variations in the category. On thecontrary, the dollar amount customers lose in the basketresults in smaller basket size, however the components ofproduct items in the basket show more variations. Specifi-cally, given one extra dollar amount customers pay in thebasket, consumers tend to make less expenditures for theirtotal purchase products, for their total basket, spend on lessaverage expenditure per item, however, they tend to buymore unique items, buy products with larger price disper-sions and more variations in the category. The results pro-vide insights that customers tend to maximize the benefitsthey’ve gained from the price savings in the basket, whilethey try to minimize the loss they face given a certain levelof price surcharge at the checkout by putting more dissimilarproduct with larger variations in prices and categories.

Key ContributionsIn sum, we propose a Gain-and-Loss Utility model incorpo-rating both price surcharges and price savings developedfrom price partitioning, price promotion as well as prospecttheory. By decomposing positive and negative gap betweenpurchased product total prices and transaction basket price,we include both positive and negative gaps and examine“Gain” and “Loss” simultaneously in the price strategyframework. Our theoretical framework includes price parti-tioning, promotion strategy, price presentation, loss and gaintheory, as well as price surcharges and price savings as thekey stimuli of customers’ expenditure behaviors. Empiricalresults show asymmetry in the effects of (both absolute andrelative) price surcharge and price discount, which impliesthat customers are managing their purchases differentlywhen they lose or gain. Specifically, we discover that whencustomers lose by paying extra surcharges, it does not nec-essarily hurt the purchase however it encourages customersto buy more, buy products in the basket with more variationsin both prices and category selections.


Research on price promotions has harvested a lot of atten-tion (Krishnan, Biswas, and Netemeyer 2006; Krishnan,Dutta, and Jha 2013). This is largely because marketersspend more than US$8 billion on price promotions perannum (Howard and Kerin 2006) and price information is asignificant cue in consumer judgment and decision making(Chandrashekaran 2004). One of the major price promotiontools used by retailers is to provide the discount size infor-mation with reference to some external standards. On theother hand, consumers often evaluate an advertised discountsize as plausible or exaggerated by comparing the sale pricewith some external or internal standards (Jacobson andObermiller 1990).

Research Question A number of researchers (Grewal, Marmorstein, and Sharma1996; Krishnan, Biswas, and Netemeyer 2006) have studiedthe role of discount size in advertised price promotion.Although the effectiveness of exaggerated discount size iswell documented, it has been shown that time pressure, fre-quency (Krishnan, Dutta, and Jha 2013), familiarity (Biswasand Blair 1991), consumers’ age (Licata, Biswas, and Krish-nan 1998), and the consistency and distinctiveness of seman-tic cues used in reference price ads (Burton, Lichtenstein,and Herr 1993) have either weakened or strengthen its effec-tiveness. Therefore, in order to expand our understanding,we examine the effect of temporal farming and discount sizeon attitude and purchase intention. Additionally, we investi-gate the role of a consumer’s temporal orientation, whichhas not been examined in the extant pricing literature. We

propose that psychological distance may systematicallyinfluence consumers’ price perceptions. We propose that thischange in mental construal alters the relative salience of thetwo contrasting roles of price, leading to different productevaluations for psychologically distant versus near pur-chases.

Method and Data We conduct a pilot and one experiment to test the hypothe-ses. The experiment was a 2 (Discount Size: Low vs. High)x 2 (Time of Release: 1 Week vs. 6 Months) between-subjects experiment addressing effects of DS and TR for aTablet PC. The sample consisted of 248 undergraduate busi-ness students enrolled at a major southern university. Partici-pants were given modest course credit for participating. Themean age of the sample was 21 years (SD = 1.7; range = 19to 36) and 50.81% were female. Participants were informedthat the purpose of the study was to test the effectiveness ofan advertisement announcement directed towards collegestudents.

Summary of Findings While previous studies have shown the positive effects ofdiscount size on perceptions, we find that an exaggerateddiscount is likely to have a negative impact on attitudetoward the product and purchase intention when a productrelease is in the distant future. This effect is more visible forconsumers who have a future-oriented temporal orientation.Additionally, using temporal framing and construal levelframework, we find a significant mediating role of the value

Time Marches On: Effects of TemporalOrientation, Time of Release, and Discount Sizes on Purchase IntentionsAmaradri Mukherjee, University of ArkansasSubhash Jha, Indian Institute of ManagementRonn J. Smith, University of Arkansas

Keywords: discount size, temporal orientation, new product, promotion, purchase intention

EXTENDED ABSTRACT

For further information contact: Amaradri Mukherjee, Sam M. Walton College of Business, University of Arkansas (e-mail: [email protected]).



of the deal between the relationship of discount size andprice perception.

Key Contributions The findings of this study are likely to have theoretical andmanagerial implications. Theoretically, CLT is used toexplain the impact of temporal framing and discount size onconsumers’ attitudinal perceptions. Additionally, we find theboundary condition of our research finding using individualtemporal orientation as a moderating variable. Managerially,

it is important to know how consumers process the pricingmessage containing temporal elements in it. For example,online retailers can use temporal message framing with thedifferent levels of discount size, such as pre-order optionsfor products that will be released in the future. Our studyprovides insight to whether temporal framing with differentlevels of discount size is going to differ among consumerswith different levels of time orientation.


Research QuestionPay-what-you-want pricing strategy is a new form of partici-pative pricing, which offers consumers the greatest controlover prices, as it allows them to set the price at any level,including zero, and the seller cannot reject it (Kim et al. 2009).Previous research has studied the effects of pay-what-you-want pricing on consumers’ willingness to pay, suggestingthat such approach could lead to an increase in overall reve-nues (Kim et al. 2009). Despite the potential financial bene-fits, the viability of pay-want-you-want practice for differentindustry sectors or selling channels remains under-investi-gated. Prior literature has mainly focused on the service sec-tors in brick-and-mortar stores. Given the distinct differencesbetween the brick-and-mortar and Internet shopping environ-ments (e.g., lack of sensory attributes), little is known aboutwhether this new pricing strategy can be successfullyextended to an online platform, particularly, to tangible prod-ucts. The objectives of this research are to investigate the fea-sibility of adopting the pay-what-you-want pricing mecha-nism on the Internet and to identify determinant factors thatmight influence consumers’ willingness to pay.

Method and DataTwo between-subject experiments with a total of 259 partici-pants obtained through a nationally representative onlineconsumer panel by marketing research company Zoomerang(now Survey Monkey) were used to examine our hypothesesand conceptual model. In study 1, the respondents were ran-domly assigned to the conditions of a 2 (Virtual product

experience: presence vs. absence of product video) x 2(Product brand familiarity: familiar vs. unfamiliar) between-subjects factorial design. Participants first read a short sce-nario asking them to consider purchasing a movie DVDonline. They were then shown the movie DVD product pagewith standard product images and a written description ofthe movie. To manipulate virtual product experience, a two-minute movie trailer (presence vs. absence of a movietrailer) was embedded within the product page. At the end,participants responded to seven-point Likert scales thatmeasured product knowledge, perceived quality, and pur-chase intentions, and indicated the price they would pay forthe DVD. In study 2, the subjects were randomly assigned tothe conditions of a 2 (External reference price: presence vs.absence) x 2 (Product brand familiarity: familiar vs. unfa-miliar) between-subjects factorial design. A 16GB USBflash drive was the experimental product.

