The Mediating Effect of Satisfaction on Consumers Switching Intention

Carmen Antn, Carmen Camarero, and Mirtha Carrero

University of Valladolid, Spain

ABSTRACT
Most previous research on consumers switching intention has focused on individual variables that have immediate effects on consumers intentions or behaviors, rather than analyzing it as a complex phenomenon. This article provides evidence that some service provider behaviors precipitate relationship dissolution, whereas other behaviors create a predisposition to switch. This different effect is observed through the mediating effect of customer satisfaction. While poor service quality and low firm commitment undermine consumer satisfaction and have only an indirect effect on switching intentions, price unfairness and anger incidents have a strong effect on switching, both directly and indirectly through satisfaction. Implications are discussed for customer relationship management. 2007 Wiley Periodicals, Inc.

Research in relationship marketing has for some time now argued that

creating and developing relationships contributes to the success of firms (Morgan & Hunt, 1994). Some authors maintain that firms can even use relationship marketing as a competitive advantage (Day, 2000). This interest in the relational approach of exchanges has led to a proliferation of studies examining all types of relational phenomenon in both consumer and industrial markets: the creation of relationships (Ganesan, 1994), the determinants of loyalty (McDougall & Levesque, 2000; Sirohi, McLaughlin, & Wittink, 1998), the strategies firms adopt to achieve customer
Psychology & Marketing, Vol. 24(6): 511538 (June 2007) Published online in Wiley InterScience (www.interscience.wiley.com) 2007 Wiley Periodicals, Inc. DOI: 10.1002/mar.20171 511

commitment (Sharp & Sharp, 1997; Yi & Jeon, 2003), or the value firms can generate by building customer loyalty (Reichheld & Sasser, 1990; Sin et al., 2002), among others.Within this wide range of proposals and tendencies, however, there is a surprising scarcity of research analyzing why relationships end. In the case of industrial relationships, relationship dissolution has attracted more attention from researchers (Gassenheimer, Houston, & Davis, 1998; Heide & Weiss, 1995;Michell, Cataquet,& Hague, 1992;Perrien, Paradis, & Banting, 1995; Ping, 1995). Halinen and Thtinen (2002) point out in this respect that analyzing the dissolution process is very important in industrial markets, since firms must frequently consider terminating

inefficient relationships because of their implicit costs. In the case of consumer relationships, in contrast, the phenomenon does not appear to have provoked as much interest in the literaturethe 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 when firms lose a customer they are not only losing future earnings and incurring the cost of finding new customers, they are also probably 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 in which 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, which includes 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. Thus, this study proposes and tests a model that considers dissolution as a phenomenon in which there are determinant factors of the switching intentionpoor service quality, unfair pricing, low perceived commitment, and critical episodesand mediating factorssatisfaction. Other determinants of relationship termination and switching have been considered in the literature, for example awareness of alternatives or the consumers search for variety (Bansal, Taylor, &
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James, 2005; Bansal & Taylor, 1999; Jones, Mothersbaugh, & Beatty, 2000). The current work is focused exclusively on determinant factors relating to the firms behavior and its relationship with its customers, ignoring other aspects such as consumer preferences, attitudes, or behaviors with regard to the product or service. Specifically, the following questions are examined: How do service quality, perceived price, commitment, anger episodes, and consumer satisfaction intervene to produce switching intentions? Does the

consumers satisfaction/dissatisfaction have a mediating function between the determinant factors and the consumers switching intentions? The work, which attempts to contribute to knowledge about relationship dissolution by responding to these questions, is organized as follows. In the first section, the dissolution process and the determinant factors of that process are analyzed. The nature of satisfaction as a mediator is discussed in the second section, along with the proposed model of dissolution. Subsequently, the model is tested with data from a sample of automobile-insurance buyers and the results are analyzed. The work ends with a section presenting the main conclusions and the management implications. RELATIONSHIP DISSOLUTION IN CONSUMER MARKETS The relationship marketing literature has offered various models of the processes by which these relationships form and develop (Dwyer, Schurr,& Oh, 1987; Landeros, Robert, & Plank, 1995). The most widely-cited model is undoubtedly Dwyer, Schurr, and Oh (1987), which identifies five stages in an interactive process that they generalize for all buyer-seller relationships: awareness, exploration, expansion, commitment, and dissolution. According to these authors, dissolution can be present in any of these stages, even once all of them have been overcome. If commercial relationships can be compared to a marriage, then unfortunately they can at times also be expected to end in divorce (Dywer, Schurr, & Oh, 1987).

