European Journal of Marketing

Analysing firms' failures as determinants of consumer switching intentions: The effect

of moderating factors
Carmen Antón Carmen Camarero Mirtha Carrero
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Carmen Antón Carmen Camarero Mirtha Carrero, (2007),"Analysing firms' failures as determinants of
consumer switching intentions", European Journal of Marketing, Vol. 41 Iss 1/2 pp. 135 - 158
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Consumer
Analysing firms’ failures as switching
determinants of consumer intentions
switching intentions
135
The effect of moderating factors
Received August 2005
Carmen Antón, Carmen Camarero and Mirtha Carrero Revised December 2005
Department of Business and Marketing, University of Valladolid, Spain
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Abstract
Purpose – The objective of this work is to provide evidence of customer switching intentions as a
complex phenomenon involving a series of firm actions – service quality failures, unfair price, low
perceived commitment and anger incidents – and factors relating to the purchase situation or the
consumer that also play an important role as moderators in the dissolution process.
Design/methodology/approach – An empirical study has been carried out in the case of customers
of car-insurance firms.
Findings – Results demonstrate the existence of some factors that have a weak influence on the
switching intention – service quality and company commitment – and other factors that have a
strong influence and precipitate the consumers’ decisions – price changes and critical incidents. This
study also underlines the moderator role of knowledge about alternatives and switching costs in this
process.
Practical implications – This findings show that a continuing dissatisfaction with the firm as a
consequence of a quality that is poorer than expected does not influence individuals as much as a
change in the price policy or a one-off incident in which consumers experience a strong unease.
Originality/value – This work provides empirical evidence about the existence of various
determinants of switching: variables that weaken the relationship and variables that precipitate
dissolution. These categories had already been discussed theoretically in previous work, but their
effect had not been tested. Moreover, it advances in the idea that switching intention may
fundamentally be conditioned by consumers’ level of involvement and their knowledge about other
alternatives.
Keywords Relationship marketing, Consumer behaviour, Motor car insurance, Services marketing
Paper type Research paper

Introduction
In relationship marketing research, there has been a proliferation of all types of study
investigating all types of relational phenomenon in both consumer and industrial
markets: the creation of relationships (Ganesan, 1994), the determinants of loyalty
(McDougall and Levesque, 2000; Sirohi et al., 1998), the strategies firms adopt to
achieve customer commitment (Sharp and Sharp, 1997; Yi and Leon, 2003), or the value
firms can generate by building customer loyalty (Reichheld and Sasser, 1990; Sin et al.,
2002), among others. Within this wide range of proposals and tendencies, however,
very little attention have been given to how, why and when exchange relationships end European Journal of Marketing
Vol. 41 No. 1/2, 2007
(Tähtinen and Havila, 2004). pp. 135-158
q Emerald Group Publishing Limited
In the case of industrial relationships, relationship dissolution has attracted more 0309-0566
attention from researchers (Gassenheimer et al., 1998; Heide and Weiss, 1995; Michell DOI 10.1108/03090560710718157
 EJM et al., 1992; Perrien et al., 1995; Ping, 1995; Tähtinen and Havila, 2004). In the case of
consumer relationships, in contrast, the phenomenon does not appear to have provoked
41,1/2 as much interest in the literature – the studies by authors such as Hocutt (1998),
Keaveney (1995), Mittal and Lassar (1998), and Bansal and Taylor (1999, 2002) are
exceptions. And this in spite of the fact that in certain services, when customers
terminate relationships the firm may incur high costs. Keaveney (1995) indicates that
136 when firms lose a customer they are not only losing future earnings and incurring the
cost of finding new customers, they are also likely losing a loyal customer, which means
giving up high margins. Over time, loyal customers increase their expenditure in the
firm, and they become less price-sensitive and less costly. Keaveney and Parthasarathy
(2001) likewise warn that consumers’ switching behavior in services markets can be
particularly serious when the service is delivered continuously, such as in insurance,
banking, public services, medical insurance, telecommunications, or generally in services
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where customers take out a subscription. A premature end to the relationship may mean
that customers end up costing the firm more than they bring in. The problem becomes
more serious if we consider consumers’ greater access to information and their growing
capacity to choose the best option. Customers are becoming increasingly intolerant of
inconsistency or mediocrity, and they can choose to dissolve the relationship as soon as
any problem arises. In this respect, Roos (2002) points out that there are critical
relationships, i.e. relationships that are more likely to end because of their context – the
ability of competitors and customers to adapt to changes.
In this perspective, the objective of the current work is to deepen our understanding
of the process whereby consumers dissolve their relationship with their service
provider. Specifically, the study we present here proposes and tests a model showing
dissolution as a complex phenomenon involving a series of firm’s actions that can
provoke the switching intention – service quality failures, unfair price, low perceived
commitment and anger incidents – and factors relating to the purchase situation or the
consumer that also play an important role as moderators in the dissolution process –
switching costs, knowledge of better alternatives or consumer involvement. To test
empirically the hypotheses proposed we have collected information on car-insurance
customers. The work ends with a section presenting our main conclusions and the
management implications.