Summary of FindingsOverall, the findings indicate that the effects of the presenceof virtual product experience and an external reference priceare moderated by brand familiarity. For an unfamiliar brand,providing consumers’ with a virtual product experience(e.g., a product video with both visual and auditory compo-nents) is important for enhancing consumer’s evaluationsand increasing the price they are willing to pay for the prod-uct. On the other hand, an inclusion of an external referenceprice diminishes their evaluations and consequent behav-ioral intentions. In contrast, for a known, familiar brand, the

Determinants of Consumers’ Response toPay-What-You-Want Pricing Strategy onthe InternetFei L. Weisstein, University of Texas-Pan AmericanMonika Kukar-Kinney, University of RichmondKent B. Monroe, University of Richmond, University of Illinois at Urbana-Champaign

Keywords: pay-what-you-want pricing, brand familiarity, virtual product experience, external reference price,online shopping

EXTENDED ABSTRACT

For further information contact: Fei L. Weisstein, Assistant Professor of Marketing, University of Texas-Pan American (e-mail: [email protected]).



presence of a virtual product experience did not significantlyinfluence the dependent variables. Including a suggested ref-erence price increased perceived product knowledge andperceived quality. Finally, we demonstrate that in this pay-what-you-want pricing context consumers’ purchase inten-tions are influenced mainly by their perceived productknowledge, while perceived quality influences the price theyare willing to pay.

Key ContributionsIn this research, we explore the effects of pay-what-you-want pricing in an online setting and extend the scope ofinvestigation to tangible products. We contribute to the pric-ing literature by identifying two factors that influence onlineshoppers’ perceptions of and response to pay-what-you-wantpricing: a presence of virtual product experience (study 1)

and an existence of an external reference price (study 2).Further, we identify brand familiarity as an important mod-erator of these effects. We also uncover two theoreticalmechanisms underlying consumers’ pay-what-you-wantpurchase decisions. We demonstrate that consumers’ pur-chase intentions are primarily driven by their perceivedproduct knowledge, while the final pay-what-you-want pricethey are willing to pay is determined by the perceivedquality of the product. Subjective product knowledge andperceived product quality emerge as mediators of the pro-posed effects on consumers’ purchase intentions and pay-what-you-want price paid. Our empirical evidence also pro-vides important and relevant implications to pay-what-you-want pricing managers.


Research Question Despite their effectiveness as a marketing tool, studies havenoted unintended consequences of Customer Referral Pro-grams (CRP). In particular, potential customers may oppor-tunistically take advantage of a CRP by engineering an arti-ficial referral situation to obtain the reward. A new customermay learn that the company offers a reward for referrals andsearch for a friend who already is a customer to ask him orher for the referral. The potential customer purchases fromthe service provider, essentially “faking” a referral situation,which invokes payment of a reward. We call this process“referral engineering.” In the case of engineered referrals,CRPs may not build on existing customer satisfaction and donot stimulate authentic word-of-mouth. According to anec-dotal evidence we received from the cellular services indus-try, opportunistic use of CRPs can account for more than50% of all referrals, leading us to raise the followingresearch questions: (1) How prevalent are engineered refer-rals in services industries? (2) In general, what factors moti-vate customers to engage in engineered referrals? (3) In par-ticular, how do the size of the reward and the reputation ofthe service firm affect the likelihood that customers engineerreferrals?

Method and DataWe conducted two empirical studies. First, we conducted anexploratory survey study to demonstrate the prevalence ofreferral engineering in different service industries. We con-tacted a representative set of German consumers via tele-phone (sample size 501). Second, we test our hypotheses inan online scenario experiment in which we analyzed theeffects of reward size and reputation on intentions to engi-neer a referral. We conducted a 2x2 between-subjects facto-rial design and manipulated reward size (large versus small)

and reputation (high versus low). We chose cellular telecom-munications services as setting. In total, 307 subjects tookpart in this study.

Summary of Findings In our survey, we could determine that approximately one-third of the sample (31.0%) had participated in a CRP byrecommending a new customer to a firm offering a CRP. Ofthese 155 referrers, 71 (45.8%) engaged in referral engineer-ing the last time they participated in a CRP. The most com-mon service industries in which consumers participate inCRPs were: retailing; newspaper and magazine subscrip-tions; book, automobile, or fitness clubs; and telecommuni-cations. We analyzed whether referral engineering is morecommon in certain service categories but found no signifi-cant differences among industries.

In analyzing the experimental data, we first tested for apositive effect of reward size on intentions to engineer areferral. The ANOVA results revealed a significant directeffect (F = 6.2; p < .05). In response to a large reward, sub-jects exhibited a 72.7% average intention to engineer areferral; for a low reward, this intention decreased to62.6%. The direct effect of reputation on intention to engi-neer a referral was not significant (F = .1; p > .05), thoughthe hypothesized interaction between reward size and repu-tation on intention to engineer a referral was significant (F = 4.0; p < .05). However, reward size only mattered forfirms with higher reputation. When faced with a more rep-utable firm, customers’ intentions to engineer a referralincreased from 59% to 77.3% for a large compared with asmall reward. In contrast, intentions to engineer a referralfor the less reputable firm remained the same for large andsmall rewards.

Referral Engineering in Service Markets:Initial Evidence and Consumer MotivationsIna Garnefeld, University of WuppertalSabrina V. Helm, University of Arizona

Keywords: referral engineering, word-of-mouth, referrals, customer referral programs, opportunism

EXTENDED ABSTRACT

For further information contact: Sabrina V. Helm, Associate Professor, Retailing and Consumer Sciences, University of Arizona (e-mail: [email protected]).



Key Contributions CRPs have been identified as a particularly effective andefficient customer acquisition tool. However, past researchand marketing practice have vastly neglected the potentialunintended consequences of CRPs (Wirtz and Chew 2002;Schmitt et al. 2011). Our research introduces the concept ofreferral engineering and provides first and notable empiricalevidence on its pervasiveness in service industries. We canshow that certain design elements of CRPs (i.e., size of the

reward) increase the likelihood of referral engineeringamong customers, and that certain firms (i.e., those with lowreputation) are more prone to face referral engineering. Wesuggest that marketing managers reconsider the effective-ness of CRPs based on this and future studies to betterunderstand the impact referral engineering may have onfirms as well as their customers.


