intermediary financial services setting
Remco de Jong
Remco de Jong
University of Groningen
Faculty of Economics and Business
Master thesis @ department of Marketing
MBA/MSc. BA Marketing Management
Completion date: May 2011
Author: R.F. de Jong
Student number: 1534424
Contact information: Anemoonstraat 4 8922 GS Leeuwarden
06-23946362 rfdejong@live.nl First supervisor: Prof. Dr. J.C. Hoekstra Second supervisor: Dr. J.A. Voerman
Organization: Movir N.V.
Brugwal 1 3432 NZ Nieuwegein Internal supervisors: R.A. van der Linden
M.C. Wagenaar – van der Slot
Customer value provision in an intermediary financial services setting is the main topic of this thesis. This topic is chosen because the focus of marketing has shifted from a product centered view towards a view in which the customer is central: customer centricity. Intensified global competition, rapid advances in information technology and more demanding customers have led marketing researchers and practitioners to focus on their customers (Ramani & Kumar, 2008). Customer centricity is not about selling the product, it is about value creation for the customer and thereby value creation for the firm: a process of dual value creation (Boulding et al., 2005). Customer value “takes the perspective of an organization’s customers, considering what they want and believe they get” (Woodruff, 1997). First of all this thesis needed to provide an overview of the development of customer value, in order to be able to make a profound choice for a certain customer value concept. This concept then was applied to the specific context in order to empirically validate the concept and define the drivers of customer value in this specific context. The main research question stated:
In what way can intermediary financial services organizations increase their customer value by their service, brand and distribution?
The literature review revealed that customer value has developed from an unidimensional view, in which the trade-off between price and sacrifice is value, to a multi-dimensional view, in which customer value is focused on the utility as well as social value (Sánchez-Fernández & Iniesta-Bonillo, 2007). The most recent customer value concept by Verhoef et al. (2010) was chosen to be applied to the specific context. Customer value is comprised of four dimensions: value equity, brand equity, relationship equity and emotions. This concept was applied because it is a tested method with a multi-dimensional view clearly founded in academic literature.
Due to the conditionality of customer value (Holbrook, 1994), drivers of customer value dimensions are not present in current academic literature. A combination of semi-structured expert interviews and academic literature is used to derive the context specific drivers (service product attributes, brand associations, price perceptions and intermediary attributes) of customer value’s dimensions. For the collection of data, a questionnaire was used. The questionnaire was spread through professional associations and the professional networking site LinkedIn. A total of 118 questionnaires were completed.
not significant. The regression was controlled for customer expertise, which showed significant positive influence on customer value. Customers gaining expertise are better able to evaluate the service received and thereby recognize the value received.
From the regression analyses on context specific attributes, service product attributes and brand associations influenced customer value through its dimensions. Intermediary attributes and price perceptions did not influence customer value.
The conclusion focused on the provision of customer value by use of the service product and brand associations. The intermediary distribution did not influence customer value through any of the dimensions. This might be caused by the intermediary’s independence from the insurer, leading to a separate value evaluation for the intermediary, which is not linked to an organization’s customer value.
To finalize my MSc. Business administration, with a specialization in Marketing Management, I have written this thesis.
Studying on an academic level means loads of theory, applying these theories in assignments, but few to none applications in practice. Therefore I wanted to graduate within an internship, to combine practice with theory. This opportunity was given to me by Movir N.V., a Dutch disability insurer for professionals on a higher vocational and academic level. Movir is part of the worldwide ING Group. During this internship I was constantly juggling the academic requirements on a Master thesis with the practical requirements of the company, because both are not always in congruence. My company supervisors, R.A. van der Linden and M.C. Wagenaar – van der Slot have helped me stay focused on the practical side of thesis. I want to thank Movir and my company supervisors for giving me this opportunity.
In the mean time, prof. dr. J.C. Hoekstra has helped me stay on track with the academic requirements for a Master thesis. Her comments and suggestions were always very helpful, as were our meetings. I am very grateful for her help in this final phase towards my graduation, thank you for that.
Also my parents deserve a huge word of gratitude for mentally and financially helping me throughout my study period.
Overall, it was about time my study period came to end. I am looking forward to put all my skills into practice but at the same time I realize that one always has to keep learning.
Once again, thank you all for your support!
Chapter 1: Introduction ______________________________________________________ 1
1.1 General introduction _________________________________________________________ 1 1.1.1 Current customer value literature ____________________________________________________ 2 1.1.2 Customer value in a services setting __________________________________________________ 3 1.2 Company introduction _______________________________________________________ 4 1.3 Research questions __________________________________________________________ 4 1.4 Research method ____________________________________________________________ 5 1.5 Academic & managerial relevance _____________________________________________ 5 1.5.1 Academic relevance ______________________________________________________________ 5 1.5.2 Managerial relevance______________________________________________________________ 6 1.6 Structure of this paper _______________________________________________________ 6
Chapter 2: Customer value literature ___________________________________________ 7
2.1 Customer value? ____________________________________________________________ 7 2.2 The development of the customer value concept __________________________________ 7 2.2.1 Customer value’s start: unidimensional constructs _______________________________________ 8 2.2.2 Development of customer value: multidimensional constructs _____________________________ 10 2.2.3 Axiology ______________________________________________________________________ 10 2.2.4 Consumption values theory ________________________________________________________ 11 2.2.5 Holbrook’s customer value ________________________________________________________ 12 2.2.6 Customer value hierarchy _________________________________________________________ 13 2.2.7 Customer value & customer equity __________________________________________________ 15 2.2.8 Woodall’s value for the customer ___________________________________________________ 16 2.2.9 Smith & Colgate’s strategic customer value framework __________________________________ 17 2.2.10 Customer value development summary______________________________________________ 17
Chapter 3: Conceptual model & hypotheses _____________________________________ 19
3.3.2 Price perception _________________________________________________________________ 24 3.3.3 The insurer’s brand ______________________________________________________________ 25 3.3.4 Intermediary services_____________________________________________________________ 25
Chapter 4: Research method _________________________________________________ 26
4.1 Setting & sample ___________________________________________________________ 26 4.2 Data collection _____________________________________________________________ 27 4.3 Measures__________________________________________________________________ 27 4.3.1 Reliability analysis ______________________________________________________________ 28 4.3.2 Revising the emotions scale _______________________________________________________ 29 4.4 Expert interview attributes ___________________________________________________ 30 4.4.1 Service product attributes _________________________________________________________ 31 4.4.3 Price perception _________________________________________________________________ 31 4.4.4 Brand responses and associations ___________________________________________________ 31 4.4.5 Intermediary attributes____________________________________________________________ 31 4.4.6Formative attributes ______________________________________________________________ 31 4.5 Data analysis ______________________________________________________________ 32 4.5.1 Regression analyses ______________________________________________________________ 33
Chapter 5: Results _________________________________________________________ 34
5.1 Descriptive statistics ________________________________________________________ 34 5.2 Regression analyses _________________________________________________________ 34 5.2.1 Value dimensions on customer value ________________________________________________ 34 5.2.2 Formative attributes on value dimensions _____________________________________________ 36 5.2.2.1 Attributes on value equity _______________________________________________________ 37 5.2.2.2 Attributes on brand equity _______________________________________________________ 37 5.2.2.3 Attributes on relationship equity __________________________________________________ 37 5.2.2.4 Attributes on positive emotions ___________________________________________________ 38 5.2.2.5 Attributes on negative emotions ___________________________________________________ 38Chapter 6: Conclusion, Implications & Limitations _______________________________ 39
6.2 Implications _______________________________________________________________ 42 6.3 Limitations and directions for further research __________________________________ 43 6.3.1 Sample ________________________________________________________________________ 43 6.3.2Emotions as a separate dimension ___________________________________________________ 44 6.3.3Formative attributes ______________________________________________________________ 44
References ________________________________________________________________ 45
Appendix 1: Questionnaire __________________________________________________ 51
Chapter 1: Introduction
This first chapter will start with a general introduction in 1.1. In section 1.2 the company for which the thesis is carried out is introduced. Section 1.3 formulates the research questions and the research method is described in 1.4. The academic and managerial relevance are presented in 1.5. And the structure of this paper is described in 1.6.