Relationship dissolution in consumer markets

In the relationship marketing literature, dissolution has been defined as a process
(Coulter and Ligas, 2000; Halinen and Tähtinen, 2002; Michalski, 2004). Coulter and
Ligas (2000) identify three stages in the long dissolution stage:
(1) The breakdown trigger, i.e. any factor that starts off the switch.
(2) The breakdown phase, marked by negative and positive experiences, as well as
by inertia, when relationship members evaluate both the transaction and the
psychological costs of switching.
(3) The determinant incident, i.e. any factor that makes the customer and the
relationship.
In this dissolution process, authors are beginning to find evidence of the existence of
different factors and experiences: some gradually undermine the relationship and push
it towards the switching intention, while others precipitate the termination. Roos
 (1999), after analyzing the experiences of numerous consumers using the critical Consumer
incident method, argues that relationship dissolution has three types of determinant: switching
determinants pushing consumers to switch suppliers, determinants that encourage
them to remain in the relationship (pullers), and swayers, which act so that after the intentions
switch the consumer resorts to their old supplier occasionally. In a very similar line,
Halinen and Tähtinen (2002) theoretically argue for the need to categories the
antecedents of dissolution in three levels: predisposing factors, precipitating factors, 137
and attenuating factors of the switching intention. On the theoretical basis of these
works, the antecedent factors of dissolution intention can be classified into two types:
(1) Factors with a direct effect. These are variables that directly predispose or
precipitate switching intention. The factors that predispose to relationship
dissolution are factors of a structural, static nature, and they create the
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conditions in which individuals pay more attention to certain elements that will
precipitate dissolution. The factors that predispose may be related to the
fulfillment of the tasks inherent to the relationship – delivering the service
quality required or desired by the consumer – or to the dyadic relationship –
the commitment and interest demonstrated by the firm in the relationship. The
factors that precipitate dissolution are events pushing the consumer to take
measures to end the relationship. They may be sudden and dramatic, or form
part of a series of events pushing the consumer towards switching suppliers.
Like in the previous case, they are failings in the fulfillment of the tasks –
sudden price rises – or deficiencies in the interaction in the relationship –
sporadic conflicts or episodes that demonstrate the firm’s lack of interest in the
client – which provoke consumers’ anger and lead them to take immediate
measures.
(2) Factors with a moderating effect. These are variables that either attenuate or
reinforce the effect of the direct determinants. These moderators may be exit
barriers associated with the relationship, such as the existence of switching
costs, or emotional links created in the relationship, or the lack or unawareness
of attractive alternatives. The absence of these barriers, in contrast, could
reinforce consumers’ switching intention.

Before describing these antecedents of switching intention, we need to make a short

digression and clarify that the study of the dissolution process differs remarkably from
the models explaining consumer loyalty or commitment. We do not deny that this is
“the other side of the coin”, and that studies on the customer retention process shed
considerable light on the factors contributing to relationship maintenance –
satisfaction, trust, service quality, commitment, perceived switching costs, etc.
Despite this, and according to some recent studies in services marketing, satisfied and
loyal customers can also decide to end relationships (Ganesh et al., 2000; Mittal and
Lassar, 1998). Moreover, the variables having positive outcomes – loyalty or retention
– may have an asymmetric effect when we examine negative outcomes – dissolution –
(Bansal and Taylor, 1999).

Direct determinants of relationship dissolution by consumer

As we have just said, there are certain factors pushing consumers to end their
relationship. We focus here particularly on the effect of deficiencies in the firm’s actions
 EJM as determinants of consumers’ intention to exit the relationship. These deficiencies or
41,1/2 failures can act continuously, gradually creating unease in consumers – predisposing
factors – or occur abruptly, causing consumers to bring forward their switching
intention – precipitating factors. In our proposal, we consider that the predisposing
factors are, mainly, poor service quality (Hess et al., 2003) and the firm’s low
commitment to maintaining the relationship (Dwyer et al., 1987), while the
138 precipitating factors are the consumers’ perception of an inappropriate price
(Keaveney, 1995) and their experience of episodes of dissatisfaction or anger incidents
(Roos, 1999, 2002).

Deficient service quality

The quality of the service, from the perspective of Grönroos (1990), is conceptualized
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from two dimensions: the technical quality (what is delivered to the consumer) and the
functional quality (how it is delivered). The most widely-employed measure of this
variable is the one proposed by Parasuman et al. (1988) – the SERVQUAL scale, which
consists of five dimensions (tangibles, reliability, responsiveness, assurance and
empathy). But this scale has led to some controversy. Brady and Cronin (2001), for
example, criticize it and propose an alternative. These authors contend that the
perceived service quality is instead made up of three dimensions: the outcome,
interaction and physical environment quality. Outcome quality is defined as what the
customer obtains when the productive process ends; interaction quality refers to the
interaction that takes place while the service is being delivered; and environment
quality refers to the conditions of the environment where the service is delivered or the
product is sold.
In line with this last definition of quality, Keaveney (1995) suggests that consumers
voluntarily exit a relationship because of personal dissatisfaction with the quality of
the service received – outcome – or with the service provider – interaction. Many
researchers have also suggested that the quality of the customer-organization
interaction affects the customer’s response to failings in services (Berry, 1995; Kelley
and Davis, 1994). The literature on loyalty also indicates that customers value the
company’s resources and skills very highly – resources and skills that are manifested
in the service quality (Mittal and Lassar, 1998). High quality can motivate consumers
to strengthen their relationship with their service provider (Hess et al., 2003; Bell et al.,
2005), or not (a result obtained by Cronin and Taylor, 1992). However, what does seem
to be clearer is that poor quality or changes in the firm’s quality levels provoke a
change in consumers’ attitudes towards the firm and likely a change in their behavior
(Bansal et al., 2005).
According to this, we propose:
H1. Consumers’ perception of a low level of quality in the service delivered
positively affects their intention to exit the relationship.

Low organisation commitment to customers

The variable commitment has evolved considerably over time in the research on the
relationship phenomenon. Authors have offered numerous and diverse proposals
about the nature, dimensions and measurement of this variable. In a brief examination
of the literature on the topic, we can find different definitions of commitment, which
include aspects such as:
 .
The desire to make short-term sacrifices to favour the long-term stability of the Consumer
relationship (Anderson and Weitz, 1992; Dwyer et al., 1987). switching
.
Recognition of the importance of the relationship and the desire to maintain it intentions
(Morgan and Hunt, 1994).
.
The continuing desire to develop and maintain the relationship (Walter and
Ritter, 2000).
139
In short, commitment can be understood as the desire to develop and maintain
long-term exchange relationships, a desire that materializes in the realization of
implicit and explicit promises, as well as sacrifices in favor of the economic and social
well-being of all the parties having some interest in the relationship. The organization’s
commitment refers, then, to its interest in the consumers and its efforts to maintain
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their loyalty by adapting to their specific needs, offering frequent communication,

special treatment and full information. This attitude from the firm is a result of the
assumption that consumers can obtain more value from a relationship of continuing
loyalty, and may therefore forgo the opportunity to choose another supplier to fulfill
their needs (Sheth and Parvatiyar, 1995). When consumers perceive added value in the
firm’s efforts to offer them special treatment to foster their loyalty, they will not switch
suppliers. Indeed in some cases the firm’s efforts to build customers’ loyalty and keep
them satisfied excludes any other type of relationship that the consumer might
contemplate with any of the firm’s competitors (Wathne et al., 2001; Dwyer et al., 1987),
which makes the switching intention even more improbable. In contrast, we maintain
that low commitment on the part of the firm reflects its lack of interest in the
consumers and will lead to disenchantment, dispelling any intention of loyalty.
Consequently, we propose:
H2. Consumers’ perception of a low level of commitment to maintain the
relationship on the part of the organisation positively affects their intention to
exit the relationship.

