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.
Keywords
ComplaintOligopolyMonopolyContext (archaeology)BusinessIncentiveOffensiveMarketingCollusionMicroeconomicsIndustrial organizationEconomicsCournot competition
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Publication Info
- Year
- 1988
- Type
- article
- Volume
- 7
- Issue
- 3
- Pages
- 287-298
- Citations
- 354
- Access
- Closed
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Cite This
Claes Fornell,
Birger Wernerfelt
(1988).
A Model for Customer Complaint Management.
Marketing Science
, 7
(3)
, 287-298.
https://doi.org/10.1287/mksc.7.3.287
Identifiers
- DOI
- 10.1287/mksc.7.3.287