1.1 General introduction
During the early days of marketing there was a strong product focus; marketing then was primarily selling. The four P’s of the marketing mix are the result of this strong focus on selling the product. They have been treated as the solution to all problems within marketing, instead of focusing on customers and their needs (Grönroos, 1994). At that time, the product was central and organizations were built around the product. At the time where product centricity had the main focus, some conceptual development has been undertaken in the field of customer centricity, building the organization around its customers (Levitt, 1960). Levitt (1960) already recognized that companies exist to satisfy their customers and that the organization itself should focus on its customers. This development however has not been deepened to any further extent and has left the concept unexplored for decades.
As Boulding et al. (2005) describe, the key of customer centricity is not how to sell your product, but creating value for the customer and thereby creating value for the firm. Customer centricity is thus a process of dual value creation (Boulding et al., 2005).
Within the customer centricity stream, customer value is a key concept. Customer value “takes the perspective of an organization’s customers, considering what they want and believe they get” (Woodruff, 1997). Using the concept of customer value allows for the organizational importance of exactly knowing what an organization can provide its customers (Anderson and Narus, 1998). Building on this customer knowledge, customer value strategies can be created for maximizing performance on elements that truly matter to an organization’s customers (Lemon et al., 2001). Being good or best in translating customer values into an offering provides companies with the competitive advantage they have been looking for (Ulaga, 2001).
Customer value is also recognized as an important contributor to customers’ satisfaction (Bolton & Drew, 1991; de Ruyter et al., 1997; Slater, 1997). Satisfaction in its turn has the possibility to influence loyalty, where loyalty can significantly raise profits to a higher level (Heskett et al., 1994; Khalifa, 2004; Reichheld, 1994). Accordingly, creating and maintaining customer value is utterly important in contemporary strategic management (Woodruff, 1997; Lemon et al., 2001; Holbrook, 1994).
Next to customer value influencing profits through satisfaction and loyalty, the concept also steers purchase behaviour and intentions (Bettman et al., 1998; Bolton & Drew, 1991; Treacy & Wiersema, 1993). Woodall (2003) suggests that customer value pre-purchase steers and influences purchase behaviour. Post-purchase customer value, concerning Woodall (2003), influences satisfaction and customers’ repurchase intentions and thereby loyalty and profits.
Not only is the concept of customer value valued in academic literature, companies also established customer centric views and began to adopt the customer value concept as the foundation of their organization. Some organizations, such as AT&T, and Xerox (Woodruff, 1997), have reaped the benefits from this approach and have gained competitive advantages over their direct and indirect competitors.
1.1.1 Current customer value literature
1988; Dodds et al., 1991). After the recognition that these customer value concepts are too narrow and do not represent a full view on customer value (Holbrook, 1994; de Ruyter et al., 1997; Woodruff & Gardial, 1996), multidimensional customer value concepts have been developed. These multidimensional views often take into account price, quality and sacrifices, but by their roots in consumer behaviour psychology (Sánchez-Fernández & Iniesta-Bonilla, 2007) also view customer value in the light of customers’ social and emotional goals and needs. Axiology theory is the first conceptualization of customer value (Mattsson, 1991) and has been further conceptualized by Holbrook (1994, 1996 and 1999).
Next to axiology theory, several other multidimensional theories have been developed. Sheth et al. (1991) developed a customer value theory called consumption values. Based on means-end chain theory by Gutman (1982), Woodruff & Gardial (1996) developed the customer value hierarchy on which Woodruff (1997) continued. Lemon et al. (2001) coined their view on customer value in a customer equity perspective. Where Woodall (2003) used ninety academic texts too develop his view on customer value, called value for the customer.
1.1.2 Customer value in a services setting
Up to this point, customer value in general was viewed. However, customer value is conditional to its setting (Sheth et al., 1991; Holbrook, 1994). This implies that customer value varies over different specific products or service settings.
The current literature on customer value focuses on products as well as services. Where the differences between services and products are not recognized in early academic literature, these differences have become very clear in later scholary research (Fisk, Brown & Bitner, 1993). Services are said to be characterized by the IHIP criteria: Intangibility, Heterogeneity, Inseparability and Perishability (Fisk Brown & Bitner, 1993; Zeithaml, Parasuraman & Berry, 1985; Lovelock & Gummesson 2004). Services and products lie on a continuum between intangible and physical elements. Products can thus have intangible elements, where services can have some tangible elements (Lovelock & Wirtz, 2007). Looking at services for example, transportation is by nature intangible, but the bus or airplane used for transportation is tangible.
Fees Premium incl. fees Service product Advice Mediation Fees Insurance company Customer Intermediary Administration
most modern day economies are dominated by services. Thereby most new jobs created in the modern world are jobs within a service organization (Lovelock & Wirtz, 2007). Therefore this thesis will research customer value in a services setting.