Research Question Customers and managers expect frontline employees (FLEs)to display positive emotions during service encounters. It isalmost impossible, however, for FLEs to be in positivemoods all the time when delivering services. As a result,FLEs are motivated to engage in emotional labor (Broth-eridge & Lee, 2002). Emotional labor, the process by whichFLEs’ regulate their emotions to show desirable displays, isoften achieved by two means (Grandey, 2000): deep acting(modifying inner feelings to deliver positive emotional dis-play) and surface acting (suppressing true feelings to fakepositive emotional display). Deep acting, but not surface act-ing, enhances employee well-being and organizational com-mitment (Cho, 2012; Totterdell & Holman, 2003) andincreases customers’ positive attitudes toward services(Gountas, Ewing, Gountas, 2007; Groth, Hennig-Thurau, &Walsh, 2009). This research aims to understand when and towhat extent customer oreintation leads to deep acting. Draw-ing on goal setting theory (Locke & Latham, 2002), I pro-pose that FLEs’ personal goal of customer oreintationencourages the goal performance of deep acting throughtheir goal-relevant skill of emotional sensitivity. In addition,I propose that the positive effects of customer oreintation ondeep acting vary based on the severity of dysfunctional cus-tumer behavior (DCB).

Method and Data A total of 330 respondents were recruited through M-Turk.Because 78 subjects failed the attention check and 15 sub-jects had no experience as service workers, the final samplecontained 237 subjects. The study used a mixed method

design using measured variables (e.g., customer orientation)and a scenario-based manipulated variable (i.e., DCB). Sub-jects were randomly assigned to one of two DCB conditions:severe DCB (n=116) and less severe DCB (n=121). Partici-pants were asked to imagine that they were FLEs encounter-ing a dysfunctional customer. The customer demands theFLE violate company policy. In the severe case, the cus-tomer makes this demand by yelling and throwing objects.In the less severe case, the customer makes this demand bycomplaining and providing negative feedback. Using seven-point Likert scales, the measures of customer oreintation,emotional sensitivity, deep acting and perspective taking(included as a control variable) are based on the scalesdeveloped by Brown et al. (2002), Riggio (1986), Broth-eridge & Lee (2003) and Chan & Wan (2012) respectively.Because all constructs indicate satisfactory reliability anddiscriminant validity, the composite scores are used to testthe proposed model by running the Preacher-HayesPROCESS model in SPSS 22.

Summary of Findings Adopting PROCESS model 15 with 5000 bootstrap samples,the proposed theoretical model explains 16.94% variance inemotional sensitivity and 25.32% variance in deep acting.Controlling for perspective taking, the results support the fullmediation effect that FLEs’ customer oreintation encouragesdeep acting through emotional sensitivity because the posi-tive effect of customer oreintation on deep acting becomesnon-significant (ß = 0.219, p = 0.208, LLCI = -0.123, ULCI = 0.560) after including the mediator of emotional sen-sitivity (ß = 0.327, p = 0.007, LLCI = 0.089, ULCI = 0.565).

How and to What Extent Customer Orientation Leads to Deep Acting: The Roles of Emotional Sensitivity and Dysfunctional Customer Behavior SeverityYu-Shan Huang, Oklahoma State University

Keywords: customer orientation, dysfunctional customer behavior severity, deep acting, emotional sensitivity

EXTENDED ABSTRACT

For further information contact: Yu-Shan Huang, PhD candidate, Oklahoma State University (e-mail: [email protected]).



In addition, emotional sensitivity was found to interact withDCB severity to affect deep acting (ß = -0.379, p = 0.020,LLCI = -0.697, ULCI = -0.060). To examine the moderatingeffects of DCB severity, dummy coding was applied to DCBseverity manipulation, such that 0 represented the less severegroup and 1 represented the severe group. Specifically, thepositive effect of emotional sensitivity on deep acting wasnot affected when the DCB was less severe while emotionalsensitivity had no influence on deep acting when DCB wassevere. In sum, emotional sensitivity was found to mediatethe positive influence of customer oreintation on deep actingonly when DCB was less severe.

Key Contributions The current study contributes in several ways to the litera-ture of customer oreintation, DCB and emotional labor aswell as offers a number of managerial implications. First, itextends the customer oreintation literature by proposing thatthe indirect positive effects of customer oreintation on deep

acting will not hold in the presence of severe DCB. Second,it broadens the literature on DCB by exploring the differenteffects of DCB severity perceived by FLEs. Third, it con-tributes to the emotional labor literature by examining itfrom the goal-setting perspective to explain how the per-sonal goal of customer oreintation leads to the goal perform-ance of deep acting through focus on the goal-relevant skillof emotional sensitivity. Lastly, it offers managerial implica-tions for organizations to better manage service encounters.To encourage FLEs’ deep acting, managers are well-advisedto help FLEs further develop the ability to sense customers’emotion during service encounters. However, it also isimportant to note that the positive effect of emotional sensi-tivity on deep acting is likely to be moderated by the severityof DCB. Companies are recommended to monitor the sever-ity of DCB and to develop coping strategies specifically tar-geted to severe DCB.


Research QuestionTo what extent do role stress variables like role conflict andwork-family conflict moderate the relationship between aservice employee’s personality traits and customer orienta-tion? The personality traits are measured using the big fivepersonality traits framework.

Method and DataThe research hypotheses are validated through a sample sur-vey of 281 call centre executives in India. Established scalesare used to measure the constructs and the measurementmodel is validated through the structural equations model-ling. The hypothesised relationships are tested through amoderated regression.

Summary of FindingsThe study finds that role conflict and work life balance ingeneral have a negative moderating impact on the relation-

ship between the big five personality traits and customer ori-entation of service employees. Except for the moderatingimpact of work family conflict on openness and role conflicton emotional stability, the moderating impact of RC andWFC on all the other relationships are shown to be statisti-cally significant at p < 0.01 level. The moderator regressionalso controlled for the gender of the employees.

Key ContributionsThe study establishes that a service employee’s role conflictand work family conflict can moderate the impact of person-ality traits on customer orientation. While previous studieshave established the link between personality traits and cus-tomer orientation, by establishing the presence of moderat-ing variables in this relationship, the study provides newinsights to existing theory as well as practice.


The Impact of Personality Traits on Customer Orientation Among Call CenterWorkers: The Moderating Effectof Work–Family Conflict and Role ConflictSunil Sahadev, University of SalfordSudarshan Seshanna, Alliance UniversityKeyoor Purani, Indian Institute of ManagementBradley Barnes, Sheffield University School of Management

Keywords: personality traits, role conflict, customer orientation, India, call centres

EXTENDED ABSTRACT

For further information contact: Sunil Sahadev, Professor of Marketing, Salford Business School, University of Salford (e-mail: [email protected]).


Research QuestionIn seasonal goods markets it is essential to understandintertemporal patterns of price-induced demand effectswhen developing pricing strategies (Levy et al. 2004).Knowledge of these effects is pivotal for online fashionretailers making use of mark-down pricing systems to clearinventories (Anderson and Simester 1998). Therein, pricesof poorly selling articles are reduced to increase sales andavoid excess stock (Soysal and Krishnamurthi 2012). A leverto improve these systems is gaining knowledge of seasonalpatterns of price elasticity to dynamically adjust prices andthus target specific customer segments at the right point intime (Sorescu et al. 2011).

