Customer repurchase intention A general structural equation model The

This paper develops a general service sector model of repurchase intention from the consumer theory literature. A key contribution of the structural equation model is the incorporation of customer perceptions of equity and value and customer brand preference into an integrated repurchase intention analysis. The model describes the extent to which customer repurchase intention is influenced by seven important factors – service quality, equity and value, customer satisfaction, past loyalty, expected switching cost and brand preference. The general model is applied to customers of comprehensive car insurance and personal superannuation services. The analysis finds that although perceived quality does not directly affect customer satisfaction, it does so indirectly via customer equity and value perceptions. The study also finds that past purchase loyalty is not directly related to customer satisfaction or current brand preference and that brand preference is an intervening factor between customer satisfaction and repurchase intention. The main factor influencing brand preference was perceived value with customer satisfaction and expected switching cost having less influence.  The objective of this paper is to test a general model which aims to describe the extent to which customer intention to repurchase a service is influenced by customer perceptions of quality, equity and value, customer satisfaction, past loyalty, expected switching cost and brand preference. The objective is important because customer repurchase intention research is largely fragmented and is in need of an empirically verified general theory. Some studies have concentrated on determining the basic antecedent variables to repurchase intention (Hocutt, 1998; Storbacka et al., 1994; Zahorik and Rust, 1992). Other studies, such as Bitner et al. (1990), Bolton and Drew (1991a, b), Boulding et al. (1993), Grayson and Ambler (1999), Liljander and Strandvik (1995), and Price et al. (1995) have considered the single incident, critical encounters and longitudinal interactions or relationships between these variables. Still others have considered the predictive validity of repurchase intention for subsequent repurchase behaviour (Bemmaor, 1995; Mittal and Kamakura, 2001; Morwitz et al., 1993). Despite the fact that research in this area largely relies on stochastic and deterministic approaches to customer retention analysis (Ehrenberg, 1988; Howard, 1977; Lilien et al., 1992), few comprehensive, empirically tested, structural models of the customer retention process are evident in marketing literature. Even the understanding of the interrelationships between customer service perceptions per se, or how these relate to overall service satisfaction appears unclear (Bolton and Drew, 1994; Fornell et al., 1996; Roest and Pieters, 1997; Taylor and Baker, 1994; Zahorik and Rust, 1992). Furthermore, a customer behaviour model, which holistically defines the processes by which customers make a choice between several competing service brands or providers, is still to be developed. Some progress in this direction has been made by the evaluation of known alternatives being factored into customer assessments, via the disconfirmation of expectations (Bearden and Teel, 1983; Bolton and Drew, 1991b; Boulding et al., 1993; Cadotte et al., 1987; Oliver, 1980; Oliver and Bearden, 1985). While this approach measures the difference between pre and post consumption assessments, it provides only a partial explanation of how customer retention mechanisms might operate (Bagozzi et al., 1999; Mano and Oliver, 1993; Oliver, 1993; Oliver and DeSarbo, 1988; Oliver and Swan, 1989; Price et al., 1995; Westbrook, 1987). This paper examines the following customer repurchase intention issues within the specific service environments of comprehensive car insurance and personal superannuation:  What is the impact of customer satisfaction and brand preference on repurchase intention?  What is the effect of customer loyalty and switching costs on brand preference?  How important is the contribution of perceived value to customer satisfaction and brand preference?  What is the impact of perceived equity on customer perceived value and satisfaction?  