1.2 Company introduction
This paper is written in commission of Movir N.V. As a company, Movir is part of the international ING Group N.V. Movir is a niche player in the insurance market, offering disability insurances for independent professionals educated on a higher vocational and academic level. The professionals are all white collars or (para-) medicals. Within the (para-) medical market, Movir is the market leader with its disability insurance. In the market for white collars, Movir is continuing to work on improvements on its market share.
The current market is characterized by changes in regulations. The Dutch government has it concerns about excessive hidden fees (black line fig. 1.1), which currently are present with complex financial services. To protect customers and to have intermediaries better serve the needs of customers instead of pursuing own financial gains, it is likely that all payments (grey line fig. 1) from (disability) insurance
companies to independent intermediaries have to be abandoned as of January 1 2013. The orange line will replace these fees. Therefore Movir N.V. is reconsidering its future, questioning how it can cope with the change of relation with its customers and intermediaries.
1.3 Research questions
Based on the preceding the following research question is stated:
In what way can intermediary financial services organizations increase their customer value by their service, brand and distribution?
In order to provide a solid answer to the main research question, the following sub questions will be answered in the process:
What is customer value and in which direction has the concept developed over time?
How do the components of customer value influence customer value?
How do customer characteristics moderate the influence of the components of customer value on customer value?
How do customer characteristics moderate the influence of customer value components antecedents on the components?
Which value drivers are present and how do these influence the components of customer value?
1.4 Research method
The research questions will be answered by a literature review and application of this literature in order to be able to test stated hypotheses and unexplored relations. This empirical research is therefore explorative as well as confirmative (Cooper & Schindler, 2006). A questionnaire among customers and non-customers has provided the data for this research. Professional organizations as well as the professional networking site LinkedIn are used to collect data. The data will be analyzed using the statistical package SPSS, multiple regression analysis is used to test the hypotheses and explore relationships. The literature and analyses will answer the sub questions and thereby the main research question.
1.5 Academic & managerial relevance
1.5.1 Academic relevance
The academic relevance of this paper lies in the fact that the topic of customer value is underexposed in service research, opposed to customer value research for products (Sánchez-Fernández et al., 2009). Therefore academic research on customer value has to be carried out to further deepen the knowledge on this concept (Holbrook, 1999; Woodruff, 1997). Customer value, its creation and delivery are viewed as the central concept within marketing on which marketing activities should be focused (Holbrook, 1994; Slater, 1997). The marketing activities mainly have been using the marketing mix and its four P’s as the holy toolbox, instead of heading in the direction of needs and desires of customers (Grönroos, 1994). Therefore it is pivotal to deepen academic research on customer value in service organizations (Huber et al., 2007). Maas & Graf (2008) add to this that customer value research in a financial services setting is very limited.
Academically and practically, the purely financial angle into marketing of the customer lifetime metrics do not provide enough insights for developing new products, extending services or creation of marketing campaigns. A customer value approach will provide marketers with these insights (Bügel, 2010).
1.5.2 Managerial relevance
Not only research practioners have recognized the need for a focus towards customers, as with customer value, also a growing number of organizations recognize customer value as the key to their strategic management (Woodruff, 1997). However, many professional service firms do not succeed in offering the customers superior value (de Brentani & Ragot, 1996). Although it is recognized that products offering superior value are more successful (Smith & Colgate, 2007). This paper will help these firms in recognizing and maximizing customer value within the financial sector.
With the current research, companies providing financial services have the possibility to gain valuable insights into customers and their determinants of value, because value determinants are category specific (Zeithaml, 1988). These insights form the base for competitive positioning and help companies limit value perception gaps (Ulaga & Chacour, 2001). Limiting value perception gaps and providing customer with superior value in the end will lead to enhanced customer loyalty and thereby increased financial performance (Reichheld, 1994).
Next to the strategic positioning possibilities, this research focuses on clearly defining the attributes that determine customer value in a financial services setting. The clearly defined attributes can be targeted accordingly by marketing and used in product development, because specifications are clear. This is opposed to what one can find in current literature, where research aimed at the determinants of customer value mostly stays within determinants that themselves remain vague constructs; e.g. price versus quality is value (Ulaga and Chacour, 2001).
1.6 Structure of this paper
Chapter 2: Customer value literature
Important for a clear answer to the research question and a thorough understanding of the main concept within this research, is a review of the current literature on customer value. This review results in an overview of the development of customer value. In section 2.1 the naming of the concept will be discussed. In the following section (2.2), the different customer value concepts will be discussed and presented in a historical order to provide an overview of the development of customer value over time. The last paragraph of section 2.2 provides a short overview of the complete chapter.
2.1 Customer value?
Up to this point the concept in this paper has been named ‘customer value’, which is the most used name for the concept (e.g. Anderson & Narus, 1998; Butz & Goodstein, 1996; Holbrook, 1996; Howden & Pressey, 2008; Huber et al., 2007; Slater, 1997; Smith & Colgate, 2007; Ulaga, 2001; Woodruff, 1997). But a large number of different names have been coined for the same concept (Woodall, 2003). Next to customer value, names as value (de Ruyter et al., 1997), consumer value (Holbrook, 1999; Khalifa, 2004; Sánchez-Fernández et al., 2009), value for customers (Treacy & Wiersema, 1993), perceived value (Zeithaml, 1988), perceived customer value (Sinha & DeSarbo, 1998), customer perceived value (Ulaga & Chacour, 2001), consumer perceived value (Sweeney & Soutar, 2001), value for the customer (Woodall, 2003), received customer value (Woodruff, 1997), desired customer value (Woodruff, 1997), value equity (Lemon et al., 2001), value to customer or V2C (Verhoef et al., 2010) and service value (Bolton & Drew, 1991) have been used by academics. The term of customer value has been used most and therefore will be used in this paper.
Some disparity between the names can be explained by the temporality of customer value. As some academics note (e.g. Woodruff, 1997; Woodall, 2003) customer value is not a static concept, but is a concept that may vary over different purchase or consumption stages. Desired value, for instance implies a pre-purchase state, where
received value is only perceivable after purchase (Woodruff, 1997).
2.2 The development of
the customer value
concept
captured in unidimensional and multidimensional constructs (figure 2.1). These dimensions however also represent the conceptualization of customer value in time. This section will therefore present the development of the customer value concept in time.
