How competent are consumers? The case of the energy sector in France

This paper discussed the notion of value co‐creation and the concept of customer competence as suggested by this notion. This led us to consider the competent customer as a social construction related to managerial representations. In order to examine this issue, a longitudinal exploratory research based on participant observation and in‐depth interviews with employees of a French energy supplier was conducted to explore whether customers are perceived as competent or incompetent market actors. The data analysis revealed four categories illustrating customers' profiles coping with the new situation of the ‘Utility X’ group in the energy sector. ‘Utility X’ employees define their customers according to four profiles: myopic, ignorant, uncreative and organizer of company resources. Even if the marketing studies that share the Service‐Dominant Logic point‐of‐view suggest that the customer would be competent at all times, our findings showed that customer competencies are in fact socially constructed and emerge partially from managerial representations. Therefore, the adoption by companies of a marketing philosophy (‘market with’ philosophy), in which the customer and supply chain partners are collaborators in the entire marketing process, seems only possible if they recognize customers' competencies and identify situations when customers do not activate their competencies or do not have the resources that enable them to develop their competencies.     

The effect of the ‘evoking freedom’ technique on sales in a computer-mediated field setting

The ‘evoking freedom’ technique is a verbal compliance procedure which solicits someone to comply with a request by simply telling a person that he/she is free to accept or to refuse the request. However, the effect of this technique has never been tested in a selling context. Previous customers (N = 900) of an extreme sports store were solicited by email to participate in a campaign where they were offered a gift voucher if they persuaded someone to become a new customer of the store. According to the case, the email contained a sentence that stated that they were free to participate or not in the operation. It was found that the ‘evoking freedom’ condition was associated with a higher number of new customers (+8.4%) than the control condition (+4.7%).     

Are Variety-Seekers Bad Customers?

SUMMARY

Variety-seeking behavior occurs if customers derive utility from a change of service providers. It has negative consequences for the firm's profits, because it functions as a moderating factor in the relationship of customer satisfaction and customer loyalty. Even by offering high service quality variety-seekers cannot be retained. Therefore variety-seekers are often seen as “bad” customers, because they are not loyal to the firm. This article will show variety-seeking behavior in a more positive light. Variety-seekers are satisfied customers and therefore they are likely to engage in positive word-of-mouth communication. Recommendations will help to attract new customers and thus increase profits.     

Fighting churn with rate plan right-sizing: a customer retention strategy for the wireless telecommunications industry

Prior literature suggests that wireless customers have difficulty in predicting their usage requirements and they often subscribe to rate plans that are not financially optimized. However, the benefits of having wireless customers on optimal rate plans are relatively unknown due to limited research in this area. This paper aims to address this knowledge gap and presents a customer retention strategy for the wireless telecommunications industry. The usage and payment records of 1403 Canadian post-paid wireless customers are examined over a 3.7-year study period. Pearson's χ ² test and hazard function graph are used to reveal how customer churn rate is influenced by rate plan suitability. The statistical analysis demonstrates that customers who are using optimal rate plans have lower churn rate than those with non-optimal ones.     

Conceptualizing and measuring experience quality: the customer's perspective

Today many customers, managers, and scholars have become aware of the importance of experiences, which are characterized as satisfying customers' psychic or personal needs. For customers, they care more about the experiences that are provided by stores, and they are willing to pay for them. As for managers, attractive experiences are the products they have taken great efforts to create, manage, and sell. For academic researchers, experiences are considered as distinct economic offerings that are different from goods and services. These scholars believe that the focus of the economy has been transferred to experience (O'Sullivan, E.L., & Spangler, K.J. (1998). Experience marketing: Strategies for the new millennium. State College, PA: Venture Publishing), and that experience industries are on the rise (O'Sullivan, E.L., & Spangler, K.J. (1998). Experience marketing: Strategies for the new millennium. State College, PA: Venture Publishing; Pine, B.J., & Gilmore, J.H. (1998). Welcome to the experience economy. Harvard Business Review (July–August), 97–105; Pine, B.J., & Gilmore, J.H. (1999). The experience economy: Work is theatre & every business a stage. Boston: Harvard Business School Press; Schmitt, B.H. (1999). Experiential marketing: How to get customer to sense, feel, think, act, relate to your company and brands. New York: The Free Press). Although experiences have moved to the centre of customers' consumption activities and have become crucial for business success, very few studies have investigated the customers' perceptions of experience quality. In this research, we have conceptually defined experience quality as the customers' emotional judgment about an entire experience with an elaborately designed service setting. We have undertaken multiple phases in conceptualizing and measuring the concept of experience quality.     

