Industry Characteristics and Consumer Dissatisfaction

The study of industry characteristics and their impact on consumer satisfaction and welfare are an important and growing area of research. In fact, in a recent content analysis of The Journal of Consumer Affairs, Geistfeld and Key (1986) found that, over a ten-year period (i.e., 1975-1984), more articles were published on the subject of "market structure and operation" than on any of the other ten designated areas. In a similar vein, the study of consumer dissatisfaction (e.g., complaint behaviors, redress) is also an important area of research. Researchers, practitioners, and public policy officials are beginning to recognize that the extent of consumer dissatisfaction in the marketplace and the manner in which it is handled (i.e., by consumers and sellers) are key indicators of consumer loyalty, discontent, and welfare (Andreasen 1984; Gilly 1987; TARP 1986). Despite their importance, few studies have examined the inter-relationships between industry characteristics and consumer dissatisfaction. Much research has tended to accumulate evidence documenting the variation in dissatisfaction levels and complaint behaviors across different industries (e.g., Day and Ash 1979; Best and Andreasen 1977), paying little attention to explaining this variation. This paper aims to fill this gap in the literature by explicitly studying the relationship between industry characteristics and consumers' responses to dissatisfaction. Specifically, the paper utilizes a conceptual framework, based largely on Hirschman's (1970) model, to propose several hypotheses for the impact of industry characteristics on consumers' responses to perceived dissatisfaction (e.g., complaint behaviors), sellers' responsiveness to complaints, and consumers' satisfaction with sellers' response (e.g., redress). Hirschman's model has received extensive attention in the political science literature (see Laver 1976 for review), and its applications in psychology (e.g., Rusbult, Johnson, and Morrow 1986), organizational behavior (e.g., Spencer 1986), and consumer behavior (e.g., Andreasen 1985; Singh 1990) have begun to appear. As such, Hirschman's model is likely to offer a solid foundation for developing the conceptual framework and positing testable hypotheses. Following this, the paper empirically examines the proposed hypotheses utilizing a purposive selection of three service industries. Because services usually entail higher consumer dissatisfaction than manufactured products (Best and Andreasen 1977; Marketing News 1980), it is desirable to focus on service industries. In addition, the hypotheses are tested under several different contingencies so as to ascertain the stability and validity of the underlying processes. Moreover, this allows delineation of dissatisfaction responses into one of three categories: (a) macro-driven responses, i.e., where industry characteristics play a dominant role on consumers' responses, (b) micro-driven responses, i.e., where individual factors play a dominant role, and (c) mixed responses, i.e., where both industry and individual factors interplay in affecting dissatisfaction responses. Finally, several implications for researchers, managers, and public policy officials are elaborated. The paper begins with a discussion of the conceptual framework. CONCEPTUAL FRAMEWORK Hirschman (1970) views the marketing system--that is, firms, competitors, and consumers--in a rather unconventional manner. He posits that some deterioration in the functioning of firms, and the quality of products they deliver are inevitable, occurring as a result of "unspecified random causes" (4). Within this context, Hirschman focused on identifying mechanisms that underlie the general condition of "reparable lapses" within a given industry, that is, when deterioration in firms and their outputs can be potentially self-corrected within the marketing system. For such reparable lapses, Hirschman posited that no external (e. …