Unfair price
There are two tendencies with respect to consumers’ perception of the price of the
product. The first maintains that consumers regard high prices as a signal of high
quality and vice versa (Dodds et al., 1991; Teas and Agarwal, 2000); while the second,
in contrast, suggests that low prices can also function as a signal of good value for
money (Kirmani and Rao, 2000). In either case, whether a low price is perceived as low
quality or a high price is perceived as abusive, when customers are dissatisfied with
the value for money or perceive the price to be unfair, their intention will be to switch
suppliers (Campbell, 1999; Homburg et al., 2005). Keaveney (1995) suggests that
consumers voluntarily switch suppliers because of their personal dissatisfaction with
the price paid. This dissatisfaction arises when the consumers perceive the price to be
unfair or excessively higher than alternative options. Athanassolpoulos (2000) and
Bansal et al. (2005) also show that among the reasons consumers switch suppliers,
price-related issues are important. Buyers will be conscious of the savings
opportunities that other options provide, and the chance to make savings can
become a substantial concern (Wathne et al., 2001), and the motive for an immediate
switch.
 EJM Thus, we propose:
41,1/2 H3. Consumers’ perception of paying an unfair price for the service positively
affects their intention to exit the relationship.

Anger incident
140 Roos (1999, 2002) analyses critical incidents as a method for studying consumers’
switching decisions. These critical incidents or episodes can affect consumers’
behavior, and specifically their intention to dissolve the relationship, either completely
or partially. In our case, we center mainly on events or episodes that have provoked
anger and manifest dissatisfaction in the consumer. Bougie et al. (2003) show that
anger is an emotion that, according to emotions theory (Roseman et al., 1994), encloses
a specific experience. Anger is associated with feelings (“as if they would explode”),
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thoughts (“thinking of how unfair something is”), action tendencies (“feel like behaving
aggressively”, “letting go”), actions (“complaining”) and emotivational goals (“wanting
to get back at someone”). According to their study, anger also mediates in the relation
between consumers’ dissatisfaction with the service and their behavioral response –
ending the relationship. In any case, this is a variable that shows the direct and
immediate effect on consumers’ intention to dissolve the relationship of the anger
provoked by a conflictive episode. Thus, we propose:
H4. Consumers’ experience of an anger incident positively affects their intention
to exit the relationship.

Moderator variables of dissolution process

Having presented the variables that directly affect consumers’ intention to end the
relationship, we now look at the set of environmental factors. Their presence or
absence may moderate the effect of the perception of deficiencies in the firm’s actions.

Consumer involvement
Consumers’ involvement in the decision to acquire a product is a special state of
motivation that arises when some values that are important to them emerge in a
purchase situation. Involvement has been defined as an internal state of arousal,
comprising three dimensions (Warrington and Shim, 2000): intensity – the level of
motivation; direction – the object producing the motivation; and persistence – the
duration of the intensity. In relationship marketing, the role of involvement in
consumer behaviour – either in terms of repurchase or switching – is indirect, and
there does not appear to be a direct effect (Warrington and Shim, 2000). In general,
highly-involved consumers react more strongly to certain aspects of the firm’s
behaviour.
According to Gordon et al. (1998), highly-involved buyers are more likely to value
the benefits of the firm’s relationship marketing strategies, and they respond positively
to these strategies. Highly-involved customers tend to show higher levels of
satisfaction or dissatisfaction (Richins and Bloch, 1991). Researchers have also found
that when highly-involved customers are satisfied, they become more loyal to the
brand and more committed to the decisions they have taken, and they also tolerate
certain service failures (Oliva et al., 1992; Pritchard et al., 1999).
 In the same reasoning, it is logical to argue that when highly-involved consumers Consumer
are dissatisfied with the quality of the service received, the value for money, or the level switching
of commitment shown by the supplier, or when they experience a situation that angers
them, their intention to exit the relationship will also be stronger than in the case of intentions
relatively uninvolved consumers. Highly-involved consumers will be more conscious
of the problems of the relationship, more predisposed to act, and more determined in
their actions. According to this, we propose: 141
H5a. The more highly-involved the consumer, the stronger the positive effect of a
perception of low service quality on the intention to switch suppliers.
H5b. The more highly-involved the consumer, the stronger the positive effect of a
perception of low firm commitment on the intention to switch suppliers.
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H5c. The more highly-involved the consumer, the stronger the positive effect of a
perception of unfair price on the intention to switch suppliers.
H5d. The more highly-involved the consumer, the stronger the positive effect of an
anger incident on the intention to switch suppliers.

