Homburg et al. (2010): A customer perspective on product eliminations: how the removal of products affects customers and business relationships
12 important questions on Homburg et al. (2010): A customer perspective on product eliminations: how the removal of products affects customers and business relationships
What does the study by Homburg et al. (2010) explore in terms of product elimination?
What does the social exchange theory entail?
- from comparison of economic and psychological costs and benefits experienced in relationship
- Argue that the elimination of a product by one exchange partner may lead to economic and psychological costs for the other partner
What is the aim of the paper by Homburg et al. (2010)?
product at the customer interface.
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The elimination of a product by one exchange partner – a company – may lead to two kinds of costs for the other partner – a customer. Which two costs and what do they entail?
- Psychological costs
- The degree to which the customer becomes uncertain about the eliminating company, can raise customer doubts about engaging in a business relationship with this company
- Economic costs
- The degree of a customer’s perceived economic burden and expenditures perceived (direct financial costs and time-related costs)
What are the two main conclusions of the paper by Homburg et al. (2010)?
- Eliminating a product may result in severe economic and psychological costs to customers, thereby seriously decreasing customer satisfaction and loyalty
- These costs are not exogenous (independent) in nature; depending on the characteristics of the eliminated product these costs are found to be more or less strongly driven by a company’s behaviour when implementing the elimination at the customer interface
Which 4 managerial implications are mentioned in the paper by Homburg et al. (2010)?
- Focus more heavily on maintaining (or restoring) customer confidence in firm than compensating customers for specific economic loss due to product elimination
- Take particular care to address “soft” factors (implementation process), rather than solely relying on “hard” factors (implementation outcome).
- Focus on timely announcement of elimination.
- Managers must be aware that effectiveness varies with product’s characteristics.
Which 4 managerial implications are mentioned in the paper by Homburg et al. (2010)?
- Focus more heavily on maintaining (or restoring) customer confidence in firm than compensating customers for specific economic loss due to product elimination
- Take particular care to address “soft” factors (implementation process), rather than solely relying on “hard” factors (implementation outcome).
- Focus on timely announcement of elimination.
- Managers must be aware that effectiveness varies with product’s characteristics.
Result: Perceived quality of eliminating firm’s implementation .....(1) more strongly reduces customer’s psychological costs, whereas the perceived quality of the firm’s implementation ......(2) more heavily decreases customer’s economic costs. Process or outcome?
- Process
- Outcome
What should firms/managers focus on when products are
- Highly relevant to customers
- Associated with significant specific investments
- Highly interrelated with other products?
- Strive to provide appropriate compensation
- Focus on both customer treatment and customer compensation
- Adequate treatment of customer through implementation process and appropriate compensation in outcome become more important
What should firms/managers focus on when products are
- Highly relevant to customers
- Associated with significant specific investments
- Highly interrelated with other products?
- Strive to provide appropriate compensation
- Focus on both customer treatment and customer compensation
- Adequate treatment of customer through implementation process and appropriate compensation in outcome become more important
Result: The degree to which customer consequences of the elimination are driven by eliminating firm’s implementation efforts depend considerably on which 3 factors?
- The eliminated product’s characteristics of importance to customer
- Specific investments of customer
- Interrelatedness with other products purchased from the firm.
Explain the conceptual framework of the paper by Homburg et al. (2010)?
- The main effect of perceived company elimination (left) on customer consequences of elimination are tested.
- The main effect of psychological and economic costs (middle) are investigated on customer satisfaction and loyalty after elimination
- The moderating effect of characteristics of the eliminated product (importance, related investments and interratedness) on the relationship between perceived company elimination behavior on customer consequences is tested
- The control variables are overall customer satisfaction before elimination and the availability of alternatives
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