Marcel Paulssen

Incorporating Latent Variables into Discrete Choice Models - A Simultaneous Estimation Approach Using SEM Software

Integrated choice and latent variable (ICLV) models represent a promising new class of models which merge classic choice models with the structural equation approach (SEM) for latent variables. Despite their conceptual appeal, applications of ICLV models in marketing remain rare. We extend previous ICLV applications by first estimating a multinomial choice model and, second, by estimating hierarchical relations between latent variables. An empirical study on travel mode choice clearly demonstrates the value of ICLV models to enhance the understanding of choice processes. In addition to the usually studied directly observable variables such as travel time, we show how abstract motivations such as power and hedonism as well as attitudes such as a desire for flexibility impact on travel mode choice. Furthermore, we show that it is possible to estimate such a complex ICLV model with the widely available structural equation modeling package Mplus. This finding is likely to encourage more widespread application of this appealing model class in the marketing field.

Risk as moderator of the trust-loyalty relationship

Purpose – The purpose of this paper is twofold: first, to investigate the role of perceived risk as a moderator of the key relational mediators of satisfaction and trust, and second, to test the influence of perceived product value and social bonding as antecedents of brand satisfaction and brand trust to understand their effectiveness under different risk conditions. Palmatier et al. (2006) call for the study of moderators of relational mediators, such as trust and satisfaction, which may determine the effectiveness of different relationship marketing strategies. Design/methodology/approach – This study investigates business-to-consumer relationships between a car brand and its customers, applying structural equation modeling. Findings – Results show that perceived risk moderates the mediating role of both brand trust and brand satisfaction on relationship outcomes. When perceived risk is low, brand satisfaction alone determines brand loyalty, whereas when perceived risk is high, brand trust exclusively ...

Choice Modeling and SEM

The paper shows how two dominant methodological approaches in quantitative marketing research of the last decades can be integrated. Combining the strengths of covariance structure analysis to control for measurement errors and the ability to predict choice behavior via the Multinomial Logit (MNL) model creates a powerful hybrid approach – the Integrated Choice and Latent variable (ICLV) model – for marketing research. We document the basic features of this approach and present an example which illustrates how the ICLV model can be used to explain travel mode choice. The hybrid modeling framework provides several advantages: (1) it gives a more realistic and comprehensive representation of the choice process taking place in the consumer’s “black box”; (2) it provides greater explanatory power; (3) it helps to remedy the biasing effect of neglecting important latent variables to explain choice behavior, thus allowing for a more accurate assessment of how marketing influences customers’ choice behavior.

Social bonding as a determinant of share of wallet and cross-buying behaviour in B2B relationships

Purpose Research on how social bonding between boundary spanners influences relationship outcomes in business-to-business (B2B) settings is sparse and controversial. This longitudinal study aims to close this gap and assess the impact of social bonding on the share of wallet and actual cross-buying behaviour. Design/methodology/approach B2B relationships between a manufacturer of light commercial vehicles and its customers were investigated. A random sample of fleet managers answered two telephone surveys. Findings Social bonding was found to affect both investigated relationship outcomes, share of wallet and cross-buying, through the generation of trust over and above the customer’s perceptions of value. Research limitations/implications Only one product category was investigated in this study, and further research should explore boundary conditions for the relevance of social bonding in B2B. Practical implications Social bonding represents one lever (next to value perceptions) for building a competitive advantage in a B2B context. Relationship marketing activities that are intended to strengthen the development of social bonds between customers and account managers should be encouraged. Originality/value The authors provide clear evidence regarding the disputed impact of social bonding between boundary spanners on relationship outcomes in B2B relationships by testing its impact on real purchase behaviour and not only purchase intentions, as is the case in most published studies to date.

Are Critical Incidents Really Critical for a Customer Relationship? A MIMIC Approach

With increasing duration of a relationship the probability that customers experience specifically negative interaction episodes but also very positive interaction episodes increases. A key question that has not been investigated in the literature concerns the impact of these extreme interaction experiences, referred to as Critical Incidents (CIs) on the quality and strength of consumer-firm relationships. In a sample of customers in a service setting we first demonstrate that indeed the number of negative (positive) CIs possess a negative (positive) and asymmetric impact on measures of relationship quality (satisfaction, trust) and measure of relationship strength (loyalty). Second using a MIMIC approach we further shed light on the question which particular incidents are really critical for a customer firm relationship and which have to be prevented with priority.

Heterogeneity in the Satisfaction-Retention Relationship – A Finite-mixture Approach

Despite the claim that satisfaction ratings are linked to actual repurchase behavior, the number of studies that actually relate satisfaction ratings to actual repurchase behavior is limited (Mittal and Kamakura 2001). Furthermore, in those studies that investigate the satisfaction-retention link customers have repeatedly been shown to defect even though they state to be highly satisfied. In a dramatic illustration of the problem Reichheld (1996) reports that while around 90% of industry customers report to be satisfied or even very satisfied, only between 30% to 40% actually repurchase. In this contribution, the relationship between satisfaction and retention was examined using a sample of 1493 business clients in the market of light transporters of a major European market. To examine heterogeneity in the satisfactionrelationship, a finite-mixture approach was chosen to model a mixed logistic regression. The subgroups found by the algorithm do differ with respect to the relationship between satisfaction and loyalty, as well as with respect to the exogenous variables. The resulting model allows us to shed more light on the role of the numerous moderating and interacting variables on the satisfaction-loyalty link in a business-to-business context.