Switching costs
Switching costs are defined as those costs that consumers associate with the process of
switching from one supplier to another (Burnham et al., 2003; Wathne et al., 2001).
When consumers manifest that it is not worthwhile switching suppliers, this may be
because they are perceiving obstacles to it. These may include searching, transaction
and learning costs, discounts for loyalty, habit, emotional costs and cognitive effort,
together with the financial, social and psychological risk. Specifically, Burnham et al.
(2003) describe three types of switching cost: procedural switching costs – these
include the economic risk and evaluation costs, and involve expenditure of time and
effort; financial switching costs – involve the loss of benefits and financial resources;
and relational switching costs – the loss of the personal relationship and the
relationship with the brand, which involves psychological and emotional discomfort
due to the loss of identity and the breaking of bonds.
Switching costs represent an impediment to exploring new suppliers (Wathne et al.,
2001). To the extent that individuals perceive costs or barriers to exit, they will tend to
maintain their supplier (Burnham et al., 2003; Lee et al., 2001). If switching costs are
low, dissatisfaction with the service quality, price or firm will motivate the intention to
switch suppliers. In contrast, if they are high, many dissatisfied consumers are likely to
manifest a “false loyalty”. Numerous studies have shown that switching costs act as a
moderating variable that negatively affects the relation between satisfaction and
intention to maintain the relationship (Burnham et al., 2003; Jones et al., 2000; Oliva
et al., 1992; Sharma and Patterson, 2000). As the costs rise, the influence of satisfaction
on the intention to maintain the relationship declines, and vice versa. This permits us
to propose:
H6a. The higher the switching costs, the weaker the positive effect of a perception
of low service quality on the intention to switch suppliers.
H6b. The higher the switching costs, the weaker the positive effect of a perception
of low firm commitment on the intention to switch suppliers.
 EJM H6c. The higher the switching costs, the weaker the positive effect of a perception
41,1/2 of unfair price on the intention to switch suppliers.
H6d. The higher the switching costs, the weaker the positive effect of an anger
incident on the intention to switch suppliers.

Alternative attractiveness
142 Many authors have recognised that the degree of knowledge about the competition
plays an important role in defection. Sheth and Parvatiyar (1995) affirm that
consumers’ fundamental motive for choosing only some of the available alternatives is
to reduce the complexity of the purchase process, and thereby facilitate information
processing. Paradoxically, although consumers seek routine selection processes,
tiredness or saturation also lead them to seek other alternatives or extra information,
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which motivates them to switch suppliers. In short, the degree of subjective knowledge
of better alternatives, i.e. individuals’ perception of how much they know about the
alternatives (Caprapo et al., 2003), is a basic condition of repurchase, or conversely
relationship termination.
The moderating effect of knowledge about attractive alternatives on repurchase
intention has been confirmed in previous work (Sharma and Patterson, 2000). Although
some authors have found a direct effect (Caprapo et al., 2003; Bansal et al., 2005), we
centre here on its moderating role. In this respect, Jones et al. (2000) show that
alternative attractiveness does not directly influence repurchase intention, but instead
acts as a moderating variable. Although in certain services merely knowing that other
suppliers exist encourages consumers to switch and try other options – variety
seeking behaviour – we consider that in services where customers tend to be loyal and
to simplify their purchase problem, knowledge of better alternatives will only reinforce
the intention to exit the relationship when the consumer has experienced
dissatisfaction in terms of service quality, perceived commitment, price paid, or
anger episode.
H7a. The higher the alternative attractiveness, the stronger the positive effect of a
perception of low service quality on the intention to switch suppliers.
H7b. The higher the alternative attractiveness, the stronger the positive effect of a
perception of low firm commitment on the intention to switch suppliers.
H7c. The higher the alternative attractiveness, the stronger the positive effect of a
perception of unfair price on the intention to switch suppliers.
H7d. The higher the alternative attractiveness, the stronger the positive effect of an
anger episode on the intention to switch suppliers.
Figure 1 summarises the proposed hypotheses.

Empirical analysis
For our empirical study we needed to choose a product or service for which
relationship termination is a clear problem from the firm’s point of view and a decision
that is carefully thought about by the consumer. Thus, we chose the consumer
relationship with car-insurance companies as the scope of the study. This is a service,
as Keaveney and Parthasarathy (2001) point out, in which customers’ behavior in
 Consumer
switching
intentions

143

Figure 1.
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Proposed model

switching suppliers may be particularly worrying for the firm, since it does not
normally recover costs until customers have spent several years with it. If customers
cancel their insurance, the firm can lose a considerable amount of money. For the rest,
it has the characteristics of all services: intangibility – it is difficult to evaluate even
after product purchase and use; the variability of service quality and prices; the
different relational policies followed by the firms; and the occasional dissatisfaction
that may be felt for a service that does not match customer expectations. All this means
that consumers can question the decision they have made on more than one occasion,
and consider switching suppliers. Other studies have also analyzed the behavior of
customers of insurance companies (Verhoef et al., 2002; Hellier et al., 2003), or of buyers
of medical insurance (Caprapo et al., 2003). Caprapo et al. (2003) note that choosing an
insurance company is a decision for which consumers seek information. On the other
hand, the fact that they have to renew this contract means that consumers can consider
switching firms at least once a year.
For the data collection, we surveyed individuals that fulfilled two requirements:
they should be owners of an automobile and they should have bought automobile
insurance. We employed three survey-takers who contacted 800 individuals. A total of
520 demonstrated to own an automobile and to have bought automobile insurance. The
final sample was 247 valid responses (47.5 per cent response rate). A total of 45.9 per
cent of the sample habitually contact their insurance firm through its offices, 37 per
cent do so by telephone, 16.3 per cent through an insurance broker and only 0.7 per cent
of them use the internet.

Variable measurement
In the appendix, we provide a full list of the variables intervening in our study. All the
items were measured using five-point Likert-type scales. We now describe the process
followed for creating and validating each scale.
Switching intention. Relationship dissolution was measured in the decision-making
stage, when consumers consider switching suppliers, the phase that Duck (1982) calls
“intra-psychic”. The stage involves intentions, so we cannot be sure that the consumer
will actually dissolve the relationship in the near future. But this approach does allow
us to undertake a cross-sectional analysis, and it is in line with previous research
 EJM (Hellier et al., 2003; Hocutt, 1998; Jones et al., 2000; Mittal and Lassar, 1998; Ping, 1994,
41,1/2 1995). The measurement scale used was based on the scale proposed by Ping (1995).
Deficient service quality. Measuring service quality still seems to be a controversial
topic, as we have mentioned. In our case we opted to follow Brady and Cronin’s (2001)
proposal, which combines those of Grönroos (1990) and Parasuman et al. (1988), and
implies that the perception of service quality is founded on three dimensions: the
144 outcome, interaction and physical environment quality. These three dimensions define
the base of the perceived service quality, and other second-order dimensions may
underlie them. Taking this approach, we measured these three aspects of quality
adapting the scale used by these authors.
Low perceived commitment. The scale for the firm’s commitment as perceived by the
consumer was built especially for this current work. We tried to include different
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aspects that the relationship marketing literature attributes to a service provider’s