Customers,marketing and the network organization

Customers are becoming more demanding. Network organizations are emerging which embrace customers, and are more flexible and responsive to their needs. CEO's increasingly regard customers as part of the organization. Customers are too important to be “left” to one or two directors and their divisions. CEO's are requiring everyone to focus upon the requirements of customers. To help achieve this, organizations are seeking ways of linking remuneration and performance assessment to customer satisfaction. Increasingly customers assume reliability and performance. Quality of itself may no longer differentiate alternative suppliers. In markets in which all suppliers have their quality programmes, managers need to consider what lies beyond quality. Reason is no longer enough. Less tangible factors such as feelings, emotions and values need to be understood. CEO's question whether marketing departments can respond to these and other challenges and help facilitate the changes they are seeking.     

Customer Loyalty and Privacy on the Web

ABSTRACT

This study examines from simulation the effects of the privacy sensitivity of customers, the personalization practices or standards of retailers and the difficulty in locating favorable sites on the loyalty of consumers to a Web site. The key finding of the study is that customer privacy sensitivity is a critical success factor that significantly impacts loyalty to a retailer. Customers have higher loyalty to sites that request the least information, while they have lower loyalty to sites that request the most information. Web retailers considering expanded personalization of products or services to customers, through increased personal information, need to rethink their practices. The study also found that difficulty in locating a favorable site is a success factor that impacts retailer loyalty, and that customers have higher loyalty to difficult to locate favorable sites on the Web. These findings are important at a time when consumers are empowered with Web technology to immediately shop competitor sites.     

Formation of Reputation in Business Markets

ABSTRACT

Purpose: This study adopts a relational perspective on reputation. We investigate how relationship characteristics impact a customer’s judgment of supplier reputation. We include characteristics at both the interfirm and interpersonal levels, and we additionally link these characteristics to interfirm trust in order to explore similarities and differences between reputation and interfirm trust.

Methodology/approach: A survey was conducted among firms in the Norwegian offshore oil and gas industry. We assessed the measurement model and tested the hypotheses by applying LISREL.

Findings: The results show that the customer’s dependence on the supplier, common knowledge, and interpersonal trust are positively related to reputation, while opportunism is negatively related to reputation. Reputation is positively linked to interfirm trust, and both reputation and interfirm trust impact the customer’s satisfaction with the supplier.

Research implications: This study sheds light on the role of relational mechanisms in reputation formation. It suggests that reputation primarily consists of cognitive components, while interfirm trust consists of more affective components. Reputation is an important factor in developing interfirm trust.

Practical implications: This study underscores the importance of a firm’s core relationships to customers for developing its reputation. Managers need to carefully develop their relationships to customers in such a way that these relationships are consistent with and confirm the reputation they want to build.

Originality/value: The study supports the view that relational characteristics play important roles in the formation of reputation in business markets.     

Customer Lifetime Value as the Basis of Customer Segmentation

SUMMARY

In this article, we examine current trends in customer life-time value and customer segmentation models and identify key issues for future research. CLV-based segmentation is a segmentation approach that groups customers into meaningful segments based upon customer lifetime value and (potentially) other factors. In the article, we discuss the extent to which CLV-based segmentation meets the criteria for effective segmentation. We also identify six areas for future research: (1) models and management of “micro-segments,” (2) using CLV-based segmentation to improve the efficiency of marketing programs, (3) the need for more dynamic CLV-based segmentation models, (4) applying CLV-based customer segmentation to new products and new customers, (5) challenges associated with implementing CLV-based segmentation, and (6) the need for new models that enable firms to segment customers by response to marketing activities and CLV at different points in the customer decision process.     

The changed legality of resale price maintenance and pricing implications

From 1911 until 2007, minimum resale price maintenance agreements between manufacturers and resellers were illegal under federal antitrust law. This handicapped manufacturers which sought to exert control over how their products were priced and promoted through the distribution channel. In June 2007, the United States Supreme Court—via the Leegin case—ruled that bilateral minimum resale price maintenance agreements would no longer be automatically illegal. Rather, they would be legal if their net impact is pro-competitive, and illegal only if the net impact is anti-competitive. This ruling empowers manufacturers to use resale price maintenance to create value for their customers and consumers. However, not all stakeholders—including some state legal systems—have embraced the Leegin ruling, thereby creating uncertainty regarding its final impact. Despite this uncertainty, the opportunities created by Leegin are worth exploring and acting upon. Since the Leegin ruling 3 years ago, a new landscape for resale pricing maintenance has been evolving. We discuss this landscape and the considerations for using resale price maintenance within its ambit. For many manufacturers, the chance of benefitting from Leegin outweighs any potential risks.     