Hocutt (1998), from social penetration theory, maintains that members continue to deepen their relationships as long as the expected benefits exceed the expected costs. The relationships are dissolved when this is no longer the case. This dissolution stage has also been seen as a process. 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; and (3) the determinant incident, i.e., any factor that makes the customer end the relationship. In these definitions of the dissolution process the authors are beginning to glimpse the possible existence of different factors and experiences: some gradually undermine the relationship and push it towards the
CONSUMERS SWITCHING INTENTION Psychology & Marketing DOI: 10.1002/mar 513

switching intention, while others precipitate the termination. But researchers studying the dissolution of interfirm or firm-consumer relationships have not yet empirically analyzed the degree of intervention of the influencing factors in relationship dissolution. The literature on dissolution antecedents has focused on specific factors: changes in the service, in the quality, in the price (Keaveney, 1995; Kelley, Hoffman, &

Davis, 1993; Rust & Zahorik, 1993), changes in the staff (Keaveney, 1995; Perrien, Paradis, & Banting, 1995), commitment (Hocutt, 1998), and dissatisfaction (Crosby & Stephens, 1987; Mittal & Lassar, 1998; Ping, 1995). Clearly, a large number of factors operate simultaneously in the dissolution process. Roos (1999), after analyzing the experiences of numerous consumers using the critical incident method, argues that relationship dissolution has three types of determinant: determinants pushing consumers to switch suppliers, determinants that encourage them to remain in the relationship (pullers), and swayers, which act so that after the switch the consumer resorts to their old supplier occasionally. In a very similar line, Halinen and Thtinen (2002) theoretically argue for the need to categorize the antecedents of dissolution in three levels: predisposing factors, precipitating factors, and attenuating factors of the switching intention. Finally, Bansal, Taylor, and James (2005) present a model based on a migration model from the human geography literature to examine push, pull and mooring variables in service switching. Before describing these antecedents of switching intention a short digression is needed to clarify that the study of the dissolution process differs markedly from the models explaining consumer loyalty or commitment. Variables having positive outcomesloyalty or retentionmay have an asymmetric effect when we examine negative outcomes dissolution (Bansal & Taylor, 1999). Duck (1981) indicates that while

growth in relationships depends on interaction, decline can result from the action of one partner alone. Moreover, relationship decline will presuppose the existence of a relationship and thus assumes the existence of something that has had an evolution and can only decline in a way that is a reflection of its evolution. DETERMINANT FACTORS OF RELATIONSHIP DISSOLUTION There are certain factors that encourage consumers to end their relationships. These factors can act continuously over time, creating unease in the consumerfactors that predisposeor alternatively, they can arise abruptly, accelerating the consumers intention to terminate the relationshipfactors that precipitate. The factors that predispose to relationship dissolution are factors that create the conditions in which individuals pay more attention to certain elements that will precipitate dissolution. Duck (1981), in the context of personal relationships, and Halinen and Thtinen (2002), in the context of business relationships,
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indicate that predisposing factors already exist when parties enter into a relationship, making it vulnerable to breakdown. These factors could also appear during the relationship; but their effect is not immediate as they need the accumulation of several incidents to be considered by the consumer. The factors that predispose may be related to the