Although the resource-based view identifies the importanceto understand the pricing process as a capability (Dutta,Zbaracki, and Bergen 2003), literature aiming to gain a bet-ter understanding for underlying success factors of mark-down pricing remains scarce (Desiraju and Shugan 1999).The emergence of e-commerce likely leads to new behav-ioral patterns of customers with respect to price sensitivityconsidering increased information availability (Varadarajanand Yadav 2002). Nevertheless, little is known aboutintertemporal demand effects in fashion e-commerce and itsdrivers. We thus seek to make a contribution by analyzingcustomer segment behavior towards price changes and vary-ing shop layouts over time.

Method and DataA three-step approach is employed to answer the raisedquestions. First, customer segmentation is conducted usinglatent class analysis. Second, in line with related literature(Granados et al. 2012) different log-linear demand modelsare estimated on brand level by two-stage least squares to

derive temporal price elasticity curves. Therein, an instru-mental variables approach is used to account for possibleprice endogeneity. Third, obtained price elasticity estimatesare regressed on varying levels of discount density to assessthe effect of a changing shop appearance on price elasticitymagnitude.

We have access to a unique data set provided by a leadingEuropean fashion e-commerce retailer consisting of morethan 3.3 million actual sales observations of numerousapparel and shoes categories. We select 20 product cate-gories for further analysis covering 373 brand-categorycombinations. The data were collected between September2013 and February 2014 involving more than 1.2 millionobservations. They contain information on demand, sellingprice, purchase price, availability and average categoryprices of private and national brands in in the German webshop on product level. Furthermore, a customer-level sub-sample covering a two-year period in the women boots cate-gory is available for customer segmentation.

Summary of FindingsThe empirical results reveal a generally increasing trend inprice elasticity magnitude over the season. This trend stemsfrom an increasing discount density over time leading to adecreasing effectiveness of price promotions. This effectoverweighs a growing extent of price elasticity resulting fromthe development of the customer base. Therein, we identifythree customer segments. First, a fashion-oriented segmentwith low price sensitivity buys early in the season and shrinksrelatively over time. Second, a strategically-acting segmentcharacterized by high price sensitivity gains relative size inthe course of a season. Third, a price-comparison shoppersegment maintains a rather constant segment share.

Intertemporal Demand Effects in FashionE-CommerceDavid Heuer, RWTH Aachen UniversityMalte Brettel, RWTH Aachen University

Keywords: e-commerce, intertemporal effects, fashion, price elasticity, customer segmentation

EXTENDED ABSTRACT

For further information contact: David Heuer, RWTH Aachen University (e-mail: [email protected]).



Furthermore, we glean from our results that retailers need toemploy time-specific elasticity estimates when developingmark-down systems as price elasticities fluctuate consider-ably over the season. Our results also show that it is pivotalto target specific customer segments in different periods dur-ing the season to ensure success of mark-down pricing prac-tices as well as fostering customer satisfaction. Proposingitems on sale to strategic customers early in the season whendiscounts are still low can contribute to firm profit as thesame products are sold to the same customers but just earlierand at a higher price.

Key ContributionsTo the knowledge of the authors this is the first study toempirically analyze intertemporal patterns of price elasticityin fashion e-commerce. We thus contribute to literature byfollowing the call of Desiraju and Shugan (1999) to betterunderstand and integrate marketing and revenue manage-ment. We disclose reasons in terms of differences in cus-tomer choice behavior why price elasticities change in the

course of a season in fashion e-commerce with direct impli-cations for mark-down pricing practices. Thereby, weaddress the call of Kopalle et al. (2009) to better understandpricing practices in online fashion retailing and to examinestrategic customer behavior in the context of pricing forprofitability.

Moreover, we identify the presence of customer segmentswith differing levels of price sensitivity resulting also fromheterogeneity in search activity among customers. Thisheterogeneity in search activity most likely stems from dif-ferences in search costs (Srinivasan & Ratchford, 1991) andthus represents empirical evidence why price dispersion stillprevails in online retailing (Kocas & Bohlmann, 2008),although search costs are predicted to be comparatively lowin this setting (Bakos, 1997). We thereby follow a call byRatchford (2009) to analyze demand side effects influencingprice dispersion in e-commerce.


Research QuestionWhat is the optimal distance between two franchising outletsand what are the impacts of an individual franchisee’s adver-tising spending, as a function of distance to another fran-chisee, on the franchisor and franchisees’ expected revenues?

Method and Data The authors develop a spatial model to 1) describe the opti-mal distance between franchising outlets with the consider-ation of simultaneously maximizing the profits of both thefranchisor and franchisees and to 2) understand the conse-quences of a franchisee’s location-specific advertisingspending intended to direct customers to a specific fran-chisee outlet.

Summary of Findings The results of this study suggest that the optimal solution forthe locations of franchisees involves some cannibalization ofsales between the outlets. In this optimal solution, both fran-chisors and franchisees can maximize their profits simultane-ously. When patronizing identical franchise outlets, customerswill attempt to travel to the outlet for which he incurs the leasttravel costs. A motivating assumption for the results is thatthese consumers cannot perfectly measure the costs of travel.A consumer’s inability to distinguish between two slightly dif-ferent distances creates an indifference area between the fran-chisee outlets where residents are indifferent to traveling toeither of the franchisee outlets. Because the revenue from thisindifference area is uncertain, franchisees have the motivationto spend some fixed proportion of expected revenue from this

area towards attracting consumers from this area to their ownoutlets. The single Nash equilibrium in this game occurswhere both franchisees spend a very large proportion of theirexpected revenues on location-specific advertising to attractthese indifferent consumers.

Key ContributionsIn franchising, the territorial restriction is commonly used toreduce the cannibalization of sales of the existing outlet and,therefore, minimize potential conflict (Ghosh & Craig1990). However, the territorial restriction is often guided by“common sense” or experiences of the franchisors instead ofmore objective measures (Hernández & Bennison 2000).The results of this study suggest that the optimal solution forthe locations of franchisees involves some cannibalization ofsales between the outlets, implying that territorial restric-tions are generally harmful to the total revenues of the fran-chisor and franchisees.

Because consumers may fail to distinguish between twoslightly different distances between the franchisee outlets,franchisees have the motivation to spend some portion oftheir expected revenues on additional advertising to attractthese customers to their own outlets. This intra-brand com-petition hurts the total potential revenues for the franchisorand franchisees. Thus, franchisors should employ incentivesand controls to prevent franchisees from engaging in loca-tion-specific advertising.


Optimal Distance Between FranchisingOutlets and Intra-Brand Competition Pui Ying “Yoshi” Tong, West Virginia UniversityChristopher Yencha, West Virginia University

Keywords: retail location strategy, franchising, intra-brand competition, spatial, modeling

EXTENDED ABSTRACT

For further information contact: Yoshi Tong, PhD candidate, West Virginia University (e-mail: [email protected]).