Erratum to: Competitive price-matching guarantees under imperfect store availability

This paper analyzes the role of verification of product availability in the context of competitive price-matching guarantees (PMGs). PMGs involve a retailer matching any lower price offered by competition for an identical item. Until now, researchers focused on the scenario where customers can receive the lower price with a simple proof (e.g., weekly flyers). However, in reality, retailers reserve the right to verify the availability at the competitor location; if the product is not available there, then the price-match request might be declined. We develop a price competition model to investigate the effects of verification of availability on price decisions and profit levels of competing retailers. In our model, demand is driven by the availability levels of retailers as well as the price-search cost and store-switching cost incurred by customers. Price-search cost leads to two customer segments: uninformed ones who have no knowledge about prices, and informed ones who are knowledgeable about prices. On the other hand, store-switching cost determines how many customers search for the product at an alternative location because of high price or unavailability at their preferred retailers. Our analysis reveals, among others, that the outcome of availability verification is linked to three factors: price-search cost, store-switching cost, and the reservation prices of customer segments. Verification of availability allows retailers to price discriminate customers who could not be discriminated otherwise, specifically those belonging to the informed customer segment. Furthermore, it is a significant profit-enhancing mechanism only if there are switching customers in the market. Interestingly, even though customers view the verification of availability as a hassle, it can actually result in them paying lower retail prices by increasing the level of retail price competition.     

Customer Participation and Project Performance: The Mediating Role of Knowledge Sharing in the Chinese Telecommunication Service Industry

Purpose: Extant literature has devoted more attention to customer value co-creation and knowledge sharing, not only in business-to-customer (B2C) markets, but also in business-to-business (B2B) markets. This study explores and examines the antecedents and consequences of customer knowledge sharing in the context of B2B markets by applying the motivation-opportunity-ability (MOA) framework.

Methodology/Approach: This empirical study involves two structured surveys of project managers from both suppliers (n = 213) and customers (n = 312), which were conducted in the context of the Chinese telecommunication service industry. The conceptual model of this study was subsequently tested by developing Partial Least Squares (PLS) based structural equation models.

Findings: It was found that customer knowledge sharing is facilitated by four MOA factors: customer orientation, customer perceived benefits, customer socialization, and customer technological capability. It was determined that knowledge sharing has a direct and significant effect on project performance. Furthermore, the study revealed that such relationships vary across suppliers and customers.

Research Implications: This study extends the existing research stream of interfirm knowledge sharing by examining the antecedents and consequences of customer knowledge sharing from dual perspectives of customers and suppliers, and sheds light on the benefits of customer knowledge sharing. The dyadic perspective embodied in this design facilitates our understanding and management of knowledge sharing between organizations.

Originality/Value/Contribution: This article provides an important contribution to the existing literature of customer knowledge sharing by revealing how to effectively facilitate interorganizational knowledge sharing, particularly knowledge from customers to suppliers, and discovers conditions under which customers are more likely to exchange information, and share knowledge with their suppliers from the dyadic perspective.     

A Conceptual Framework That Identifies Antecedents and Consequences of Building Socially Responsible International Brands

Research on the reputation of international firms using branding philosophies for offering products that are harmful for customers, through business‐to‐business networks, has until now yielded inconsistent results. Although the literature recommends socially responsible behavior of firms offering branded products as one of the determinants of brand reputation, it fails to satisfactorily identify the factors that would particularly enable a brand offering controversial products to be recognized as a socially responsible brand. Authors use the inductive approach to examine existing research and review anecdotes to build a model that will allow brand managers to develop recognition of an ethical and socially responsible brand while offering controversial products such as tobacco or gambling. In addition, the role of business customers of an international brand is also reviewed to understand if they can moderate the causal relationship between the socially responsible image of the brand and brand reputation. Guidelines for future research on the propositions made are provided in this article. © 2015 Wiley Periodicals, Inc.     

Decision Support in Virtual Organizations: The Case for Multi-Agent Support

The new economy, which is being formed by the Internet-based e-commerce and the now emerging mobile commerce, may become what Martin calls a cyber economy. This will combine traditional business with the new e- and mobile business, and will be driven by a new breed of online customers, who operate both wired and wireless networks, who will expect fast delivery, easier transactions and more fact-based information. The cyber economy requires that business is operated with virtual organisations and that decision making in this context – virtual organisations and the cyber economy – will require new and advanced forms of decision support. We have found that a useful decision platform can be built around hyperknowledge and the use of multiple software agents, if the core of these agents is built on fuzzy logic and approximate reasoning.     

Customer demotion in hierarchical loyalty programmes

Hierarchical loyalty programmes are popular in many service industries, as a means to tie customers to the company and improve customer relationships. In these programmes, customers obtain more benefits if they spent more but are demoted if they spent less. This study focuses on demotion and suggests that customer demotion can have an asymmetrical negative effect on customers' trust, commitment, and loyalty. The effect appears strongest for demoted customers with an external locus of causality. An experimental study also shows that customer loyalty is lower for demoted customers than for customers who were never elevated.     