How does perceived quality contribute to customer satisfaction? “The research model” section of this paper outlines the theoretical foundation of the general model, and the propositions arising from the various relationships. The “survey method” section explains the research approach and sample design, establishes the measurement scales and provides confirmatory factor analysis and parameter estimates for the model. The “structural equation analysis” section tests the fit of the general model to the empirical data and a modified model is developed. The modified model is then tested against data from selected customer groups. This paper concludes with sections covering the study findings, the management implications of these findings and suggested avenues for future research. The research model Several researchers have found satisfaction and attitude to be major antecedents of customer repurchase intention (Bearden and Teel, 1983; Innis, 1991; Oliver, 1980, 1981; Roest and Pieters, 1997). When attitude is treated as a post-purchase construct, the general sequence is:Equation 1In this context, satisfaction is the overall level of customer pleasure and contentment resulting from experience with the service. Attitude is the customer's positive, neutral or negative learned disposition (often as a result of past evaluative experiences), with respect to the good service, company, or brand under consideration (Roest and Pieters, 1997). However, the precise relationship between customer learned disposition and customer preference for perceived alternatives remains unclear. In the literature, different terms have been used for similar or closely related preference constructs. Examples of terms used are, customer commitment (Storbacka et al., 1994), brand choice (Manrai, 1995), product attitude (Roest and Pieters, 1997) and consumer preference (Mantel and Kardes, 1999). In this paper, the approach taken is that a separate and distinct evaluation of alternatives (brand preference) precedes customer repurchase intention (Manrai, 1995; Storbacka et al., 1994). In the conceptual model developed here the major antecedents to repurchase intention are thus:Equation 2The research model, shown in Figure 1, delineates the key factors preceding customer satisfaction and brand preference. Each of the model components is defined as follows:  Repurchase intention. The individual's judgement about buying again a designated service from the same company, taking into account his or her current situation and likely circumstances.  Brand preference. The extent to which the customer favours the designated service provided by his or her present company, in comparison to the designated service provided by other companies in his or her consideration set.  Expected switching cost. The customer's estimate of the personal loss or sacrifice in time, effort and money associated with the customer changing to another service provider.  Customer loyalty. The degree to which the customer has exhibited, over recent years, repeat purchase behaviour of a particular company service; and the significance of that expenditure in terms of the customer's total outlay on that particular type of service.  Customer satisfaction. The degree of overall pleasure or contentment felt by the customer, resulting from the ability of the service to fulfil the customer's desires, expectations and needs in relation to the service.  Perceived value. The customer's overall appraisal of the net worth of the service, based on the customer's assessment of what is received (benefits provided by the service), and what is given (costs or sacrifice in acquiring and utilising the service).  Perceived equity. The customer's overall assessment of the standard of fairness and justice of the company's service transaction and its customer problem and complaint handling process.  Perceived quality. The customer's overall assessment of the standard of the service delivery process. The theoretical basis of the research model is derived from several sources. The model is developed from the satisfaction, attitude and intention relationships examined by Oliver (1980, 1981) and from the analyses of customer perceptions of service performance by Cronin and Taylor (1992, 1994), Dodds et al. (1991), Oliver and Swan (1989) and Zeithaml (1988). The model also incorporates the defensive factors to switching identified by Fornell (1992). Analysis of the inter-relationships between customer retention factors can be undertaken at the single transaction (micro) level or at a global (macro) level. The model adopts a macro framework. This is because the customer repurchase decision often depends on a general assessment of the service and supplier, based on multiple service transaction experiences with that supplier (Danaher and Mattsson, 1994; Liljander and Strandvik, 1995). The service attribute of perceived quality is delineated as an important antecedent factor to customer satisfaction (Cronin and Taylor, 1992, 1994; Fornell et al., 1996; Parasuraman et al., 1994a). The other service attributes regarded as important determinants of satisfaction are perceived value (Crosby and Stephens, 1987; Fornell et al., 1996) and perceived equity (Oliver, 1993; Oliver and DeSarbo, 1988; Oliver and Swan, 1989). The model also proposes perceived quality and perceived equity to be antecedents to perceived value (Chang and Wildt, 1994; Dodds et al., 1991; Fornell et al., 1996; Oliver and DeSarbo, 1988; Smith Gooding, 1995; Zeithaml, 1988). There have been many approaches to the measurement of the factors influencing customer satisfaction (Erevelles and Leavitt, 1992). The performance compared to expectations approach (expectations dis