relational orientation policy, on the basis of items proposed by Anderson and Weitz
(1992), Gundlach and Cadotte (1995), Kumar et al. (1995a, b), and Mohr and Spekman
(1994): willingness to invest; shared information; loyalty and commitment to the
customer; or perceived desire to continue.
Price unfairness. The consumer’s perception of an unfair price and poor value for
money were each measured by a separate item. These items were built for this current
study starting from the results obtained by Keaveney (1995) in her descriptive study of
consumers’ motives for terminating relationships.
Anger incident. This variable was measured using a single indicator, where
respondents were asked to state if they had had any recent experience with their
supplier that had upset them and caused them to lose confidence in the firm.
Involvement. Involvement with the product-service was measured using a simplified
version of Zinkhan and Locander’s (1988) scale, which has been used by other authors
(Keaveney and Parthasarathy, 2001). Although the scale proposed by these authors
also includes aspects relating to consumers’ interest, experience and expertise, we only
measured their degree of involvement.
Switching costs. To measure switching costs we made use of the proposal by
Burnham et al. (2003) – cost in time and effort, financial costs and psychological costs
– and the scale used by Sharma and Patterson (2000), to propose a simpler scale of two
single indicators measuring these aspects.
Alternative attractiveness. The existence of better alternatives that the consumer is
aware of was measured using a single indicator, as suggested by Caprapo et al. (2003).
These authors employ this indicator to evaluate the consumer’s subjective knowledge
about alternatives. They measure objective knowledge as the degree of knowledge
about the different suppliers present in the market, but this aspect is not relevant to our
current research.
As we can see, perceived quality, commitment and price were measured by
indicators formulated in positive terms, so that “strongly agree” indicates a perception
of high quality, strong commitment or a fair price, while “strongly disagree” indicates
the precise opposite of these. The fact that these items were formulated in positive
terms, to be subsequently recoded, allows us to use the scales that were proposed in the
literature when these concepts were introduced. On the other hand, we consider that
formulating these items in negative terms could be understood by the respondents as
 indicating extreme states of dissatisfaction, which would likely be confused with what Consumer
we have labeled critical episode. Bansal et al. (2005) take a similar approach. switching
Although most of the proposed scales have been validated previously in the
literature, we subjected each of them to a validation process here. For this, we intentions
performed a confirmatory factor analysis (Lisrel 8.7), following the procedure
recommended by Anderson and Gerbing (1988). To test the validity of the
measurement scales of the quality dimensions we estimated a second-order 145
confirmatory factor model (Brady and Cronin, 2001). The results are shown in
Table I. Analysing the modification indices led us to eliminate one of the measurement
indicators, as it showed errors highly correlated with those of other indicators.
Although the chi-square statistic was significant – probably a consequence of the
sample size – the remaining goodness-of-fit indicators show adequate values, which
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allows us to confirm the multi-dimensionality of service quality.

The remaining variables, measured using multi-item scales (perceived price,
perceived commitment, involvement, switching costs and dissolution), were subjected
to a confirmatory analysis. The results are shown in Table II. Again, the lambda values
(ten to ten times as large as the standard errors) and the goodness-of-fit values allow us
to accept the convergent validity of these scales.
After validating the convergence of the scales, we calculated the correlation matrix
of the factors resulting from each scale. Table III shows the correlation matrix of all the
variables, as well as the reliability values – Cronbach alphas, composite reliability, and
variance extracted – in each case.
As we can see, in almost all cases the variance extracted of each variable exceeds
the value of its squared correlation with the other variables, which allows us to justify
the discriminant validity of the scales (Anderson and Gerbing, 1988).

Estimation of structural model

The following step in the analysis was to estimate the structural model following the
procedure described by Anderson and Gerbing (1988). We have already mentioned that
according to the dissolution literature certain factors predispose to relationship
termination, while others precipitate it (Halinen and Tähtinen, 2002; Michalski, 2004).

Variable Items l t

Poor outcome quality QUA1 0.941 10.05

QUA2 0.797 10.60
Poor interaction quality QUA3 – –
QUA4 0.974 7.713
QUA5 0.975 7.715
Poor physical environment quality QUA6 0.637 10.34
QUA7 0.975 17.40
Deficient service quality Poor outcome quality 0.714 5.064
Poor interaction quality 0.959 6.701
Poor physical environment quality 0.651 6.038
Notes: Goodness of fit – x2 ð8Þ ¼ 16:47 (p ¼ 0:036) GFI ¼ 0:978 AGFI ¼ 0:941 CFI ¼ 0:987 Table I.
RMSEA ¼ 0:0656 Second order CFA
 EJM
Variable Items l t
41,1/2
Price unfairness PRI1 0.918 17.24
PRI2 0.883 16.31
Low perceived commitment COM1 0.617 9.952
COM2 0.566 8.936
146 COM3 0.741 12.65
COM4 0.729 12.37
COM5 0.787 13.72
Switching intentions SWI1 0.852 13.78
SWI2 0.453 6.866
SWI3 0.812 13.08
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Involvement INV1 0.793 7.412

INV2 0.815 7.484
Switching costs COS1 0.907 4.873
COS2 0.504 7.337
Table II.
Confirmatory factor Notes: Goodness of fit – x2 ð66Þ ¼ 120:4 (p ¼ 0:000) GFI ¼ 0:936 AGFI ¼ 0:898 CFI ¼ 0:959
analysis RMSEA ¼ 0:0579

