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Assessing the Influence of Economic and Customer Experience Factors on Service Purchase Behaviors

Author

Listed:
  • V. Kumar

    (J. Mack Robinson College of Business, Georgia State University, Atlanta, Georgia 30303)

  • Nita Umashankar

    (J. Mack Robinson College of Business, Georgia State University, Atlanta, Georgia 30303)

  • Kihyun Hannah Kim

    (J. Mack Robinson College of Business, Georgia State University, Atlanta, Georgia 30303)

  • Yashoda Bhagwat

    (J. Mack Robinson College of Business, Georgia State University, Atlanta, Georgia 30303)

Abstract

Past studies have overlooked the joint effects of economic and customer experience factors on service purchase behaviors. Furthermore, service firms tend to make substantial investments in enhancing customer experience, mitigating the negative effects of service failures through recovery efforts and increasing overall customer satisfaction. Yet, largely due to a paucity of data, we know little about how the state of the economy influences the way in which customers use past service experiences to make future purchase decisions. We hypothesize that the state of the economy moderates the effects of customer experience factors on customers’ service purchase behaviors. In addition, we examine how personal income influences the degree to which the aggregate economy influences service purchase decisions. We test the proposed model using panel survey and transaction data from an international airline carrier. Our findings demonstrate that, contrary to wisdom in the popular press, customer experience matters more when the economy is doing better, not worse. Furthermore, lower income consumers are more sensitive to changes in the economy than higher income consumers. We validate the hypothesized model using a controlled experiment and establish that aggregate measures of the economy can be used to predict individual perceptions and purchase intentions.

Suggested Citation

  • V. Kumar & Nita Umashankar & Kihyun Hannah Kim & Yashoda Bhagwat, 2014. "Assessing the Influence of Economic and Customer Experience Factors on Service Purchase Behaviors," Marketing Science, INFORMS, vol. 33(5), pages 673-692, September.
  • Handle: RePEc:inm:ormksc:v:33:y:2014:i:5:p:673-692
    DOI: 10.1287/mksc.2014.0862
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    References listed on IDEAS

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    2. Ming-Hui Huang & Roland T. Rust, 2017. "Technology-driven service strategy," Journal of the Academy of Marketing Science, Springer, vol. 45(6), pages 906-924, November.
    3. Guangyong Yang & Guojun Ji & Kim Hua Tan, 2022. "Impact of artificial intelligence adoption on online returns policies," Annals of Operations Research, Springer, vol. 308(1), pages 703-726, January.
    4. Larissa Becker & Elina Jaakkola, 2020. "Customer experience: fundamental premises and implications for research," Journal of the Academy of Marketing Science, Springer, vol. 48(4), pages 630-648, July.
    5. Nita Umashankar & Yashoda Bhagwat & V. Kumar, 2017. "Do loyal customers really pay more for services?," Journal of the Academy of Marketing Science, Springer, vol. 45(6), pages 807-826, November.
    6. V Kumar & Amalesh Sharma & Shaphali Gupta, 2017. "Accessing the influence of strategic marketing research on generating impact: moderating roles of models, journals, and estimation approaches," Journal of the Academy of Marketing Science, Springer, vol. 45(2), pages 164-185, March.
    7. V. Kumar & Bharath Rajan & Shaphali Gupta & Ilaria Dalla Pozza, 2019. "Customer engagement in service," Journal of the Academy of Marketing Science, Springer, vol. 47(1), pages 138-160, January.
    8. Kosuke Uetake & Nathan Yang, 2020. "Inspiration from the “Biggest Loser”: Social Interactions in a Weight Loss Program," Marketing Science, INFORMS, vol. 39(3), pages 487-499, May.
    9. Samy Mansouri, 2021. "Business cycles influences upon customer cross-buying behavior in the case of financial services," Journal of Financial Services Marketing, Palgrave Macmillan, vol. 26(3), pages 181-201, September.
    10. Gijsenberg, Maarten & Verhoef, Pieter, 2018. "Moving Forward," Research Report 2018003-MARK, University of Groningen, Research Institute SOM (Systems, Organisations and Management).
    11. Marnik G. Dekimpe & Barbara Deleersnyder, 2018. "Business cycle research in marketing: a review and research agenda," Journal of the Academy of Marketing Science, Springer, vol. 46(1), pages 31-58, January.

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