fulfillment of the tasks inherent to the relationshipdeficiencies in delivering the service quality required or desired by the consumeror to the dyadic relationshipdecrease in 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 (Duck, 1981; Halinen & Thtinen, 2002; Halinen, Havila, & Salmi, 1999). 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 taskssudden price raisesor deficiencies in the interaction in the relationshipsporadic conflicts or episodes that demonstrate the firms lack of interest in the clientwhich provoke consumers anger and lead them to take immediate measures. In the current proposal, it is considered that the main predisposing factors are deficiencies in the quality of the service (Hess, Ganesan, & Klein, 2003), and the firms poor efforts to maintain the relationship (Dwyer, Schurr,& Oh, 1987); while the precipitating factors are the perception of price unfairness (Keaveney, 1995), and the experience of episodes of dissatisfaction or critical incidents (Roos, 1999, 2002). Poor Service Quality The quality of the service, from the perspective of Grnroos (1990), is conceptualized 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 Parasuraman, Zeithaml, & Berry (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 qualities. 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 receivedoutcomeor with the service providerinteraction. Many researchers have also suggested
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that the quality of the customer-organization interaction affects the customers response to failings in services (Berry, 1995; Kelley & Davis, 1994). The literature on loyalty also indicates that customers value the

companys resources and skills very highlyresources and skills that are manifested in the service quality (Mittal & Lassar, 1998).High quality can motivate consumers to strengthen their relationship with their service provider (Hess, Ganesan, & Klein, 2003; Bell, Auh, & Smalley, 2005), or not (a result obtained by Cronin & Taylor, 1992). What does seem to be clearer is that poor quality or changes in the firms quality levels provoke a change in consumers attitudes towards the firm and probably a change in their behavior, as is demonstrated by Bansal, Taylor, and James (2005), Dabholkar and Walls (1999), Roos (1999), or Zeithaml, Berry, and Parasuraman (1996). Low Organization Commitment to Customer In the relationship marketing literature commitment is 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 (Anderson & Weitz, 1992; Dwyer, Schurr, & Oh, 1987; Morgan & Hunt, 1994;Walter & Ritter, 2000). The organizations commitment refers to its interest in the consumers and its efforts to maintain 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 & Parvatiyar, 1995). When consumers perceive added value in the firms efforts to offer them special treatment to foster their loyalty, they will not switch suppliers. Indeed in some cases the firms efforts to build customers loyalty and keep them satisfied excludes any other type of relationship that the consumer might contemplate with any of the firms competitors (Wathne, Biong, & Heide, 2001; Dwyer, Schurr, & Oh, 1987), which makes the switching intention even more improbable. In contrast, it can be also maintained 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. Breakdown can result from a faulty relational process and consequent dissatisfaction with the relationship itself (Duck, 1981). Not only may expectations about the purpose of the relationship and the quality delivered be disconfirmed, but also expectations about correct or appropriate behaviors. In that line, Rusbult, Zembroke, and Gunn (1983) found a low commitment to be a significant predictor of relationship ending. Also, according to Michalskis (2004) findings in banking services, significant reasons for ending are failures in interactions, not in core services.
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516

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, Monroe,& Grewal, 1991; Teas & Agarwal, 2000); while the second, in contrast, suggests that low prices can also function as a signal of good value for money (Kirmani & 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, Hoyer, & Koschate, 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. Athanassopoulos (2000) and Bansal, Taylor, and James (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, Biong, & Heide, 2001), as well as the motive for an immediate switch. Anger Incident Roos (1999, 2002) analyzes 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. These critical incidents can become anger incidents when the events or episodes have provoked anger and manifest dissatisfaction in the consumer. Bougie, Pieters, and Zeelenberg (2003) show that anger is an emotion that, according to emotions theory (Roseman, Wiest, & Swartz, 1994), encloses specific experience content. Anger is associated with feelings (as if they would explode), 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 responseending the relationship. Having analyzed these four factors, it is maintained that the intensity of these variables effects on switching intention is unequal. The perceived failings in the service quality and in the firms commitment provoke disenchantment and unease, and influence consumers intention to switch suppliers; however, this influence is probably not very strong, insofar as the consumer does not consider imminent action.As quality and commitment comprise several dimensions, the perception of changes in quality and commitment is not instantaneous. It is the sum of several factors and, as a result, the consequences of such changes could be slower and more long-term