Hence we performed the estimation following a hierarchical process following

Anderson and Gerbing’s (1988) procedure. First, we estimated the effect of the
predisposing variables – i.e. poor perceived quality and low perceived commitment –
and restricted the structural parameters between price unfairness and switching
behaviour and anger incident and switching behaviour to zero (model I). Then, we let
free the parameter of perceived price unfairness and the anger incident – variables that
precipitate termination (model II). The result of these estimations are shown in
Table IV. In both cases the chi-square statistic is significant – a probable consequence
of the sample size – although the values of other indicators – GFI, AGFI, CFI and
RMSEA – are within recommended limits, indicating a good fit. The chi-square
difference test allows us to compare both models and demonstrate that model II is
significantly better than model I (x2 ð2Þ ¼ 33:26).
In view of the results from the estimation of the model I, H1 and H2 are confirmed.
We find that the perception of poor service quality and low organisation commitment
have a significant positive effect on termination intention. If we look now at model II,
we see that this effect weakens and even disappears when the variables price and
anger incident are introduced (H3 and H4). The effect of these two variables is so
strong that they explain switching intention alone, so that the effect of perceived
commitment is zero, while that of perceived quality is only significant at the 90 per cent
level. These results appear to be in line with Halinen and Tähtinen’s (2002) argument
that certain variables have a weak effect on switching intention – wearing down the
consumer and predisposing them to have a negative attitude towards the firm – while
others have a strong effect on switching intention – precipitating termination. We find,
moreover, that introducing these two variables contributes to a better explanation of
switching intention, with the R 2 passing from 21.6 to 35.8 per cent.
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Poor Poor
Switching outcome interaction Poor physical Price Low Anger Switching
intention quality quality env. quality unfairness commitment incident costs Involvement

Switching intention 1.000

Poor outcome quality 0.408 1,000
Poor interaction quality 0.285 0.554 1.000
Poor physical env. quality 0.128 0.324 0.463 1.000
Price unfairness 0.424 0.495 0.306 0.190 1.000
Low commitment 0.344 0.495 0.522 0.353 0.581 1.000
Anger incident 0.359 0.324 0.250 0.035 0.257 0.232 1.000
Switching costs 2 0.154 2 0.102 2 0.193 20.209 2 0.166 2 0.135 2 0.112 1.000
Involvement 0.001 2 0.079 2 0.224 20.238 0.007 2 0.134 0.064 0.116 1.000
Alternative attractiveness 0.156 0.124 2 0.027 20.041 2 0.039 2 0.011 0.155 20.152 0.091
Cronbach alpha 0.725 0.855 0.858 0.765 0.895 0.832 0.625 0.785
Composite reliability 0.760 0.863 0.974 0.711 0.895 0.820 0.683 0.785
Variance extracted 0.794 0.761 0.951 0.678 0.812 0.500 0.538 0.647
intentions
Consumer

Correlation matrix
switching

Table III.
147
 EJM
Model I Model II
41,1/2 Independent variables B t B T

Deficient service quality 0.254 2.552 0.170 1.752

Low perceived commitment 0.287 2.892 -0.014 2 0.123
Price unfairness 0.000 – 0.362 3.886
148 Anger incident 0.000 – 0.267 4.042
R2 0.238 0.358
Goodness of fit x2 ð141Þ ¼ 266:32
(p ¼ 0:000) GFI ¼ x2 ð139Þ ¼ 233:06
Table IV. 0:890 AGFI ¼ 0:880 (p ¼ 0:000) GFI ¼ 0:904
Estimation of structural CFI ¼ 0:968 AGFI ¼ 0:894 CFI ¼
models RMSEA ¼ 0:0586 0:952 RMSEA ¼ 0:0524
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Estimation of multi-sample models

To test the hypotheses referring to the moderating effects of the switching costs,
knowledge about alternatives and consumers’ degree of involvement, we re-estimated
the model that offered a best fit (model II) using a multi-sample analysis. Previously,
for each moderating variable, we had divided the sample into two, separating it into
individuals above or below the average. Cases taking mean values were ignored.
Table V reports the estimation of the models using multi-sample analysis for each
moderator variable considered. The estimators that are statistically distinct between
groups appear in bold. Although the chi-square statistic is significant in all cases, the
value of other indicators – especially CFI and RMSEA – makes us confident about the
goodness of fit of all the models.
Beginning with the variable consumer involvement, we can see from the results that
the only significant differences between the groups are found with regards the effect of
low perceived commitment (H5b) on switching intention. Among the less involved
individuals the effect of weak organisation commitment on switching intention is zero,
while among the more highly-involved individuals the effect is positive, so we can
accept H5b. No significant differences are found between the groups in the remaining
cases, so we can reject H5a, H5c, and H5d.
In the case of the switching costs variable, we see that the differences between the
groups occur only in the effect of perceived price (H6b). The effect of an unfair price,
although positive in both cases, is weaker among the individuals with low switching
costs than those with high switching costs. Our explanation for this fact, which
contradicts our hypothesis, is that switching costs may be perceived as being relatively
lower when the alternative is to remain in a relationship in which the consumers have
to pay prices they regard as unfair. Thus, the results lead us to reject H6.
Finally, with regards consumers’ knowledge of better alternatives, we can see that
there are significant differences between groups in the effect of the variables service
quality (H7a) and perceived price (H7c). We confirm that the individuals with more
knowledge about alternatives are more inclined to terminate the relationship when they
perceive that the quality of the service they receive is unsatisfactory or the price is unfair,
while those with less knowledge are more inhibited to change. With regards H7b, we also
see differences in the effect of low perceived commitment on switching intention, but not
in the expected direction. While the individuals with less knowledge of better
alternatives punish the firm by intending to switch suppliers if it does not show it is
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Involvement Switching costs Alternative attractiveness

Low
Low switching High switching alternative High alternative
Low involvement High involvement costs costs attractiveness attractiveness
Dependent variables B t B t B t B t B t B t

