Consumers’ Trade-Off Between Relationship, Service Package And Price

Consumers’ trade-off between relationship, service package and price

An empirical study in the car industry

The Authors

Gaby Odekerken-SchrÐ"¶der, Faculty of Economics and Business Administration, Maastricht University, Maastricht, The Netherlands

Hans Ouwersloot, Faculty of Economics and Business Administration, Maastricht University, Maastricht, The Netherlands

Jos Lemmink, Faculty of Economics and Business Administration, Maastricht University, Maastricht, The Netherlands

Janjaap Semeijn, Faculty of Economics and Business Administration, Maastricht University, Maastricht, The Netherlands

Abstract

Assesses whether consumer segments based on relational aspects, service aspects, or price aspects have different preferences concerning these three key decision-making variables when buying a car. In addition, assesses consumer segments resulting from simultaneously incorporating relationships, service package, and price. Investigates a large sample of Mitsubishi drivers in The Netherlands emphasizing consumers’ trade-off between dealer relationship, service package and price. Conjoint analysis showed that dealer relationships (as opposed to price) represent a very important decision-making variable when buying a car and consumer preferences concerning relationships provide a useful instrument for segmenting markets. Cluster analyses on the basis of three aspects simultaneously revealed that some consumers do value relationships, while others emphasize the service package in their purchase, both opposed to the third segment that is most probably not inclined to be loyal to a car dealer at all. Clearly indicates that different consumer segments can be distinguished on the basis of preferences for relationships and service packages rather than on the basis of price. This knowledge enables car dealers to use their resources more effectively.

Article Type:

Research Paper

Keyword(s):

Consumer behaviour; Decision making; Car manufacturers; Relationship marketing; Conjoint analysis.

Journal:

European Journal of Marketing

Volume:

37

Number:

1/2

Year:

2003

pp:

219-242

Copyright Ð'©

MCB UP Ltd

ISSN:

0309-0566

1. Introduction

Recent research has emphasized the importance of relationship marketing (Garbarino and Johnson, 1999; Morgan and Hunt, 1994) and many firms have increasingly been devoting considerable attention to developing and maintaining close relationships with their customers, in order to create value by differentiating their offering and/or lowering their costs (Weitz and Bradford, 1999). Even in the car industry, which could formerly be characterized by a product orientation, establishing long-term relationships is currently deemed to be essential at all levels of the distribution channel, although it is still a difficult process in this industry focused on mass production. As a result of this, knowledge about consumers and addressing their needs is considered to contribute to a car dealer’s competitive advantage (Chojnacki, 2000). Especially for Europe in the twenty-first century, the strategic question of how to compete is more vivid than ever. This is rooted in the increasingly deregulated environment in the European Union and a rapidly increasing sales volume via the Internet. Therefore, knowledge about key decision-making variables of consumers is crucial.

In making a purchase, consumers usually take several dimensions into consideration. Being aware of the dimensions that are crucial in the eyes of the consumer would enable car dealers to use their resources most effectively. In general two different types of benefits or values are involved in a purchase: acquisition value and exchange value (Fontenot and Wilson, 1997; Frenzen and Davis, 1990). Sharma and Patterson (1999) likewise make a distinction between technical aspects and functional aspects. In the same sense, JÐ"јttner and Wehrli (1994) referred to the difference between the exchange object and the exchange process. All classifications have in common that the first aspect is related to the goods themselves, while the second refers to everything surrounding the purchase (Frenzen and Davis, 1990). In addition to this, relational aspects have become an important third means of competitive differentiation (Storbacka et al., 1994). This can be attributed to two main developments. First, consumers’ quality expectation levels have risen as consumers have gradually become more knowledgeable and sophisticated (JÐ"јttner and Wehrli, 1994). Acceptable levels of technical and functional aspects might be considered as minimal conditions for consumers to engage in exchanges (Crosby et al., 1990). Second, car dealers are increasingly competing with each other on the basis of the same or highly comparable marketing tactics and strategies. Typically, they copy competitors’ pricing strategies, and treat their consumers well in terms of services offered (Berry and Gresham, 1986; Davis, 1997). Hence, technical and functional aspects must be supplemented by an emphasis on relational aspects to differentiate their offerings.

It is generally recognized that sellers have a portfolio of different types of relationships with their consumers, partially depending upon the personal preferences of the respective buyers. Some of these relationships are based on transactional exchanges and others are based on relational exchanges.

MacNeil (1980) was the first to make a distinction between discrete exchanges and relational exchanges. An exchange is considered to be discrete when it is separated from all else between exchange partners before, during, and after the exchange (Frazier et al., 1988; Lusch and Brown, 1996; MacNeil, 1980; Robicheaux and Coleman, 1994; Rylander et al., 1997). In other words, a discrete exchange is evaluated independently without any reference to those transactions that have been realized before and to