A Model for Customer Complaint Management

Citation
Fornell, Claes et Wernerfelt, Birger, A Model for Customer Complaint Management, Marketing science , 7(3), 1988, pp. 287-298
Journal title
ISSN journal
07322399
Volume
7
Issue
3
Year of publication
1988
Pages
287 - 298
Database
ACNP
SICI code
Abstract
A model of customer complaint management is developed in terms of defensive marketing strategy. Based on an explicit microfoundation, firms' incentives to manage complaints are analyzed. In the context of a monopoly and homogeneous oligopoly, we discuss the optimal levels of customer compensation and effort and characterize industries where complaint management is likely to be used. We then examine a differentiated oligopoly and find an explicit formula for the market share gains associated with complaint management. This is illustrated in an example with real data. We finally consider the trade-off between defensive strategy in the form of complaint management and various offensive marketing tools such as advertising and pricing.