Def. quality 0.161 1.164 20.038 20.251 0.225 1.693 0.089 0.650 0.010 0.076 0.420 2.648
Low commit. 2 0.228 2 1.429 0.221 1.256 0.053 0.304 20.090 2 0.510 0.308 2.034 2 0.338 21.749
Price unfairness 0.386 2.919 0.275 1.888 0.266 * 1.864 0.520 * 3.520 0.183 * 1.526 0.515 * 3.338
Anger incident 0.338 3.337 0.408 3.662 0.300 3.215 0.225 2.319 0.202 4.042 0.263 2.411
R2 0.323 0.407 0.393 0.373 0.333 0.450
Goodness of fit x2 ¼ 54:35% x2 ¼ 45:64% x2 ¼ 47:01% x2 ¼ 52:98% x2 ¼ 51:71% x2 ¼ 48:28%
x2 ð288Þ ¼ 436:45 (p ¼ 0:000) GFI ¼ x2 ð288Þ ¼ 446:90 (p ¼ 0:000) GFI ¼ x2 ð288Þ ¼ 453:17 (p ¼ 0:000) GFI ¼
0:805 CFI ¼ 0:910 RMSEA ¼ 0:0505 0:820 CFI ¼ 0:921 RMSEA ¼ 0:048 0:806 CFI ¼ 0:918 RMSEA ¼ 0:048
Note: *p , 0.10
intentions
Consumer
switching

multi-sample models
Estimation of
Table V.
149
 EJM committed to them, those with more knowledge of the market do not condition their
41,1/2 switching intention on perceived commitment, or in any case the reverse occurs: the
greater the commitment shown by the firm, the more these customers intend to switch.
This result leads us to doubt the importance to more knowledgeable individuals of
organisation commitment – which, we recall, includes information, frequency of
contacts and adaptation to the customer. It seems that for more expert insurance
150 customers the firm’s eagerness to maintain customer loyalty is perceived negatively, and
even punished. H7d is also rejected, since there are no differences between groups with
regards the effect of the anger episode. Finally, we should mention that it is precisely
those individuals with more knowledge about alternatives where our model achieves the
best explanation of switching intention (45 per cent).
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Conclusions
The present work has aimed to contribute to the study of switching behavior by
services customers. Although research on the topic of customer loyalty and retention
has led to greater understanding about firm-consumer relationships, it is also true that
research on the dissolution and termination of relationships has begun to create its own
field of study (Bansal and Taylor, 1999; Keaveney, 1995). In this stream, our work has
aimed to show that in the switching process firms’ failures can gradually weaken the
relationship and predispose consumers to switch suppliers, while other variables
relating to the consumer or the purchase situation can either mitigate that intention or
precipitate the decision to switch.
In our proposed model we anticipated that the factors poor quality, a perception of
low organisation commitment or interest in the consumer, a perceived unfair price and
an anger incident can determine consumers’ intention to switch suppliers. Although
the lack of longitudinal data makes it impossible for us to be totally confident about
distinguishing between predisposing and precipitating factors of switching intention,
we have demonstrated that there are factors (unfair price, conflictive episodes) with
more capacity than others (poor quality and low commitment) to explain switching
intention. These results are in line with Halinen and Tähtinen’s (2002) classification: if
some factors undermine the relationship, we would expect their direct effect on
switching intention to be weaker than that of those factors that precipitate switching.
Thus, poor quality and the perception that the firm is relatively uncommitted to its
consumers seem to predispose consumers to relationship termination, insofar as their
effect on switching intention is positive. But it is a weak effect, contributing to
explaining only a small percentage of the switching intention. Together with these
variables we have shown that other factors play a role as immediate triggers of
switching intention: a prices policy perceived as unfair and consumers’ experience of a
conflictive incident or episode that generates their suspicion. Introducing these
variables, we found that their effect on switching intention is much stronger than that
of the variables perceived quality and commitment, practically cancelling out their
effect in the explanation of switching intention, and contributing to a much better
explanation of the dependent variable. Hence these variables precipitate switching
intention and predominate over any other motive of “disenchantment” the consumers
may have.
Another section of the study is dedicated to demonstrating the existence of
moderator effects in the dissolution process. In our analysis, we showed that the role in
 dissolution of the three proposed determinants – consumer involvement, switching Consumer
costs and alternative attractiveness – varies in function of the motive behind the switching
consumers’ dissatisfaction and switching intention. Beginning with perceived service
quality, we found that its effect on switching intention depends on the consumers’ intentions
knowledge about other alternatives. Increased consumer knowledge about alternatives
means that they become more intolerant of quality failures, strengthening their
switching intention. 151
With regards perceived commitment, we found that consumers’ level of
involvement and knowledge about alternatives are again the variables that
determine the type of effect it has on switching intention. In this case, the more
highly-involved individuals punish firms that show low commitment to the consumer,
while relatively uninvolved consumers are indifferent to this aspect. Knowledge of
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superior alternatives acts in the opposite direction. Less knowledgeable individuals