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than the effect of other immediate changes. In fact, the connection between quality and exit seems to be weak because many events happen before a customer decides to end the relationship (Bansal & Taylor, 1999). Michalski (2004) refers in these cases to creeping relationship ending, because the customer has a broad tolerance zone, and several negative incidents are involved in the ending process. In contrast, raising the prices to levels considered unfair, or a situation of anger or conflict, are more likely to provoke an immediate reaction among consumers and their intention to switch suppliers immediately. Price changes are easier for customers to observe and detect than quality and commitment changes,which require a global evaluation. This quick perception is most evident in cases when customers take out a subscription and the price is paid before receiving the service, such as in insurance, public services, medical insurance, or telecommunications. In these cases, pricing becomes the first and most visible signal of the firms activity. Hence, the perception of price changes and price unfairness is instantaneous, and its effect on switching behavior is therefore more immediate. Rotemberg (2005) indicates that consumers react negatively and with anger to price increases when they become convinced that prices are unfair. In the context of services, customers high sensitivity to prices has also been demonstrated. Gerrard and Cunningham (2004) show that pricing is one

of the main incidents that provoke switching behaviors in the banking industry. Also, Lowengart, Mizrahi, and Yosef (2003) indicate that when the difference between the price and the optimal reference price is small and scarcely detectable by consumers, retailers may do better not to practice price manipulations. As for anger incidents, their stronger effect on switching intentions is predictable. Michalski reports customers strong emotional reactions and sudden relationship ending in the case of unacceptable interactions with the firm. Thus, the following hypothesis is proposed: H1: The factors predisposing consumers to relationship dissolution
(poor service quality and perception of low commitment) will have less influence on switching intention than the precipitating factors (price unfairness and anger incident).

SATISFACTION AS MEDIATING VARIABLE IN DISSOLUTION PROCESS According to Baron and Kenny (1986), a variable has a mediator function in a particular process if it explains the relation between the antecedents and the results. The variables acting as mediators in the dissolution process seem to be both the result of the determinant factors and the antecedents of dissolution. Their direct effect on dissolution comes mainly from the fact that they are the consequence of the determinant variables, the true causes of the switch. But their function
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in the process should not be understood as merely to transmit the effects of the determinant factors. Mediating factors are more than this: they are the focus on which the causes determining relationship termination converge; they then transform into a new and different concept that can modify the final effect of such causes on dissolution. The loyalty literature has traditionally regarded satisfaction as the mediator in the path towards consumer commitment. By analogy, it might be expected this variable to also play that role in the dissolution process. Consumer satisfaction continues to be a vital objective in the marketing community, since it is a critical focus for designing effective marketing programs (Oliver, 1999), as well as companies predominant means of detecting and controlling the probability of customer defection (Capraro, Broniarczyk, & Srivastava, 2003). However, the effect of satisfaction on loyalty has been shown to be more complex than it seems at first (Fournier & Mick, 1999; Mittal & Kamakura, 2001). According to Burnham, Frels, and Majahan (2003), firms are caught in a satisfaction trap, a myopic belief that satisfaction and service quality are the only tools available for retaining customers. Given this uncertainty about satisfactions role in consumer retention processes, there is increasing interest in understanding its role in dissolution processes. At the theoretical level, satisfaction is a concept that has been amply

debated in the literature. Numerous definitions have been proposed (Oliver, 1997; Vanhamme, 2000), which tend to diverge from each other (Szymansky & Henard, 2001). In the most recent definitions, the dual nature of satisfaction is recognized, in other words a cognitive and an affective character, as well as a relative nature, since it is the result of comparing a subjective experience with a previous base of reference (Oliver, 1993). For the purpose of the current work it is considered that satisfaction is achieved when the consumers expectations about the performance of the product or service being consumed are met or exceeded; that it is a sensation or feeling generated both by cognitive and emotional aspects of the product or service; and that it is a cumulative evaluation of the sum of diverse aspects of the product or service. On the basis of the hierarchical knowledge-attitude-behavior model, the role of satisfaction is better understood as a mediator between consumers experience and their behavior (Bloemer & de Ruyter, 1998; Hellier et al., 2003; Lam et al., 2004; Olsen, 2002). Olsen (2002) demonstrates that satisfaction acts as a mediator variable between service quality and the intention to continue buying from the same supplier, since quality only affects loyalty indirectly, through satisfaction. Harris and Goode (2004) and Lam et al. (2004) also confirm satisfactions mediating role in the relation between perceived quality or value and loyalty. Thus, with the previously mentioned reasoning it is suggested that