Research QuestionCustomer participation (CP) is key to service delivery pro-cesses (Lovelock and Young 1979; Gallan et al. 2013). How-ever, CP may not be limited to service delivery alone. Forinstance, in service failure customers may be required to par-ticipate in the recovery, by providing additional information ortaking over new tasks. Customers who lose Internet connec-tion, for example, may be required to reboot and restart theirrouter, and participate in the recovery by following instructionsfrom the Internet provider’s customer service employee. Asservice recovery after a failure is crucial to service firms in thatit affects e.g., customer satisfaction and loyalty (e.g., Liao2007; Maxham 2001; Smith et al. 1999), it is important tounderstand factors influencing those customers’ post-recoveryevaluations. While the impact of perceived justice (e.g., Smith,Bolton, and Wagner 1999) or emotions (e.g., DeWitt, Nguyen,and Marshall 2008) on post-recovery evaluations has oftenbeen examined, the relevance of CP has been widely neglected(see Dong, Evans, and Zou 2008; Roggeveen, Tsiros, and Gre-wal 2012 for exceptions). Therefore, we ask how differentdegrees of CP impact customer’s satisfaction after recovery.Moreover, we examine whether choice availability as a situa-tional variable may moderate this relationship.

Method and DataWe applied equity theory (e.g., Adams 1963) to investigate therelationship between the degree of CP in recovery and cus-tomers’ satisfaction after recovery in three laboratory experi-ments using student and consumer samples. In Study 1a, busi-ness undergraduates participated in a between-subjects

laboratory experiment in which the level of CP in recovery(low vs. high) was varied. In Study 1b, we replicate our resultsin a different context using a consumer sample. Participantswere recruited with Amazon’s Mechanical Turk and paid toperform tasks. Study 2 used a 2 x 2 factorial between-subjectsdesign, with a business student sample, and used the same con-text as Study 1a. We varied the level of CP in recovery (low vs.high) and availability of choice (no choice vs. choice).

Summary of FindingsWe consistently find a negative effect of customers’ partici-pation efforts on customers’ satisfaction after recovery whenthe outcome of the recovery process stays constant. Thiseffect is robust in different service settings and across stu-dent and consumer samples (Studies 1a and 1b). Hence, weshow that CP during recovery processes may do more harmthan good to the customer-firm relationship. By investigat-ing the availability of choice, Study 2 reveals a boundarycondition. Customers, who deliberately chose to do moreduring the recovery, report a significantly higher satisfactionafter recovery than customers who had to participate in therecovery to a high degree. Study 2 provides evidence thatchoice of participation in the recovery process impacts cus-tomer satisfaction. Consequently, providing customers achoice of CP may help companies avoid negative effectsarising from CP in recovery.

Key ContributionsOur research contributes to the marketing literature in severalways. From a theoretical perspective, it highlights the role of

Unintended Effects of Customer Participation in Recovery: Can ChoiceAvailability Be a Remedy?Nicola Bilstein, Catholic University of Eichstaett-IngolstadtShashi M. Matta, Ohio State UniversityJens Hogreve, Catholic University of Eichstaett-Ingolstadt

Keywords: service recovery, service failure, customer participation in recovery, availability of choice

EXTENDED ABSTRACT

For further information contact: Nicola Bilstein, Catholic University of Eichstaett-Ingolstadt (e-mail: [email protected]).



CP in service recovery processes, an under researched topic.Prior research suggests a positive impact of CP (Dong, Evans,and Zou 2008) or cocreation (Roggeveen, Tsiros, and Grewal2012) in recovery on customer post-recovery evaluations.However, in contrast to our studies, those studies focus onsituations in which the recovery outcome shifts based on cus-tomers’ increased participation in recovery. Hence, we con-tribute to that stream of research by holding recovery out-comes constant when examining CP in recovery. Moreover,our research adds to the stream of literature showing theunintended effects of marketing actions by revealing possiblenegative outcomes of CP activities. From a managerial per-

spective, this paper offers implications for service providerson the appropriate level of CP in recovery processes. Byexamining the influence of CP on customer satisfaction along-side the availability of choice to participate, this research iden-tifies situations in which higher levels of CP are suitable.

AcknowledgmentsThis research project was supported by a fellowship of the“DAAD” (German Academic Exchange Service) for Ph.D.research studies.


Research QuestionTraditionally, service failure occurs when the delivery doesnot meet a customer’s expectations. These expectations getlinked to the goods (Folkes & Kotsos 1986) or services asunits of outputs which are embedded with value. Conse-quently, service recovery (Tax, Brown, and Chan-drashekaran 1998) is characterized as “value-adding activi-ties” as suggested by a G-D logic perspective. However, inS-D logic goods and services are resources embedded “onlywith potential value” (Vargo and Lusch 2004), while servicecan be defined as “a process of applying resources for thebenefit of another and the underlying basis of exchange”(Vargo, Lusch & Akaka 2010). These resources through aprocess called resource integration, turn into a specific bene-fit and thus value is derived from this process (Vargo andLusch 2008b; Lusch, Vargo, and Wessels 2008). Thereforein terms of S-D logic “service failure” should be concernedabout the failure of employment operant to operandresources, a process-failure and not an outcome, sinceemphasis is given on the resource integration processes,rather than the resources in terms of output. We seek toaddress these issues by developing an integrated model ofresource-integration process in order to understand servicefailure in a continuum process, the “service process.”

Summary of FindingsWe develop a conceptual model where service failures aredescribed in a continuum of resource integration process asco-destruction process. Drawing on lifecycle and dialecticaltheory (Van de Ven 1992), prior research on co-creation and

co-destruction process and their different streams (Arnouldet al. 2006; Gummesson and Mele, 2010; Grönroos 2011;Ramaswamy 2011; Grönroos and Voima, 2013; Hilton et al.2012; Plé, and Chumpitaz Cáceres, 2010; Echeverri andSkålén, 2011; Smith 2013), we propose an integrated con-ceptualization of resource integration process theorizing it asa sequence of incidents, events or activities and stagesbetween actors which unfolds over the duration of directinteractions. We suggest that co-creation and co-destructionare both processes of resource integration which are formeddue to resource-configuration, and may lead to: value-in-context, value-in recovery, value-in-reduction, value-through-misuse. Therefore the concepts of co-creation andco-destruction create a continuum, the resource integrationprocess. “Service” is the resource integrationprocess(Vargo and Lusch 2004; 2008a) which may form either co-creation (Vargo and Lusch 2008; Payne et al. 2008; Vargo etal. 2008) or co-destruction process. Stages of service processinclude actor’s resources as inputs, resource integrationprocess, experiences and evaluation of experiences in formsof value acquired (outcomes).