2.2.1 Customer value’s start: unidimensional constructs
Unidimensional constructs are the first customer value constructs that have been formed. They present customer value as “with a utilitarian perspective, whereby economic and cognitive reasoning is used to assess the relevant benefits and costs” (e.g. Zeithaml, 1988)(Sánchez-Fernández & Iniesta-Bonillo, 2007). The customer value from this point of view is seen as an end and can be produced by one or several antecedents (Sánchez-Fernández & Iniesta-Bonillo, 2007). Its unidimensionality arises from the measurement of customer value being one construct: the trade-off between benefits and sacrifices (e.g. Zeithaml, 1988).
Within the unidimensional approach, research can be separated into price based studies and means-end concepts as stated by Zeithaml (1988). This means-means-end approach also can be found in a multidimensional setting; therefore this means-end approach in unidimensional form is titled Zeithaml’s concept, in congruence with the founder of this customer value concept.
Price-based studies: based in the economic theory of the consumer and utility (Sánchez-Fernández &
Iniesta-Bonillo, 2007), price-based studies of value have first focused on the relationship between price and quality (Dodds & Monroe, 1985). After further conceptualization of these price focused studies, the concept of price was interchanged with the wider sacrifice concept. This resulted in value as a trade-off between quality and sacrifice (Dodds et al., 1991). External cues, such as the price or brand, determined the quality and value as perceived by the customer (Agarwal & Teas, 2004; Dodds et al., 1991). From this point of view value thus is an unidimensional construct, because price/sacrifice and quality are
determinants instead of components of value (Sánchez-Fernández & Iniesta-Bonillo, 2007).
Zeithaml’s means-end concept: Zeithaml’s (1988) means-end customer value concept is based in the
means-end theory as proposed by Gutman (1982) and the price-based study of Dodds & Monroe (1985). In Gutman’s (1982) theory, decision making is a customers’ consideration of the link between attributes, the arising consequences and the proceeding fulfilment of personal values/needs. As a step in the decision making process, value from this point of view is a continuation of Dodds & Monroe’s (1985) price based value. Zeithaml’s (1988) exploratory research found four values: value is low price, value is what I want, value is received quality for priced paid and value is get for give. The latter definition was, in this approach, the final definition as applied to perceived value (Zeithaml, 1988). By its sacrifice/benefits trade-off, the concept is unidimensional. The conceptual model is displayed in figure 2.2.
In this conceptual model, perceived quality and value are higher level attributes, determined by lower level attributes and perceptions as perceived monetary price, intrinsic attributes and perceived sacrifice. The direct determinants of the value judgement are thus higher-level abstractions instead of direct product attributes. Although value and quality seem to be the same level constructs, value is a higher construct, because it is more individualistic and personal than quality (Zeithaml, 1988). Confirmation of Zeithaml’s (1988) model has been
undertaken by Bolton & Drew (1991) (figure2.3). In their research in the telephone communications industry, service value, as a higher construct, was determined by quality and sacrifices. As noted by Zeithaml (1988) and tested by Bolton & Drew (1991), customer characteristics influence the establishment of customer value. Customer value is thus context specific.
Some other research from Zeithaml’s concept has been undertaken by Lapierre et al. (1999), who found that the relation between sacrifice and value is stronger than the relation between quality and value. Also Sweeney et al. (1999) used Zeithaml’s (1988) concept and found perceived risk being a mediator in the relationship between quality and value.
(Holbrook, 1994; Woodruff & Gardial, 1996). In reaction to these statements, multidimensional concepts have been developed.
2.2.2 Development of customer value: multidimensional constructs
Born in critique on the unidimensional approach, several multidimensional approaches have been developed (figure 2.1). Contrary to the economic theory roots of the uni-dimensional constructs, multidimensional constructs are rooted in consumer behaviour psychology (Sánchez-Fernández & Iniesta-Bonillo, 2007). Based on different consumer behaviour theories, some of the different multidimensional constructs have been developed simultaneously.
2.2.3 Axiology: the first multidimensional theory was the axiology perspective. As figure 2.1
displays, axiology frameworks are comprised of hedonic as well as utilitarian perspectives. The latter stands for task related and functional value, the former stands for the emotional, affective or experiential value.
Axiology, the science of value, is rooted in the work of Hartman (1973). Hartman provides a framework in which value is comprised of three sub dimensions; intrinsic value, extrinsic value and systemic value. Its utilitarian perspective stems from its extrinsic value, which is the value of utilitarian aspects of the service, i.e. the service as a means to goal fulfilment. Intrinsic value is the hedonic aspect of Hartman’s (1973) framework. It is the emotional or affective appreciation of the service. Systemic value stands for the rational and logical aspects of the service and the relationship (Hartman, 1973). Hartman’s (1973) axiology theory however is a view on value that can be adopted very broadly, as with the whole concept of axiology.
This framework has been adapted by Mattsson (1991), into a framework with three generic dimensions of customer value: emotional, practical and logical. Emotional dimensions reflected the customers’ feelings, practical dimensions reflected the physical and functional aspects of the service and logical items reflected the rational and abstract characteristics, comparable to Hartman’s (1973) systematic value. Mattsson (1991) found the emotional value to be more important than practical and logical value, and practical value to be more important than logical value. The three values together represent Mattsson’s (1991) view on customer value.
In axiology, the three value components are often treated and conceptualized as antecedents of customer satisfaction (Hartman, 1973; de Ruyter et al., 1997).
2.2.4 Consumption values theory: while Mattsson (1991) coined his view on customer value in an
axiological perspective, Sheth et al. (1991) developed a customer value theory based on consumption values (figure 2.1). Sheth et al. (1991) are the founders of this theory, which states that customer purchase intentions (to buy or not to buy), the choice for a particular service over another and one brand over another, are elicited by five underlying value dimensions (figure 2.4):
Functional value is a customers’ perceived utility of the product or service to fulfil its functional, utilitarian or physical performance. Functional value thus stems from functional, utilitarian and physical attributes. Social value is customers’
perceived utility from
association with one or several social groups, stereotyped by demographics, socioeconomics or cultural-ethnics. Services with high visibility to others or services to be shared are most probably elicited by customers’ social value.
Emotional value is a products’ or service’s capacity to arouse feelings or affective states. These feeling or states can be positive (excitement) as well as negative (anger). All products and services have the capacity to elicit certain feelings, such as romance with candlelight dinner or childhood memories from certain candies.
Epistemic value is derived from a product or service when it has the ability to arouse curiosity, provides novelty or satisfies a customer’s desire for (new) knowledge. This value is certainly present with totally new experiences, but also exists to avoid boredom or saturation, by choosing another brand of cookies than the customer has chosen several times.