consumers satisfaction will mediate between the determinant factors of relationship termination and the dissolution itself. This means that it will simultaneously be the result of the determinant variables and the predictor
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of dissolution. According to the cumulative satisfaction approach, evaluations of the service quality, commitment, perceived price, and critical episode of both a cognitive and emotional nature will all be summed to produce a global evaluation of the service, which is labeled global satisfaction. With regards to the role of (dis)satisfaction as a predictor of dissolution, it must be noted the controversy and lack of conclusive results in the literature. Authors such as Capraro, Broniarczyk, and Srivastava (2003) and Mittal and Lassar (1998) suggest that although there is a relation between satisfaction and loyalty or consumers switching probability, the variable is only a weak predictor of consumer repurchase behavior. They stress the need to find other determinant factors. These authors indicate that dissatisfied consumers may stay in their relationship if they do not expect other alternatives to be any better, while satisfied consumers may opt for other alternatives even if the current outcome is satisfactory. In contrast to these views, numerous empirical studies provide evidence that satisfaction does play a role in the

retention process and repurchase behavior (Bolton, 1998; Jones, Mothersbaug, & Beatty, 2000; LaBarbera & Mazursky, 1983; Oliver, 1997; Sambandam & Lord, 1995; Yang & Peterson, 2004). The relation between dissatisfaction and switching seems to be more evident (Ping, 1994, 1995). Whereas satisfied consumers could be reluctant to exit because there is much to lose, less satisfied consumers may be vulnerable to moves aimed at increasing supplier attractiveness. H2: Consumer satisfaction acts as a mediator variable between the
predisposing and precipitating factors of dissolution and the consumers switching intention.

Also for the mediating effect of satisfaction, there may be different consumer behaviors when consumers perceive poor service quality or low commitment (predisposing factors) than when they perceive unfair prices or an anger episode occurs (precipitating factors). As it has been said, variables that predispose consumers to end their relationships act by accumulating unease in consumers until they run out of patience, and only thenafter a delaydo they influence the switching decision. According to this reasoning, their repercussion on satisfaction will be greater than their immediate effect on the switching intention. The intention to dissolve the relationship will take place through a longer path, i.e., the mediating effect of satisfaction in the switching intention will be high. On the other hand, the variables that precipitate relationship

dissolution have a much more immediate effect on consumers intention to end their relationship. Hence their effect on the switching intention will logically be greater than their effect on satisfaction, so satisfactions mediating role will be weaker in this case.
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H3: The mediating effect of satisfaction will be stronger for variables

that predispose to dissolution than for variables that precipitate dissolution.

Model 1 (see Figure 1) graphically represents the dissolution process and the mediating role of satisfaction. This model describes the relation between satisfaction and dissolution directly, while poor quality, low commitment, unfair price, and anger episode, although they are linked with
CONSUMERS SWITCHING INTENTION Psychology & Marketing DOI: 10.1002/mar 521 SATISFACTION SWITCHING
INTENTION

Model 2
SATISFACTION SWITCHING
INTENTION

Model 3

SATISFACTION SWITCHING
INTENTION

Model 1 PREDISPOSING AND PRECIPITATING

FACTORS

Deficiencies in: Outcome quality Interaction quality Physical environment quality Price unfairness Anger incident Low perceived commitment
PREDISPOSING AND PRECIPITATING FACTORS

Deficiencies in: Outcome quality Interaction quality Physical environment quality Price unfairness Anger incident Low perceived commitment
PREDISPOSING AND PRECIPITATING FACTORS

Deficiencies in: Outcome quality Interaction quality Physical environment quality Price unfairness Anger incident Low perceived commitment

+ +
Figure 1. Mediating effect of satisfaction: rival models.