Key ContributionsThis article contributes to the existing litterature by reconcep-tualizing service failures through the lens of S-D logic. Wesuggest that in terms of value, traditional service failures ingoods and services are process-failures, since these resourcesare distribution mechanisms for value realisation. Thereforethese failures concern resources during the development ofthe service process. We develop an integrated model of co-

Conceptualizing Service Failures Throughthe Lens of Service-Dominant Logic: A Value-Based ApproachGeorge Skourtis, University of Toulouse 1Jean-Marc Decaudin, University of Toulouse 1Ioannis Assiouras, University of Toulouse 1

Keywords: service-dominant logic, service failures, value co-creation, value co-destruction, resource integration

EXTENDED ABSTRACT

For further information contact: George Skourtis, IAE Toulouse School of Management, University of Toulouse 1 (e-mail: [email protected]).



creation/co-destruction process by supporting the notion thatthis is a continuum process rather than dichotomy anddepends on changes and the contradictions of resource-configuration process. In terms of outcome-failure from an S-D logic perspective we argue that this matches with the per-ceived value-loss. Moreover, drawing on lifecycle anddialectic theories we treat service success and service failure(i.e co-creation and co-destruction) as a sequence of events ofin continuum process. In terms of failure severity, we suggest

that severity of service failure gets link with the stage of serv-ice process and the resource availability, contrary to G-Dlogic which posits that severity is related to resources loss.The most important contribution of this paper is that by offer-ing a new perspective for services failures (processes andoutcomes) opens up important new avenues for the establish-ment of proactive recovery strategies before the value lost.


Research QuestionProduct failures are common and managers employ variousrecovery strategies to mitigate their effects (Grewal,Roggeveen and Tsiros 2008). Although much attention hasbeen paid to recovery strategies (Kelley, Hoffman and Davis1993), no research has examined their effects in the contextof bundles. Given the prevalence of bundling (Brough andChernev 2012; Harris and Blair 2006) and the increasednumber of products that could potentially fail, providing abetter understanding of bundle recovery efforts would seemimportant. This research investigates whether consumer per-ceptions of customer satisfaction and repeat purchase inten-tions improve when refunds are allocated to the flawed prod-uct or to the unflawed product in a multiproduct bundle.

Method and DataOne hundred twenty-six undergraduate students participatedin a 2 (failed product: pizza, wings) × 2 (recovery product:pizza, wings) between-subjects design. Participants weregiven a scenario where they placed an order with a fictitiouspizza company consisting of a large pizza and ten wings for$20. To manipulate failed product, participants wereinformed that either the pizza or wings portion of the bundlewas incorrect. In the pizza failure condition, the pizza did nothave the correct toppings. In the wings failure condition, thewings did not come with the correct sauce. Next, participantswere informed that, after complaining to the company aboutthe failed product, the company decided to refund a portionof the purchase price. The recovery product was manipulatedby specifying the product to which the recovery was allo-

cated. The recovery amount was $10 in each condition. Fol-lowing the scenario, participants responded to measures ofrecovery satisfaction and repeat purchase intentions.

Summary of FindingsWe tested for moderated mediation by investigating indi-vidual mediation models at each level of the moderator,failed product. The models included recovery product as theindependent variable (pizza recovery = 0, wings recovery =1), recovery satisfaction as the mediating variable, andrepeat purchase intentions as the dependent variable. Recov-ery product was a significant predictor of recovery satisfac-tion in the pizza failure condition (β = -1.08; SE = .39; p <.01) and the wings failure condition (β = .76; SE = .36; p <.05). Recovery satisfaction was also a significant predictorof repeat purchase intentions in the pizza failure condition (β = .75; SE = .07; p < .01) and the wings failure condition(β = .72; SE = .28; p < .01). Additional tests revealed that theeffect of recovery product on repeat purchase intentions wasfully mediated by recovery satisfaction in both the pizza fail-ure and wings failure conditions (all p-values < .05).Although failed product moderated the effect of recoveryproduct on recovery satisfaction (p < .05), failed product didnot moderate the effect of recovery satisfaction on repur-chase intentions (p > .10).

Key ContributionsThe purpose of this study was to gain insight into recoveriesinvolving multiple product bundles. The results demonstratethat the product to which a recovery is attributed in a bundle

Recovery Strategies Involving BundledProductsPatrick Fennell, Louisiana State UniversityMatthew M. Lastner, Louisiana State UniversityDan Hamilton Rice, Louisiana State UniversityRonald W. Niedrich, Louisiana State University

Keywords: service recovery, disconfirmation judgment, customer satisfaction, customer loyalty, social exchange theory

EXTENDED ABSTRACT

For further information contact: Patrick Fennell, PhD student, Louisiana State University (e-mail: [email protected]).



can impact recovery satisfaction and, subsequently, repeatpurchase intentions. These effects can be explained byexpectation-disconfirmation theory and social exchangetheory (Palmatier, Jarvis, Bechkoff and Kardes 2009; Sierraand McQuitty 2005). Providing a recovery on the failedproduct (a failure consistent recovery), compared to a failure

inconsistent recovery, leads to higher recovery satisfactionand repeat purchase intentions. In addition, recovery satis-faction explained the relationship between recovery productand repeat purchase intentions.


Research QuestionWhat is the impact of customer-firm, customer-employee,and employee-firm fit on the service experience?

Method and DataThe paper looks at the impact of fit on the service experiencestudy and focuses on three specific types of dyadic fit: cus-tomer-employee, customer-firm, and employee-firm. A con-ceptual model is presented, accompanied by a detaileddevelopment of the hypotheses. A sample of 447 consumersis used to empirically test the proposed model.

Summary of FindingsThe analysis reveals the importance of dyadic fit, and sug-gest a triadic relationship perspective is essential whendesigning for the service experience. First, the resultsdemonstrate that customer-employee fit has a direct positiveeffect on both customer-firm fit and rapport. Second, theresults suggest that employee-firm fit has both a direct posi-tive impact on the service experience, and moderates thecustomer-employee fit/customer-firm fit relationship.Specifically, employee-firm fit is key to enhancing fit withinthe other dyads and providing a superior service experience.Lastly, our results also demonstrate that, in terms of a directpositive effect, a customers’ service experience might beenhanced by customer-firm fit. Taken together, these results

indicate that service researchers should pay more attentionto the integrated nature of fit within and among the dyadsthat create the service triad.

Key ContributionsResearch implications: Prior research has not explored theimpact of fit among the customer-employee, customer-firm,and employee-firm dyads in one model on an important out-come such as the service experience. Thus, this researchextends the current knowledge base regarding the potentialimpact of fit by actually assessing how customers’ perceptionsof fit in one dyadic relationship can influence the perceptionof fit in another. Furthermore, a review of the literature sug-gests that this is the first study to use a tri-dyadic fit as a theo-retical basis to empirically investigate the relations among theservice triad. From a theoretical perspective, this studyextends the service experience literature by moving it frommore descriptive research toward more theoreticallygrounded, prescriptive implications. Managerial implications:The tri-dyadic fit model suggests that managers need to adopta triadic relationship perspective when designing for the serv-ice experience. While dyadic relationships are crucial in anyservice firm, managers should be cognizant of the integratednature of three types of dyadic fits that form the service triad.