Conditional value stems from a certain situation or circumstance the customer is in. A product or service acquires conditional value from the enhanced functional or social value
derived through the situation (e.g. Christmas cards only have value during Christmas) (Sheth et al., 1991).
These five values all independently and additively contribute to consumer purchase intentions, but do so differently in different settings. Sheth et al. (1991) have empirically tested and confirmed their model in more then 200 choice situations. The conditionality of the five values is confirmed in research by Williams & Soutar (2000), who found that four dimensions, all but conditional value, fitted the customer value perspective in the tourism industry. Sweeney and Soutar (2001) found only three dimensions (functional, emotional and social value) to be present in a durable goods setting. Pura (2005) found all fives dimensions to be present in a mobile telephone services context. These mixed results seem to contribute to the situation specificity mentioned by Sheth et al. (1991).
Although one would find it desirable to maximize five values, it is not feasible or practical. Consumers also often do not expect all consumption values to be maximized and accept obtaining more of one value in order for less of other values. Therefore the consumption values have to be tested empirically to determine the most salient situation specific consumption values in order to “greatly enhance marketing efficiency” in a specific setting (Sheth et al., 1991).
2.2.5 Holbrook’s customer value: an evolution of the axiology perspective has been developed by
Holbrook (1994, 1996 and 1999), with his typology of customer value. Holbrook’s (1994) perspective can be seen as a modification and extension of axiology theory. Customer value in Holbrook’s theory (1994, 1996) is defined as an interactive relativistic preference. Value is interactive because there always is an interaction between a subject, the customer, and an object: the product or service. Value is firstly relativistic because one can only compare value between products, not between oneself and someone else. Secondly value is relativistic because it varies among individuals and thirdly because it is dependent of the context in which the evaluation takes place. Preference in this definition is the evaluative judgment and experience because in Holbrook’s concept value resides from consumption only (Holbrook, 1994, 1996 and 1999). Holbrook’s (1994, 1996 and 1999) typology is based on three dimensions of value:
Intrinsic value (consumption experience as the end in itself) versus extrinsic value (consumption as a means towards a higher goal).
Self oriented value (effect of product/service solely on oneself) versus other oriented value (positive evaluation by others’ responses or for the sake of someone else).
Combining the three dimensions of value, results in eight types of customer value (table 2.1). Holbrook (1996) states that in every product or service use situation, these eights types of value are present, albeit to varying degrees in different situations.
Parts of Holbrook’s theory have been operationalized and confirmed by Mathwick et al. (2001). They have successfully adapted the self-oriented values in an on- and offline shopping setting. Bourdeau et al. (2002) empirically studied the underlying values of internet use. Thereby they found three broad categories of value: hedonic, utilitarian and social value.
In a later study concerning Holbrook’s axiology theory, Sánchez-Fernández et al. (2009) provide
an “empirical adaptation” where customer value is measured by six dimensions: Efficiency, Quality, Social Value, Play, Aesthetics and Altruistic Value. Efficiency is defined as what a customer gets versus what the customer gives. Therefore it includes monetary cost, time and effort. Quality, comparable to excellence from table 2.1, is a customer’s judgment of the product or service to accomplish a goal or fulfil a function. Social value, derived from status and esteem from table 2.1, is aimed at impression of others by possession or manipulating consumption choices of others. Play is any fun related to the product or service. Aesthetics are concerned with the beauty products can provide.
Altruistic value, ethics and spirituality from table 2.1, resides from consumption aimed at others, but
valued for oneself (Fernández et al., 2009). After their empirical research, Sánchez-Fernández et al. (2009) defined the six values as underlying subcategories that generate customer value.
2.2.6 Customer value hierarchy: Gutman’s
(1982) means-end chain theory is also the base for the customer value hierarchy theory. Woodruff & Gardial (1996) adapted the means-end chain theory to what they call the customer value hierarchy, displayed in figure 2.5. This customer value hierarchy is a broader concept then Zeithaml’s (1988) means-end approach, which takes a
unidimensional view by its definition of value as a trade-off between sacrifices and benefits. Woodruff (1997) namely defines customer value as “a customer’s perceived preference for and evaluation of those product-attributes, attribute performances, and consequences arising from use that facilitate (or block) achieving the customer’s goals and purposes in use situations.” These preferences in the hierarchy are not static: customers’ value judgments can vary in different situations and over time (Woodruff & Gardial, 1996).
The customer value hierarchy is comprised of three hierarchical levels of value: attributes and their performance, consequences, and customers’ goals and purposes. The lower levels, attributes and consequences, are the means to reaching the desired end state of customers’ goals and purposes. These end goals lead customers to think about the consequences that are necessary for fulfilment of these goals. After having determined consequences, customers come to think about the attributes and their performance needed to achieve certain consequences (Woodruff, 1997).
However, the hierarchy also works the other way around. Customers do not evaluate a product as a whole, but learn to see products as a set of attributes with their performance. After using a product, they evaluate attributes and form new preferences for attributes to achieve desired consequences. Customers then also begin to think about the
consequences that can help them in reaching their end goals (Woodruff, 1997).
Woodruff’s (1997) customer value hierarchy theory also provides us with a conceptual model for linking the concept of customer value and satisfaction (figure 2.6). Customers, after purchasing or using, compare the value received with the desired value. This comparison can take place at all three levels of
the hierarchy and directly influences the customer’s satisfaction feelings. These feelings are also directly enhanced or diminished by the perceptions of received value (post-purchase), compared to desired customer value (pre-purchase) (Woodruff, 1997).
The customer value hierarchy concept by Woodruff has been further adapted in a concept by Parasuraman (1997). Woodruff’s (1997) framework has been adapted to monitor an organization’s customer value within four groups: first-time, short-term, long-term and leaving customers (called defectors). This way, organizations can effectively adapt the customer value hierarchy to understand customers and put this understanding to work for the organization (Parasuraman, 1997).
Based on the work of Woodruff (1997), Van der Haar et al. (2001) developed a customer value concept that conceptualizes a product or service development from idea to actual product/service. Thereby the model identifies desired, expected and received value maps that describe customers’ value at different levels. The desired value map is a second order abstraction according to Woodruff’s (1997) striving for certain consequences and fulfilment of goals. The expected value map focuses more on the attributes as in Woodruff’s (1997) terms. By their framework Van der Haar et al. (2001) operationalize Woodruff’s (1997) concept for new product development.
