Journal of Service Research

This article presents factorial structural equations models (FAC-SEM). An experimenter conducting ANOVAs on means can use FAC-SEM on covariance matrices. To illustrate, the authors model customer evaluations and examine how construct relationships vary by sector and country. The methodological approach presented in this article is new to the literature and easily implemented.

The authors' model of Internet pricing competition shows how differences in switching costs, increasing returns to scale, and discount rates between pure and hybrid e-tailers affected their choice of pricing objective. During the run-up of Internet stocks, differences in these determinants motivated pure e-tailers to build their customer base, whereas hybrid e-tailers leveraged their relationship with existing (offline) customers. In the resulting two-tiered pricing structure, pure e-tailers offered substantially lower prices than hybrid e-tailers. The dot.com crash of April 2000 increased the discount rate for pure e-tailers. Using a longitudinal database of printer prices, the authors' model correctly predicts changes in overall price dispersion and the direction and magnitude of price changes for pure and hybrid e-tailers associated with this change in the financial markets. This study illustrates how changes in financial markets can affect pricing competition among Internet retailers in a single category.

Research has found that customer satisfaction is positively related to repurchase intention, actual repurchase, market share, and word of mouth. There is growing recognition among managers of the importance of measuring the share of business a customer conducts with a particular service provider (share-of-wallet) as opposed to simply repurchasing a product or service at some point in the future or continuing to keep a business relationship with a service provider. Currently there is very little empirical research concerning the relationship between customer satisfaction and share-of-wallet. This article examines the relationship between satisfaction and actual share-of-wallet in a business-to-business environment. The authors not only find that there is a positive relationship but that the relationship is nonlinear, with the greatest positive impact occurring at the upper extreme of satisfaction levels.

The rapid increase in transaction-based e-services creates a challenge for firms: What combination of features should they offer to satisfy consumers while realistically considering operational and financial constraints? This article explores the above question by highlighting similarities and differences in consumer preferences between different segments for a transaction-based e-service. The study employs a Web-based discrete choice experiment, in which 1,430 consumers are offered e-service options, differing from each other in terms of non-web-based and online-only features, price per transaction, and marketing promotions. The results demonstrate that overall, consumer preferences for features of transaction-based e-services differ between offline and online consumers. Furthermore, with increase in consumer usage frequency, interesting trends regarding the relative importance for features are observed. Similarities also exist in consumer preferences between various usage-frequency-based consumer segments. The authors believe that these results have both managerial and research implications for design and operations strategy formulation for transaction-based e-services.

Male and female consumers place different emphasis on elements of the service recovery process. Perceptions were influenced by gender of the service provider and by a match of customer and service provider gender. The study, an experimental design with 712 respondents, found that when service providers, irrespective of gender, display concern and give customers voice and a sizable compensation, both men and women reported more positive attitudes compared with when this was not so. Combinations of high voice with high outcome and high voice with high concern were especially important in positively influencing perceptions of effort, regardless of gender. However, the authors also found that there were significant differences between male and female respondents regarding their perceptions of how service recovery should be handled. Women want their views heard during service recovery attempts and to be allowed to provide input. Men, in contrast, do not view voice as important.

The authors examine the impact of consumer involvement on consumers'willingness to engage in relationships with service providers, because healthy relationships between consumers and service providers depend on the voluntary participation of consumers in relationships. They also examine the effect that involvement has on consumers' expectations of relational efforts by the service provider. On the basis of survey results from the telecom and health sector, the authors' results indicate that more involved consumers express greater interest in engaging in relationships with service providers. Also, although high-involvement customers do not differ from their low-involvement counterparts in terms of their expectations that their service providers communicate with them regularly and be price-competitive, they express a greater desire for fairness in treatment and being involved in solutions to their problems. These results indicate that the opportunity exists to engage high-involvement customers in long-term relationship programs tailored to their unique needs.

Organized service recovery policies and programs are important tools to firms in their efforts to maintain satisfied, loyal customers. Although service failure and recovery issues have received considerable attention in the literature, these topics have received only limited attention in the context of online retailing. Specifically, we lack an understanding of the types of online service failures occurring, the success with which firms are recovering from these failures, and consumer reactions to the service failure/recovery encounters they are experiencing. Therefore, this research involves two studies employing both qualitative and quantitative methods with samples of online shoppers to provide an initial examination of the service recovery management of online retailers. The results provide a typology of online service failures and demonstrate a number of areas in which online retailers are failing to effectively manage their service recoveries. The discussion includes implications for online retailers as well as directions for future research.