The Impact of Tri-Dyadic Fit on the Service Experience Sidney Anderson, Florida State UniversityJeffery Smith, Florida State University

Keywords: service experience, dyadic fit, empirical research, structural equation modeling

EXTENDED ABSTRACT

For further information contact: Sidney Anderson, PhD candidate, Florida State University (e-mail: [email protected]).


Research QuestionIntroducing new ideas to the customer lies at the heart of mar-keting, yet surprisingly little is known about customers’ stateof inspiration within a marketing context. Prior research hasinvestigated different facets of inspiration, but lacks a com-prehensive, marketing-specific conceptualization and a relia-ble way to measure customers’ level of inspiration. Weaddress this research gap by presenting a conceptualization aswell as developing and validating a scale for inspiration in amarketing context, hereafter named customer inspiration.

Method and DataWe report five studies as part of our empirical scale develop-ment for customer inspiration. These studies involve (1) item generation, (2) expert judgment, (3) card sortingtasks, (4) a scale refinement and initial validation study, and(5) a nomological validation study. We use qualitative andquantitative data from marketing academics, top managers,students, an online panel, and field data from shopper sur-veys. On that basis, we demonstrate the psychometric prop-erties of the scale and its distinct position within the nomo-logical network of related consumption variables.

Summary of FindingsOur findings support a two-dimensional, second-order con-ceptualization of customer inspiration. These two factors canbe described as capturing the notion of being inspired by astimulus and being inspired to perform an action. We findthese two factors to be distinct, yet related.

Moreover, our findings suggest that customer inspirationis predicted by transcendent customer experiences andindirectly by the hedonic motive of idea shopping. Fur-thermore, our results reveal that customer inspiration fos-ters customers’ positive affect, satisfaction, intention torecommend, and impulsive buying. Finally, we find evi-dence for a competitive mediation through impulsive buy-ing which counteracts positive direct effects of customerinspiration on positive affect, satisfaction, and intention torecommend.

Key ContributionsThe contribution of this paper is threefold. First, we providea marketing-specific conceptualization of customer inspira-tion based on a review of prior research. Specifically, wedefine customer inspiration as a state, which is evoked bymarketing stimuli, incorporates the realization of new,enhanced insights, and motivates customers to purchase aproduct or service. Second, we develop a two-dimensionalscale to measure customer inspiration and address thedimensionality, reliability, and validity of the construct.Across two samples, we measured high convergent and dis-criminant validity of the scale. The scale satisfies all impor-tant criteria for newly developed construct measures.Finally, we test the nomological validity and explore therole of customer inspiration in its network of related mar-keting constructs.


Customer Inspiration: Conceptualization,Scale Development, and ValidationThomas Rudolph, University of St. GallenTim Boettger, University of St. GallenThilo Pfrang, University of St. GallenHeiner Evanschitzky, Aston Business School

Keywords: customer inspiration, scale development, nomological network, psychometric properties, shopper marketing

EXTENDED ABSTRACT

For further information contact: Tim Boettger, University of St. Gallen (e-mail: [email protected]).


Research QuestionThe increased availability of information about customers’behaviors is giving many firms the ability to customize mar-keting efforts to the tastes of their customers (Venkatesanand Farris 2012). Many direct marketing companies usetheir customer data base to design effective promotional pro-grams (Kumar 2010). To effectively target customers whowill respond to promotions, academics have designed theo-retical models that explain customer behavior based on bothcustomer specific variables (such as attitudes and subjectivenorms) and promotion specific variables (such as the valueof the promotion and type of the promotion). However,when implementing the Customer Relationship Manage-ment programs marketers may not have information aboutall the variables that affect consumers’ response to promo-tions. They are likely to have data on consumers’ past behav-ior and how they responded to different promotions. How-ever, they are unlikely to have secondary data pertaining tothe attitudes and subjective norms of these customers. Howseriously are the marketers handicapped by the lack of atti-tudinal information when designing consumer promotions?

Method and DataThe data for this research was collected through the cooper-ation of a grocery chain. An instrument was developed tomeasure consumer’s intentions to redeem different types ofcoupons in the coffee and detergent product categories. Dataon number of coupons redeemed per month and consumer’sintention to redeem coupons of three different face values,

three different methods of distribution (free standing inserts,on pack coupons for next purchase occasion, and mail incoupons) and for two brands (their favorite brand and abrand they occasionally purchase) were collected. The over-all attitude towards redeeming coupons and subjectivenorms were also measured using established scales (Shimpand Kavas 1984). Using a series of nested logistic regressionmodels we estimated the incremental predictive ability ofattitudinal variables over and above those of the characteris-tics of the consumer promotion.

Summary of FindingsIn the case of a coupon promotion, the characteristics of thepromotion (such as its face value, method of distribution, andloyalty towards the promoted brand) explained most of thevariation in consumers’ coupon redemptions. Individual’sattitude towards the promotion and subjective norms did notsignificantly add to predicting coupon redemptions. Theparameter estimates are stable when we tested the modelusing the overall sample and also when we randomly split thedata and estimated them on each of the subsamples.

Key ContributionsThough CRM is gaining popularity among marketers,implementation of the CRM solutions requires firms tounderstand the underlying marketing problem at hand and todesign processes to collect, analyze and apply the acquiredcustomer information (Jayachandran et al. 2005). Differentmarketing problems require different types of information

Customer Relationship Management:Should Absence of Attitudinal Data Prevent Designing Effective ConsumerPromotions?Srinivasan Swaminathan, Drexel UniversityAnubhav Aggarwal, Drexel University

Keywords: sales promotions, customer relationship management

EXTENDED ABSTRACT

For further information contact: Anubhav Aggarwal, Drexel University (e-mail: [email protected]).



and marketers may not have access to all of the importantvariables affecting the outcome of interest. In the case ofconsumer promotions, marketers have identified a numberof attitudinal (Shimp and Kavas 1984), individual (Bawaand Shoemaker 1989), and promotion specific variables(Kumar and Srinivasan 2005) that affect consumers’ respon-siveness to coupon promotions. Using field data, we con-clude that for coupon promotions, the absence of attitudinaldata does not significantly impact predicting couponredemptions. Coupon characteristics and brand characteris-

tics satisfactorily explain consumers’ aggregate redemptionintentions. Future researchers might want to extend thisresearch to other product categories and other types of pro-motions. Consumer’s use of coupons is not limited to theireconomic value, but also to its hedonic benefits (Chandon,Wansink, and Laurent 2000). Future researchers also mightwant to understand the impact of these hedonic benefits inexplaining coupon redemptions.