relationship termination, will only have an indirect effect on dissolution through satisfaction. Authors such as Bagozzi and Yi (1988) recommend comparing the result of the model being proposed with other alternatives. Morgan and Hunt (1994) and Pritchard, Havitz, and Howard (1999) analyze the mediating function of commitment in this way, comparing the model that they propose with other rival direct-effects models. For this purpose, Figure 1 also shows two rival models of the dissolution process. Model 2 allows testing the direct impact of poor quality, low commitment, unfair price, and anger episode on both satisfaction and dissolution, effects that we would expect to be significant. Model 3 responds to a final question: Are the direct effects of the determinant factors of dissolution still significant after adding the relationi.e., after opening the pathbetween satisfaction and dissolution?

METHOD AND RESULTS Sample and Data Collection For the empirical study it was needed to choose a product or service for which relationship termination is a clear problem from the firms point of view and a decision that is carefully thought about by the consumer. Thus, the consumer relationship with automobile-insurance companies was chosen as the scope of the study. This is a service, as Keaveney and Parthasarathy (2001) point out, in which customers behavior in 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: intangibilityit 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, Franses,& Hoekstra, 2002; Hellier, et al., 2003), or of buyers of medical insurance (Capraro, Broniarczyk, & Srivastava, 2003). Capraro, Broniarczyk, and Srivastava (2003) note that the fact that insurance

contracts need to be renewed annually gives consumers the frequent opportunity to consider switching companies. For the data collection, individuals that have bought automobile insurance were surveyed. Survey-takers were employed and they obtained a sample of 247 appropriate individuals. A total of 45.9% of the sample habitually contact with their insurance firm through its offices, 37% do so by telephone, 16.3% through an insurance broker, and only 0.7% of them use the Internet.
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Variable Measurement In the appendix, a full list of the variables intervening in our study are provided. All the items were measured using 5-point Likert-type scales.Next, the process followed for creating and validating each variable is described. Switching Intention. Relationship dissolution was measured in the decision-making stage, when consumers consider switching suppliers. The stage involves intentions, so it cannot be assured that the consumer will actually dissolve the relationship in the near future. But this approach does allow undertaking a cross-sectional analysis, and it is in line with previous research (Hellier et al., 2003; Hocutt, 1998; Jones, Mothersbaugh,& Beatty, 2000; Mittal & Lassar, 1998; Ping, 1994, 1995). The measurement scale used was based on the scale proposed by Ping (1995).

Poor Service Quality. Measuring service quality still seems to be a controversial topic, as it has been mentioned. In our case, Brady and Cronins (2001) proposal was adopted, which combines those of Grnroos (1990) and Parasuraman, Zeithaml, and Berry (1988) and implies that the perception of service quality is founded on three dimensions: the outcome, interaction, and physical environment qualities. These three dimensions define the base of the perceived service quality, and other second-order dimensions may underlie them.Taking this approach, these three aspects of quality were measured adapting the scale used by these authors. Low Perceived Commitment. The scale for the firms commitment as perceived by the consumer was built especially for this current work.There, different aspects that the relationship marketing literature attributes to a service providers relational orientation policy were included, on the basis of items proposed by several authors (Anderson & Weitz, 1992; Gundlach, Achrol, & Mentzer, 1995; Kumar, Scheer,& Steenkamp, 1995 and Mohr & Spekman, 1994): willingness to invest; shared information; loyalty and commitment to the customer; or perceived desire to continue. Price Unfairness. The consumers perception of an unfair price and poor value for money were each measured by a separate indicator. These indicators were built for this current study starting from the results obtained by Keaveney (1995) in her descriptive study of consumers motives for terminating relationships.

