European legal developments in product safety and liability: The role of customer complaint management as a defensive marketing tool

Abstract

In view of recent pose in this article is and Antoni Brack Enschede, the Netherlands European legal developments, our purto position customer complaint manage- Defensive marketingIn order to expand market share and increase sales most firms spend much effort in attempts to attract new customers. This "offensive" objective in marketing strategy diment as an essential instrument for a defensive marketing strategy, specifically to prevent legal problems in the fields of product liability and product safety.rects marketing "actions" (Bonoma, 1985) such as promotion and pricing. Recent economic and forthcoming political developments in Europe will make it difficult to meet such an objective. Many firms operate in mature or shrinking markets in which it is hard and costly to generate new customers as price and quality differences between products are becoming less clear. In addition, competition from both domestic and foreign rivals will intensify in the newly formed internal market in Europe. Therefore, it becomes important and profitable to retain current customers and to increase their purchase frequency. These developments are parallelled by a number of recent developments in the legal field. Particularly with regards to product safety and liability, European regulations have changed considerably. As a result of these developments, companies are more likely to be confronted with customer liability claims in the future. Ways of defense against potential liability claims will become a major issue. From a marketing-strategic point of view, the focus is shifting from offensive to defensive. While offensive marketing focuses on generating new customers, the defensive marketing strategy aims at building up a relationship with customers that leads to customer loyalty and repurchase behaviour and

Offensive versus defensive marketing: What is the optimal spending allocation?

“…Customer complaints and service recovery strategies are critical for firm success (Hart, Heskett, & Sasser, 1990;Patterson, Cowley, & Prasongsukarn, 2006). Complaints give firms an opportunity to make service recoveries, avoid lost sales and negative word-of-mouth, and identify problems with service delivery (de Ruyter & Brack, 1993). Service quality and customer relationship management initiatives reflect efforts to develop and leverage customer loyalty through retention programs that increase firm profitability (Anderson, Fornell, & Lehmann, 1994;Anderson & Sullivan, 1993;Rust, Zahorik, & Keiningham, 1995).…”

Exit and Voice: A Game‐theoretic Analysis of Customer Complaint Management

“…Since the 1990s, the legal development on customer complaints in European countries focuses mainly on transferring the burden of proof from complaining customers to the firm. The directive on product liability and safety issued around 1990 required the firm to use accepted means of defence to convince the court; otherwise the firm will be held liable (de Ruyter and Brack, ). This effort could be understood as effectively reducing the complaint cost on the customer side, which, in general, would enhance welfare, as our model suggests.…”

Consumer Complaints and Company Market Value

“…Brown & Reingen, 1987). A third party agency's credentials may further intensify the impact of complaints by simply collecting, sorting, and disseminating the issues to the general public (Ruyter & Brack, 1993). Depending on the agency's or consumer's influence in a given industry, there may be severe damage to the company's reputation and eventually to its sales.…”

“…Singh and Wilkes (1996) found evidence that complaints to third parties are a solid objective measure because it comes after any kind of previous complaint to either the company or family and friends. Previous study has employed complaints to third parties as a measure to study consumer dissatisfaction (Ruyter & Brack, 1993). The complaint type made to a regulatory agency denotes a serious issue and high degree of frustration with the bad experience with the product or service (Cronin & Fox, 2010).…”

“…ANATEL's website provides monthly data on the number of complaints made to the agency, broken down by cell phone service provider, since 2005. Complaints made to a third party agency is critical for a company's performance because consumers may have already complained directly to the company and to others (Cronin & Fox, 2010;Ruyter & Brack, 1993). We also collected data from the three main publicly quoted cell phone service providers in Brazil.…”