2.2.7 Customer value & customer equity: Lemon et al. (2001) conceptualized a customer value
view based on customer equity. Customer equity in that view is the total of discounted lifetime values of all the firm’s customers.
Lemon et al.’s (2001) concept is used to measure the value of the customers, by the valuation customers provide for three key dimensions of the organization: value equity, brand equity and relationship equity. These three key dimensions are used to provide the customer with value.
Their concept of value equity, by them also named customer value, is a unidimensional customer value concept by its description: “the customer’s objective assessment of the utility of a brand, based on perceptions of what is given up for what is received” (Lemon et al., 2001). Value equity is influenced by quality, price and convenience (Lemon et al., 2001). This view is consistent with the early pure utilitarian views of customer value.
However Lemon et al. (2001) base their view of customer equity on two other drivers as well. Brand equity is based on a customer’s “perceptions of objective aspects of a firm’s offerings” (Lemon et al., 2001). Relationship equity is defined as “the tendency to stick with the brand, above and beyond the customer’s objective and subjective assessment of the brand” (Lemon et al., 2001). Both of these definitions are aimed toward a customer equity view, where value of the customer to the firm is central. But clearly brand equity and relationship equity also provide customer’s with value, because they tend to favour one brand over another through its brand equity or stick with a brand because of the relationship. Both drivers of customer equity thus seem to be valued by customers and thereby provide value to the customer (Verhoef et al., 2010).
2.2.8 Woodall’s value for the customer: After the initial statement of customer value as customer
equity, Woodall (2003) developed a customer value concept. Based on a review of ninety customer value texts, Woodall (2003) developed a customer value concept called value for the customer or VC. By Woodall’s (2003) definition of value “any demand-side, personal perception of advantage arising out of a customer’s association with an organisation’s offering, and can occur as reduction in sacrifice; presence of benefit (perceived as either attributes or outcomes); the resultant of any weighed combination of sacrifice and benefit (determined and expressed either rationally or intuitively); or an aggregation, over time, of any or all of these”, one could expect a unidimensional view on value because its focus on benefits versus sacrifices.
However, his value for the customer is comprised of five primary forms of value: Net VC (balance of benefits versus sacrifices), Derived VC (use or experience outcomes), Marketing VC (perceived product attributes), Sale VC (reduction in costs or sacrifices), Rational VC (perceived monetary difference). These five main dimensions are then comprised of several, sometimes overlapping, lower level constructs, which include benefit as social value and personal value, making Woodall’s (2003) concept utilitarian and hedonic by nature.
Three of these five dimensions (Net VC, Marketing VC and Derived VC) are further conceptualized. Derived VC is in its turn comprised of VC in kind (value in financial terms), Strategic VC (value through the fulfilment of consequences of goals as with Woodruff (1997)), Personal VC (value of spiritual nature according to Holbrook (1994)), Social VC (value through appreciation by others social group or individuals) and Practical VC (value as in effectivity by Holbrook (1994) or functional value by Sheth et al., 1991)). Net VC is then comprised of a balance between all benefits and sacrifices, with some of the benefits of attributes arising from marketing VC and outcomes of these attributes arising from Derived VC. Some sacrifices in the composition of Net VC can be reduced to Sale VC. Marketing VC then is made up of core product qualities and quality of featuring services, with those being the attributes of the difference between the proposed marketing VC by the organization and the perceived marketing VC by the customer, resulting in a true value proposition.
Next to this view on value, Woodall (2003) also adapts a longitudinal view on customer value. Woodall (2003) states that customer value can vary over a pre-purchase stage (Ex Ante VC), over a purchase or experience stage (Transaction VC), after the purchase stage (Ex Post VC) and after the experience or use stage (Disposition VC).
2.2.9 Smith & Colgate’s strategic customer value framework: with the development of their
practical framework, Smith & Colgate (2007) did not delve into existing psychology or social theories, but based their framework on existing literature from Sheth et al. (2001), Holbrook (1994, 1996 and 1999), Woodruff (1997) and Zeithaml (1988). With their conceptual framework they do not attempt to provide an overview of all benefits and sacrifices that may arise, but focus on the strategic differentiation that offerings can provide.
The framework establishes four value types with five possible value sources. Functional/instrumental
value arises from the product’s or service’s ability to perform a certain function or possesses
necessary attributes. Experiental/hedonic value is related to experiences, feeling or emotions a customer relates to a product or service. Symbolic/expressive value stems from any psychological meaning the customers attach to the product or service. Cost/sacrifice value is value from minimization of all transaction costs (Smith & Colgate, 2007).
Organizations in their turn can provide one or more of these values through five sources of value: information, products, interactions, the environment and ownership/possession transfer (Smith & Colgate, 2007).
With their framework, Smith & Colgate (2007) provide a link between strategy and customer value. Thereby the framework can be used to: describe marketing strategies coined by Treacy & Wiersema (1993), define product concepts and opportunities to create value and identify sources of competitive advantage (Smith & Colgate, 2007).
2.2.10 Customer value development summary
By concluding the foregoing section, the first sub-question will be answered:
What is customer value and in which direction has the concept developed over time?
Price-based studies (Dodds & Monroe, 1985) Means-end theory (Gutman, 1982) 1985 Zeithaml’s (1988) unidimension al concept Risk as a moderator in quality/value (S&S, 1999) Customer value hierarchy (Woodruff & Gardial, 1996) + Woodruff (1997)
Adapted for new product/service development (Van der Haar et al., 2001)
Value for the customer by Woodall (2003)
Smith & Colgate (2007) strategic customer value framework Mattsson’s (1991) E, P, L axiology Holbrook’s (1994, 1996 and 1999) customer value view based in axiology. Axiology (Hartman, 1973) Operationalisatio n of parts Holbrook’s typology (SF, IB, Holbrook 2009) Consumption values theory (Sheth et al., 1991) Empirical confirmation by Pura (2005) 1990 1995 2000 2005 2010
Chapter 3: Conceptual model & hypotheses
This thesis is about customer value, customer value dimensions and the dimensions’ antecedents in an intermediary financial services setting. Figure 3.1 presents the conceptual model of this study. The model assumes positive relationships between the value dimensions (value equity; brand equity; relationship equity; and emotions) and customer value. Customer expertise and risk aversion are hypothesized to moderate several relationships.