Research QuestionAt the frontlines, retail frontline store managers serve a bound-ary spanning role of creating value by blending merchandisingand service practices that lead to superior customer experi-ences and strong financial outcomes. In past research, payoffsfrom entrepreneurial behaviors are neither uniformly positivenor invariant across contexts. In the context of modern big boxretailers, increasingly frontline store managers are expected toact entrepreneurially but there is little evidence that suchactions yield higher revenues or profits or both, and if so byhow much. To address this gap, we first conceptualize andoperationalize constructs corresponding to merchandising andservice entrepreneurial behaviors that are suited for studyingfrontline manager role in a retailing context. Both merchandis-ing and service behavior are treated as multi-dimensional con-structs with dimensions of innovativeness, proactiveness, andwillingness to undertake risks. Second, we examine nonlineareffects of frontline store managers’ entrepreneurial behaviorson mean level of store revenue and profits based on longitudi-nal store sales data over 10 time periods. Third, we use itemresponse theory (“IRT’) in addition to usual psychometric pro-cedures based on confirmatory factor analysis (“CFA”) for val-idating the proposed constructs.

Method and DataWe used a combination of psychometric and econometricapproaches for data analysis. A psychometric approach is

well suited to provide evidence for the reliability andvalidity of multi-item scales with self-report data. In itemselection, we used exploratory and confirmatory factoranalyses procedures as well as the S-χ2 index and item infor-mation functions in multidimensional item response theoryto identify valid construct items. An econometric approach iswell suited for analyzing determinants of store revenue andprofitability obtained as a longitudinal series over 10 timeperiods. Specifically, we estimated a time-series model thatextracts variability due to the path dependence of revenue/profitability, seasonality and unobservable variables. Welinked the two approaches by estimating MAP factor scoresof each dimension (i.e. innovativeness, proactiveness andrisk-taking) after satisfactory evidence of reliability andvalidity, and inputting them as predictors in the econometricanalysis. Our retail setting is drugstores, which compete forprescription drug customers with other pharmacies byemphasizing service orientation and for everyday customersof grocery and convenience products by emphasizing mer-chandising orientation.

Summary and Key ContributionsWe found: (a) robust evidence to support merchandising andservice as distinct and meaningful constructs to representfrontline store managers’ role performance. Merchandisingand service role performance achieve convergent validity(e.g., items load on hypothesized factors as per CFA), show

Nonlinear Effects of Frontline Store Managers’ Entrepreneurial Role Performance: Retail Profit and RevenueAnalysis Using Item Response TheoryYuechen Wu, Case Western Reserve UniversityJagdip Singh, Case Western Reserve University Gary K Rhoads, Brigham Young University Detelina Marinova, University of Missouri-Columbia

Keywords: entrepreneurial orientation, frontline store manager, store performance, retail, item response theory

EXTENDED ABSTRACT

For further information contact: Yuechen Wu, Research Associate, Case Western Reserve University (e-mail: [email protected]).



discriminant information functions (e.g., as obtained fromIRT), and nomologically relate differentially to store out-comes (e.g., store revenue and profitability). In developingthese constructs and testing their validity, IRT offers severalbenefits over classical test theory in estimating psychometricproperties of items, and in estimating construct scores. Themost interesting results from our study are the finding ofopposite effects of frontline store managers’ merchandisingand service role performance on store revenue and profitabil-ity. The use of actual revenue and profitability data allows usto quantify these contrasting effects. Compared to frontlinestore managers with average level of service role perform-ance, frontline store managers who perform at high level ofservice performance (+2 SD above mean) are expected todepress revenue at the rate of $277,190 for every SD increasein merchandising role performance, but increase profitability

at the rate of $90, 436 for every SD increase in merchandis-ing role performance. This means that stores with frontlinestore managers who perform at high levels (+2 SD) of bothmerchandising and service performance will show a monthlyrevenue loss of about $ 0.5 million, but a monthly profitabil-ity lift of about $0.18 million compared to stores with aver-age performing frontline store managers. Over a year, thesenumbers can add up: revenue loss = $6.6 million; profitabil-ity gain = $2.1 million. This is a surprising finding with sig-nificant managerial consequences. Retail top managementthat attends to revenue metric to assess store performance islikely to demotivate the more entrepreneurial frontline storemanagers—the very frontline store managers that want todrive innovative and provide net bottom line returns.


Research QuestionTwo controversies have emerged in the literature on the participation-satisfaction relationship. First, some researcherssuggest a strong positive relationship (e.g., Chan et al.2010; Lam et al. 2004), some find a weak relationship (e.g.,Rodie and Kleine 2000), and still others report no relation-ship (e.g., Wu 2011) between the two. Second, in part toaddress these mixed findings, researchers have consideredthe effect of locus of causality attribution, dividing causesinto “external and internal to the individual” (Weiner1979, p. 6). Here, some studies find evidence of a self-serving bias. On the other hand, there are studies suggest-ing a different pattern, which we refer to as the “modestybias.”

The purpose of this research is to address these two contro-versies (i.e., the main effect and the role of locus attribution)by looking to the consumer and examining an interpersonaldifference that promises to shed light on the debate, whichwe refer to as propensity to participate (PTP).

Method and DataThe hypotheses are tested in two important service indus-tries, namely higher education and personal training. In ascenario-based approach, consumers (i.e., students) areasked to imagine themselves in a hypothetical academicadvising or a personal training session scenario, where thelevel of required participation is manipulated.

Summary of FindingsThe results show that consumers vary in their attributionbased on PTP. In particular, low-PTP relative to high-PTPconsumers make stronger external attributions and lowerinternal attributions in general and particularly in encounterswhere high participation is required. Furthermore, PTP wasshown to moderate the relationship between participationand satisfaction. With increased required participation, con-sumers low in PTP relative to their high-PTP counterpartsexperience lower satisfaction. On the other hand, attributionwas not found to moderate this relationship.

Key ContributionsThis study has important theoretical implications. Inaddressing the two controversies identified above, it pro-vides a new construct. PTP appears to be a significant con-tingency factor in the participation-satisfaction relationship.More importantly, attribution is not found to moderate thisrelationship as argued in previous studies.

This research has also important managerial implications.Service providers need to understand that high required par-ticipation is not appreciated by every consumer. Rather, theydiffer in their PTP. Managers are encouraged to develop meth-ods to distinguish between these types of consumers becausethis will ultimately determine their level of satisfaction.


Turning to the Role of Propensity to Participate in the Participation–Satisfaction Link Jakob Braun, University of Texas-Pan AmericanMohammadali Zolfagharian, University of Texas-Pan American

Keywords: services, participation, co-creation, satisfaction, attribution

EXTENDED ABSTRACT

For further information contact: Jakob Braun, doctoral candidate, University of Texas-Pan American (e-mail: [email protected]).


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Part H Marketing of Services and Retailings3.amazonaws.com/.../Part_H_Winter_Proceedings_2015.pdf · H-4 2015 AMA Winter Educators’ Proceedings impaired consumers based upon atmospherics