Managerial Ethics by Schminke Marshall;

Author:Schminke, Marshall;
Language: eng
Format: epub
Tags: Behavioral Sciences
Publisher: Taylor & Francis Group
Published: 2010-06-15T00:00:00+00:00

Categorization of Failure Types

Early research on the failure–recovery process attempted to categorize the types of failures that are experienced by customers (Bitner, Booms, & Tetreault, 1990; Kelley, Hoffman, & Davis, 1993; Keaveney, 1995). The predominant view of these researchers was that customers responded uniquely to different types of failures. Bitner, Booms, and Tetreault (1990) uncovered three general categories that caused customer dissatisfaction which include: (1) unacceptable responses to failures (i.e., recovery), (2) unresponsive to customer needs and requests, and (3) inappropriate employee treatment of customers. Their findings also revealed that unacceptable responses to failures (Category 1) occurred most frequently in the airline and hotel industries, while unresponsive responses to customer needs and requests (Category 2) occurred most often in the restaurant industry.

A similar study conducted within a retailing context showed that the unacceptable response to product defects (similar to Category 1 above but adapted for the retailing context) produced most (70.5%) of customers’ dissatisfying incidents (Kelley, Hoffman, & Davis, 1993). These authors also collected and classified information regarding the recovery activities employed by retailers to respond to customers’ failure experiences. The findings indicated that product replacement (26.2%), no recovery activity (17.2%), refund of purchase price (12.3%), and problem correction (12.3%) were the most frequently cited recovery activities provided by retailers. In addition, the authors paired specific failure types with the corresponding recoveries employed by retailers. The findings showed that a wide variety of recovery activities were applied to the same failure type suggesting that retailers generally disagreed about which recovery activities were most effective at restoring customer equity when failures occurred.

In a similar study of the behavioral consequences of failures, Keaveney (1995) revealed that core service failures (24.8%), unacceptable employee treatment of customers (19.1%), unfair pricing practices (16.7%), inconvenience (location, hours of operation, wait time) (11.6%), and unacceptable recovery (9.7%) were the most frequently cited incidents causing customers to switch to competitive firms. Most interesting, she also showed that most (55%) of the customers’ switching behavior was produced by multiple failure types occurring during a single encounter with an organization. Thus, customers were much more likely to switch to the competition when, for example, they were charged an unfair price combined with unacceptable resolution of the price issue (i.e., recovery) during an encounter with the organization.

A second stream of research has more recently emerged in marketing that employs a more simplistic classification scheme to empirically examine whether customers respond differently to certain types of failures. Much of this research classifies failures based on the outcome (i.e., central benefits received or sought by customers) and process (i.e., how the service is delivered to customers) conceptualization of service delivery (Gronroos, 1988; Parasuraman, Zeithaml, & Berry 1985). For example, outcome failures are related to problems with the restaurant meal, hotel room, and haircut, while process failures involve problems with the way in which these services are delivered including the courtesy, responsiveness, and speed of delivery provided by the employee. Several different terms have been employed for outcome (e.g., core) and process (e.g., peripheral,

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