As mentioned in the introduction, customer value research in financial services settings is very scarce (Maas & Graf, 2008). It is therefore that customer value drivers in this setting cannot solely be obtained from previous academic research. This chapter first focuses on the customer value framework choice. The drivers of customer value dimensions are then extracted from triangle 1.1. Hereby the chapter provides an academic base that will guide the expert interviews needed to abstract the context specific attributes in chapter 4. By the explorative nature of the drivers of value dimensions, no hypotheses are formulated concerning this part of the conceptual model.
Figure 3.1: Conceptual model
H2c H2d H3b H3a H2b H2a H1d H1c H1b H1a Relations hip equity Value equity Emotions Brand equity
Customer
value
Service product attributes Price perceptions Brand associations Intermediary attributes & actionsCustomer expertise
3.1 Customer value and its dimensions
For this thesis, the customer value and customer equity framework will be applied. Several reasons underlie the choice for this framework. First of all, the customer equity framework is a tested method (Verhoef et al., 2010), as it is applied in the Dutch Customer Performance Index (www.dcpi.nl). Secondly, the framework does not solely focus on product attributes and value, but also focuses on value stemming from brand equity, relationship equity and from customers’ emotions (Verhoef et al., 2010), which seems all the more relevant in a services setting. Thirdly, the framework has a clear academic foundation, based on customer equity, relationship equity and brand equity, each of which are frequently studied constructs.
Verhoef et al. (2010) further developed the framework of Lemon et al. (2001) into their concept of value to customer (or V2C). The V2C concept is measured as the value delivered by an organization to a customer. Hereby it states that customer value does not solely stem from an organization’s product or service, but from the interaction between the customer and the organization as a whole. Value to customer is built upon four components:
Value equity: value equity is a customer’s price-value perceptions and price perceptions. Value equity thus measures the utilitarian value customers attach to a company’s offering(s). This includes price, quality and convenience. As stated by Lemon et al. (2001), value equity is the base of customer value and comprises the core of the product or service delivered. The value equity concept is comparable to the customer value conceptualization of Bolton & Drew (1991), in which customer value is a trade-off between quality and sacrifices.
Although value equity is named the base of customer value, value equity is not expected to be most important in all situations. Value equity can make an organization stand out of the crowd, if the differences between competing financial services are hard to recognize. High involvement purchase decisions will be mostly performed based on customer’s value equity perceptions, because of the extensive evaluations of benefits and sacrifices (Lemon et al., 2001).
Brand equity is most important in low involvement and high repetitive decisions. However in high involvement decisions brand equity can be important when the product is highly visible for others. Also brand equity will have an important role when the decision at hand is about a credence good/service, the IHIP criteria certainly add to this. The fact that the service is hard to evaluate up front and possibly even after consumption, leads customers to search for other cues that inform them about the service (Dodds et al., 1991; Lemon et al., 2001). Relationship equity: relationship equity is the customer’s perception of the relationship
value the company offers. This dimension provides the cohesion between the other dimensions, because the relationship equity is the tendency of customer to stay with an organization, above and beyond the perceived value and brand equity (Lemon et al., 2001). According to Keller (2008), a relationship in which customers feel attached, engaged, committed and loyal to a brand, is a brand’s end-goal.
Relationship equity will be most important when the service or product makes customers part of a larger community (as with Apple), when firms can create learning relationships (and therefore better serve customers) and when the customer’s perception of the benefits of the relationship (or loyalty) program are seen to be greater than its actual value (Lemon et al., 2001).
Emotions: a customer can experience several emotions with an organization’s service. A product is thought of as providing value when providing positive emotions, where value is diminished with negative emotions (Verhoef et al., 2010).
The value to customer concept is not solely a theoretic model, but has been applied empirically in several service sectors (Verhoef et al., 2010). However, to the author’s knowledge this is the first study with empirical validation of the four value dimensions. These relationships thus will be empirically tested within the current research. The following hypotheses are formulated:
H1a: value equity positively influences customer value. H1b: brand equity positively influences customer value. H1c: relationship equity positively influences customer value. H1d: emotions positively influence customer value.
3.2 Moderators
From the conducted expert interviews, two customer characteristics were extracted (table 3.1). These characteristics might influence some of the attributes of the service product, the insurance company and the intermediary or exert influence in relationships between attributes and customer
value dimensions (e.g. Lee & Cho, 2005; Lemon et al., 2001). Because these characteristics have also been captured in academic literature, they are discussed using academic literature. By their academic foundation, it is not necessary to conduct explorative research on the characteristics and hypotheses are formulated and tested.
3.2.1 Customer’s expertise
Customer expertise is mentioned in expert interviews as a foundation on which customers are able to base their evaluations. Customer expertise is combined of the knowledge a customer obtained about the performance of a service product and an understanding in general of how other organizations within the same product category perform (Sharma & Patterson, 2000).
The effect of customer expertise can be twofold. First of all, customers with low expertise concerning the insurance setting will experience difficulty in evaluating the service they receive. Therefore their evaluations will be based largely on cues that are tangible and concern the relation (Sharma & Patterson, 2000). Looking at customer value and its four dimensions, this implies the following hypothesis:
H2a: Customer expertise will enhance the positive relationship between value equity and customer value
H2b: Customer expertise will diminish the positive relationship between brand equity and customer value.
H2c: Customer expertise will diminish the positive relationship between relationship equity and customer value.
Secondly, Brucks (1985) argues that as customers gain expertise concerning the product category, they will be able to better distinct and understand the (relative) importance of the attributes related to the service product. Therefore service product attributes will become more important in their judgments. The following is hypothesized:
Table 3.1: Customer characteristics Customer characteristics
Expertise concerning financial
H2d: Customer expertise will strengthen the relationship between service product attributes and value equity.
By better understanding the attributes of the product, it is expected that evaluations of the overall value will also differ. Therefore customer value will be controlled for customer expertise.
3.2.2 Risk aversion
With the consequence of the product being the coverage of risks due to disability, it is logical that risk aversion is mentioned by some experts. Customers with some level of risk aversion feel affected when they are faced with unknown novel situations. Thereby these customers also are reluctant to try new products and brands, because they then engage in an uncertain situation with unknown outcomes (Steenkamp et al., 1999). As stated by Zhou et al. (2002) risk averse customers are more inclined to purchase brands with higher than average prices. Therefore the following hypothesis is stated:
H3a: Risk aversion will diminish the relationship between price perceptions and the value dimensions.