appear to value the firm’s commitment to the customer more than knowledgeable ones,
who do not regard corporate commitment as a motive for termination. This result
again contradicts our hypotheses, and leads us to think that customers with more
knowledge of the market do not value the firm’s commitment or efforts to retain
consumers, and hence do not take this factor into account when deciding whether to
maintain or terminate the relationship.
The perception of paying an unfair price influences in the consumers’ switching
intention in all cases, although we find that the effect is much stronger among
individuals with higher switching costs and more knowledge of superior alternatives.
Finally, experience of an anger incident also affects switching intention in all
situations, although there are no differences in function of involvement, switching
costs or knowledge about alternatives. We again confirmed the effect of this variable as
a precipitator of relationship termination.
In view of these conclusions, we would like to stress as a contribution of this work to
the marketing literature the fact that it provides empirical evidence about the process
by which consumers switch suppliers, a phenomenon that seems to be more complex
than might at first have been expected, and which is in no way comparable to loyalty
or customer retention. First, we have empirically demonstrated the existence of various
determinants of switching: variables that weaken the relationship and predispose
consumers to dissolution, and variables that precipitate dissolution. These categories
had already been discussed theoretically in previous work, but until this current work
their effect had not been tested. A second contribution refers to the existence of
variables that mitigate or reinforce consumers’ intention to switch suppliers. Our
results advance in the idea that switching intention may fundamentally be conditioned
by consumers’ level of involvement and their knowledge about other alternatives.
However, we consider that our study may stimulate new research aimed at
determining the effect of these moderator variables more precisely. Specifically, the
effect of switching costs: a variable that in contrast to what might have been expected
does not appear to exert a significant effect in the dissolution process.
With regards the implications for management, we need hardly say that our
analysis of the motives encouraging consumers to terminate their relationships may
serve as guidelines for firms wishing to avoid customer defection. Burnham et al. (2003)
argue that firms are stuck in the myopic belief that satisfaction and service quality are
the only tools available to help them to retain consumers. In the same way, Bansal and
 EJM Taylor (1999) show that quality is not the attribute of the service that most influences
41,1/2 consumer intentions. In this line, we have shown that the perception of poor quality
levels and of a low firm commitment does undermine consumers’ trust in the firm, and
to a certain extent motivates their desire to switch. But it is other factors that actually
have a stronger effect on consumer intentions: the perception of an unfair price and the
experience of anger incidents. Firms should strive to determine the range of prices
152 acceptable to consumers, and prevent their customers from experiencing negative
incidents with the firm, or failing that resolve them in the best way possible after they
occur. A continuing dissatisfaction with the firm as a consequence of a quality that is
poorer than expected does not influence individuals as much as a one-off incident in
which consumers experience a strong unease or suspicion towards the firm. Similarly,
a change in the price policy may lead consumers to take the irreversible decision to
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switch suppliers. In short, firms should put all their efforts into improving customers’
perception of the service, and above all, into ensuring that their customers do not
experience situations that provoke their irritation, unease or strong dissatisfaction.
Firms should also get to know their customers more; specifically, they should assess
customers’ degree of knowledge about alternatives and involvement with the product
or service, since these variables will influence their switching intentions.
To conclude, as limitations of the work and future lines of research, we would first
mention analysis of the effect of switching intention on actual switching behaviour. In
this respect, authors such as Bansal and Taylor (1999) have already offered evidence
that intention has a weak effect on real behaviour, which leads us to consider the need
to determine the variables that hold consumers back and encourage them to remain in
the relationship, even though they have switching intentions. In this type of analysis
longitudinal data are useful, since they guarantee a more detailed analysis of the
process consumers follow towards dissolution.
Another limitation of this current work is the fact that we consider predisposing and
precipitating variables of switching in the same time period. This prevents us from
determining the long-term effect of these variables, or the consumers’ tolerance
threshold to each of these variables – tolerance of poor quality, excessive prices, low
commitment or conflictive episodes. For this, it would be interesting to use new
methodologies – specifically, experimentation or the study of critical incidents (Roos,
1999) – which would allow us more precisely to determine the causal effects of the
different types of variable on switching intention.
Finally, another line continuing on from the present work would be to analyse the
role in switching intention of variables such as consumers’ satisfaction or feeling of
trust or loyalty. The effect of satisfaction on loyalty has been shown to be more
complex than might at first have seemed likely (Fournier and Mick, 1999; Mittal and
Kamakura, 2001). Given this uncertainty about the role of satisfaction in consumer
retention processes, it would be interesting to understand its role in dissolution
processes, either as a mediator or a moderator between switching intention and actual
switching behaviour.

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 Appendix Consumer
Variables Item Description Mean SD
switching
intentions
Dependent
Switching intention SWI1 I have considered changing companies 2.05 1.33
SWI2 I have no intention to renew with this company 2.34 1.56
SWI3 I intend to insure my automobile with another 157
company in the future 2.03 1.33
Independents
Outcome qualitya QUA1 My company responds quickly to my needs 3.63 1.07
QUA2 When I have had a problem my company has
responded efficiently 3.72 1.15
Interaction qualitya QUA3 The attitude of this company’s employees
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demonstrates their willingness to help me 3.58 1.06

QUA4 The attitude of this company’s employees
demonstrates that they understand my needs 3.35 1.05
QUA5 This company’s workers are very competent 3.38 0.98
Physical environment QUA6 The offices and branches of my company are modern
qualitya and well-equipped 3.54 1.07
QUA7 The offices of my company give an image of
professionalism 3.42 1.06
Pricesa PRI1 The price I pay for the service I receive from the
insurance company is fair 2.90 1.22
PRI2 The service I receive is good value for money 3.09 1.17
Perceived COM1 The company maintains a frequent and constant
commitmenta relationship with me 2.37 1.16
COM2 The company gives me full and useful information
about its products 2.83 1.24
COM3 I think the company is committed to me as a
customer 2.87 1.12
COM4 I feel I get special benefits for being a good customer 2.62 1.24
COM5 The company is flexible in adapting its offer to my
specific needs 2.68 1.07
Anger incident INC1 I have recently had an experience with this company
that angered me 2.14 1.30
Moderator
Involvement INV1 I consider myself a person concerned about and
involved in the decision to buy automobile insurance 3.50 1.12
INV2 I think that the decision to buy automobile insurance
is highly important 3.88 1.10
Switching costs COS1 If I switched my insurance company, I would have to
pay high costs 3.26 1.24
COS2 It I switched my insurance company, I would loose
some advantages I have acquired 3.10 1.37
Alternative ALT1 I am aware of other insurance companies that offer
attractiveness better conditions than my company 2.22 1.04
Table AI.
a
Note: Recoded variables Variables measurement
 EJM About the authors
Carmen Antón is Associate Professor of Marketing at the University of Valladolid, Spain. She is
41,1/2 the author of articles and papers for several academic journals and proceedings. At present, her
main research topics are related to consumer behaviour and new products. Carmen Antón is the
corresponding author and can be contacted at: anton@eco.uva.e
Carmen Camarero is Associate Professor at the University of Valladolid, Spain. Her research,
which focuses on business relationships and consumer relationship marketing, has been
158 published in several national and international journals. At present, her main research interests
are related to relationship marketing and consumer behavior. She has written two books and
several book chapters.
Mirtha Carrero is PhD Candidate. Her research focuses on relationship marketing and
relationship dissolution.
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