Consumer workers as immaterial labour in the converging media markets: three value‐creation practices

This paper takes a practice‐based approach to consumer studies and focuses on the strategic and productive roles that consumers play as immaterial labour or consumer workers in the converging media markets. Based on a case study of a print media organization and its customers, the aim is to discuss the collaborative practices through which value is created in the market. By means of a textual analysis of online and interview data, three value‐creation practices are abstracted and illustrated: constructing a sense of belonging and collective identity, mutual helping and peer support, and building pride and self‐respect. Overall, the paper suggests that in global media environments, consumer‐customers are playing increasingly significant strategic roles in the practices and processes through which value is co‐created in the market. It is therefore concluded that the idea of consumers, and media audiences in particular, as recipients of communication and targets of marketing activities needs to be problematized and the dynamic strategic roles that consumers currently play in the market need to be acknowledged and actively incorporated into the business praxis of media corporations.     

Experience, socialization and customer retention: Lessons from the dance floor

Experience and socialization are key factors in customer commitment and defection decisions. To study the effect of experience and social relationships on customer retention, we analyze a reality-mined co-presence network of health club members over a period of 4 years. Since central customers in the network have more social ties they will lose if they defect, we use centrality as a proxy for customer relationship switching costs. We find that long-standing customers do have a lower chance of renewing their contracts. However, in line with theoretical predictions (Burnham et al., Journal of the Academy of Marketing Science 31(2):109–126, 2003), the consumer’s centrality in the network (reflecting a social cost of defection) reduces customer churn rate. This study’s results indicate that the inclusion of social effects increases the predictive power of the customer churn model (Nitzan and Libai, Journal of Marketing 75(6):24–38, 2011), thus contributing to our understanding of the role social networks play in customer decisions.     

Strangers in the night: speeddating, CCI and service businesses

Organisations are increasingly realising the importance of customer-to-customer interactions (CCI). From theme parks and shopping malls, to hairdressing and health clubs, interactions between customers are recognised as a key aspect of the service experience. This research examines CCI in the context of the speeddating phenomena, a unique setting in which conversations between strangers are at the very core of the service exchange. Three elements emerge from an in-depth qualitative study to provide new insights for managers who wish to influence CCI and give some structure to future research in the area: planning, roles and performances, and cooperation versus competition.     

Customer Involvement in Product Development: An Industrial Network Perspective

Purpose: In business markets, working with customers and users has become increasingly important to get knowledge about customer needs and to develop new products. The purpose of this article is twofold: (1) to develop a framework for analyzing customer involvement in product development in a business market context, and (2) to apply this framework to a particular company to describe and analyze how it practices customer involvement.

Methodology/approach: The article takes its main theoretical starting point in the industrial network approach, but also uses other literature from the innovation and product development field. The empirical study applies a qualitative case study approach and focuses on one company in the truck business.

Findings: The suggested framework deals with four key aspects of customer involvement: Why, when, how, and who. The observed pattern of the truck manufacturer shows how dealers, hauliers, and truck drivers are all part of the overall understanding of the customer. These actors are involved for different, typically very clear, purposes at different points in time through surveys, product clinics, and field testing. The pattern, referred to as mixed facilitative, is not one of close collaboration with individual customers, but one of broad involvement of several customers through business intelligence and direct involvement.

Research implications: First, the article provides researchers with a framework and method for studying customer involvement in product development. Second, the case study provides an illustrative example of the customer involvement pattern pursued by a leading company in a major industry. This enhances the understanding of the focal phenomenon, leads to managerial implications, and gives ideas for future research.

Practical implications: There are several managerial implications related to the why, when, how, and who questions. For example, it is pointed out that managers should consider involving customers more extensively than what seems to be common today—for example, by using customers as codevelopers, working with them throughout the entire development process (i.e., not only early and late), and including different types of users (with different requirements and wishes).

Originality/value/contribution of the article: The contribution lies in the development of a framework centered on the four key questions of customer involvement in

product development and using this framework for observing a pattern, and finding explanations and relating this pattern to how other firms are doing.     

Effects of perceived organizational support and guanxi on salesperson performance: The mediation of customer need knowledge

Based on data from car dealers in China, this study examines the impacts of perceived organizational support (POS) and guanxi on personal performance and the mediating role of customer need knowledge (CNK). Results indicate that salespersons’ POS and guanxi with customers have a positively influence on their CNK and job performance; their CNK is also positively related to job performance. Meanwhile, CNK acts as a full mediator between salespersons’ POS and their job performance, and as a partial mediator between salespersons’ guanxi with clients and their job performance.