However, risk aversion does not only influence the relative importance of product attributes. Intermediary financial services are characterized by the presence of the IHIP criteria. The fact that the service is hard to evaluate up front and possibly even after consumption, leads customers to search for other cues that inform them about the service (Dodds et al., 1991; Lemon et al., 2001). In this case, brands can act as information sources that signal information about product attributes (Erdem & Swait, 1998). Therefore the following hypothesis is stated:
H3b: Risk aversion increases the strength of the relationship between brand equity and customer value
3.3 Customer value dimension drivers
3.3.1 The service product
The service product is comprised of the core product and facilitating services (Lovelock & Wirtz, 2007). Both will be discussed in separate sections.
3.3.1.1 The core service
The service product is the core of the company and represents the service’s benefits and solutions that fulfill the need and solve the problems of customers (Lovelock & Wirtz, 2007). The core service product is disability insurance, providing customers with the safety that their income will not diminish when becoming (partly) disabled to work. In terms of Woodruff (1997) this is a customer’s end goal. This and the following sections however focus on the attributes desired to reach the end goals (Woodruff, 1997). The core service that fulfills the end goals is the coverage provided by the insurance, the attributes related to coverage are extracted from the expert interviews in chapter 4.
3.3.1.2 Supplementary services
However, customers value more than the core product when purchasing a product (Colgate & Alexander, 2002; Maas & Graf, 2008). The core service product therefore is accompanied by services that supplement (Lovelock & Wirtz, 2007) or augment the service product (Colgate & Alexander, 2002). Supplementary services can come in two forms, facilitating and supporting.
Facilitating services are, as implied by their name, facilitating in the process of delivering and
consuming the core services (Colgate & Alexander, 2002). Facilitating services do not have the possibility to add value, but they can be detrimental to overall value if performance is perceived as insufficient (Lovelock & Wirtz, 2007).
Supporting services are services that add value to the core service and have the ability to
differentiate an organization from others (Lovelock & Wirtz, 2007).
3.3.2 Price perception
Next to the value delivered by the core product and supplementary services, customer value is subject to the price perception of the customer (Lemon et al., 2001; Maas & Graf, 2008; Zeithaml, 1988). Instead of actual monetary prices, customers often store information concerning prices as useful to them. A customer’s relevant meaning attached to price instead of the true monetary value is a customer’s price perception (Zeithaml, 1984).
3.3.3 The insurer’s brand
Experts and academics (Maas & Graf, 2008; Verhoef et al., 2010) agree on the possible value added by the perceived company image or more specific, by the brand. A brand is a brand element (e.g. logo, name, symbol) or combination of elements used to identify the services and goods of one seller and differentiate it from its competitors (Keller, 2008). Brand knowledge is an important part of creating value related to brand, known as customer based brand equity (Keller, 2008) or brand equity (Lemon et al., 2001). Brand knowledge consists of brand awareness and brand image. Brand awareness is a mere fact of knowing or recognizing the brand.
Brand image however is a customer’s perception of the brand, reflected in his or hers associations with the brand (Keller, 2008). Established in Keller’s (2008) brand equity pyramid, is building of a brand by associations. Strong, favorable and unique associations help build the brand, but only if they produce the necessary brand responses. Brand responses are a customer’s feelings or judgments about the brand and thereby are the key to establishing the ultimate goal of branding, brand resonance (Keller, 2008). By this, the brand responses are the key in the pyramid, and present the judgments and feelings of customers or, as in this case, the judgments and feelings that they would have to experience with a brand to favor it over another. This preference for a certain brand is the value the organization provides the customer with (Verhoef et al., 2010).
3.3.4 Intermediary services
Chapter 4: Research method
In this fourth chapter the research method is central. The research is conducted in a real life market setting and therefore is characterized as field research. This empirical research has both an explorative and a confirmative element (Cooper & Schindler, 2006). The research is confirmative concerning the hypotheses testing. The explorative part of the research refers to the relationships between currently unexplored attributes of intermediary financial services and the relationships between these attributes and customer value’s dimensions.
4.1 Setting & sample
The research is performed in the Dutch disability insurance market on behalf of Movir N.V. This organization focuses on disability insurances for independent professionals educated on a higher vocational and academic level. The professionals are all white collars or (para-) medicals. To overcome possible biases when only including the company’s customers in the sample, current customers as well as prospects are included in this research. Biases might arise due to the fact that current customers have opted for Movir by its current service offering and therefore probably will favour attributes concerning this offering over other attributes. To gain an unbiased view, also non-customers are included.
For the collection of data, a questionnaire is used, which can be found in appendix 1. The questionnaire is spread through large professional associations with which Movir has a partnership. These associations represent the target group on which Movir focuses. The professional associations with which Movir has a relationship have all been contacted. Not all associations were willing to participate, which made it necessary to use LinkedIn as well.
Furthermore these associations could not provide us with exact numbers of members. Therefore the response percentages cannot be determined. To increase customer responses, participation was rewarded with the chance of winning a Nintendo Wii.
4.2 Data collection
Data are collected with the help of a questionnaire. No relation to Movir is mentioned in the questionnaire. Before distributing the questionnaire, the questionnaire was pre-tested by Movir employees to determine clarity and improve the questionnaire by their suggestions.
The survey starts with questions about the possession of a disability insurance, to be able to segment users and non-users. Next the customer value, value equity, brand equity, relationship equity and emotions are tested. Because these dimensions all represent post-purchase value, only respondents that have insured themselves against disability were questioned. Thereafter the attributes were questioned, followed by general demographics (sex, age, income, payroll vs. sole trader and profession) and the customer characteristics to end the survey.
4.3 Measures
For measuring the customer value and its dimensions existing scales are used. The scales for customer value dimensions consist of multiple items and therefore are evaluated for the accuracy and applicability of the items they represent (Cooper & Schindler, 2006). For the remaining attributes extracted from expert interviews, no scales exist yet. Therefore the attributes are listed and rated for the insurers’ current performances in order to check the relation between the performance on attributes and the customer value dimensions.
All items are measured with Likert scales. These scales are used for their usefulness in performing analyses and by the interpretation possibilities as interval. These scales are also very understandable for respondents (Cooper & Schindler, 2006).
The items used for measuring the constructs are presented in table 4.1.
Construct Source Items Alpha
Dependent variable (grading 1 worst – 10 best) Customer
value
- Overall, the value I receive from my insurer is:
(1-10): -
Value dimensions/drivers (Five point Likert: totally disagree (1) - totally agree (5)) Value equity Verhoef, Langerak &
Donkers (2007) Rust, Lemon & Zeithaml (2004)
My insurance company is reasonably priced The price/quality ratio at my insurer is good My insurer provides me with value for money When I think of my insurer I think of convenience
Wherever, whenever, I can contact my insurer