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 the use of the scales that were proposed in the literature when these concepts were introduced. On the other hand, it is considered that formulating these
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items in negative terms could be understood by the respondents as indicating extreme states of dissatisfaction, which would likely be confused with what we have labeled critical episode. Bansal,Taylor, and James (2005) take a similar approach. Anger Incident. This variable was measured using a single indicator, in which 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. Satisfaction. A single item coming from Olivers (1997) satisfaction scale was used to measure consumers global or cumulative satisfaction with their insurance company. Compared to measuring satisfaction by evaluating different aspects of the product or service, various authors have opted to use a single item to measure global satisfaction (Athanassopoulos,

2000; Ganesh, Arnold, & Reynolds, 2000; Mittal & Kamakura, 2001). Although most of the proposed scales have been validated previously in the literature, each of them was subjected to a validation process here. For this, a confirmatory factor analysis (Lisrel 8.7) was performed, following the procedure recommended by Anderson and Gerbing (1988). The items proposed for measuring service quality, perceived price, and perceived commitment were previously recoded, such that higher values in the items indicated poor quality levels, greater price unfairness, and lack of commitment. This codification allows representing negative factors at the origin of consumers switching intentions (Bansal, Taylor, & James, 2005) and to test the hypotheses in the proposed direction. To test the validity of the measurement scales a confirmatory factor model was estimated, the results of which are shown in Table 1. Although the chi-square statistic is significantconceivably as a result of the size of the samplethe lambda values and the remaining goodness-of-fit indicators confirm the convergent validity of these scales. After validating the convergence of the scales, the correlation matrix of the factors resulting from each scale was calculated. Table 2 shows the correlation matrix of all the variables, as well as the reliability values Cronbach alphas and variance extractedin each case. In all cases the variance extracted of each variable exceeds the value of its squared correlation with the other variables, which justifies the

discriminant validity of the scales (Anderson & Gerbing, 1988). Estimation of Rival Structural Models The following step in the analysis was to estimate the rival structural models, following the procedure described by Anderson and Gerbing (1988). In order to show that certain factors predispose consumers to dissolve relationships, while others precipitate their switching decision, we carried out the estimation following a hierarchical process. First, the rival models were estimated to determine the effect of the variables that
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Table 1. Confirmatory Factor Analysis. Variable Items _ t Goodness of fit Outcome quality QUA1 0.903 16.86 QUA2 0.831 15.05 Interaction quality QUA3 _ QUA4 0.882 15.32 QUA5 0.745 12.53 Physical environment QUA6 0.659 9.85 quality QUA7 0.940 13.42 Perceived commitment COM1 0.637 10.51 _2(109) _ 195.37 COM2 0.594 9.63 ( p _ 0.000)

COM3 0.793 13.95 GFI _ 0.922 COM4 0.660 10.95 AGFI _ 0.880 COM5 0.708 12.09 CFI _ 0.982 RMSEA _ 0.054 Price PRI1 0.863 15.90 PRI2 0.939 17.96 Switching intention SWI1 0.875 13.94 SWI2 0.447 6.90 SWI3 0.788 13.23 Anger incident INC1 0.975 _ Satisfaction SAT1 0.975 _

predispose to dissolution, i.e., poor perceived quality and low perceived commitment (Table 3). Then, they were introduced perceived price unfairness and anger episode, variables that precipitate dissolution (Table 4). On the other hand, and as is has been mentioned previously, to verify the mediating effect of satisfaction a number of conditions must hold (Baron & Kenny, 1986; Pritchard, Havitz, & Howard, 1999): (1) the antecedent variables should have a significant effect on satisfaction; (2) satisfaction should have a significant effect on switching intention (these first two conditions are examined in Model 1); (3) the antecedent variables should have a significant direct effect on switching intention (Model 2); and (4) the previously significant effects of the antecedent variables on switching intention should become nonsignificant when the path between satisfaction and switching intention is opened (Model 3).

Table 3 shows, for the three models, that although the chi-square statistic is significantprobably a consequence of the sample sizethe values of other indicatorsGFI, AGFI, CFI, and RMSEAare within recommended limits, indicating a good fit. But it is Model 2, the direct-effects model, which presents the worst goodness-of-fit indicators. The differences between Models 1 and 3 are minimal, and the chi-square difference test is non-significant. In spite of this, there is sufficient evidence to say that the conditions are present for the existence of a clear mediating effect of satisfaction in the case of the variables that predispose to dissolution (Baron & Kenny, 1986). According to Model 1, the relation between satisfaction and dissolution is significant, as are the effects of poor outcome quality and low
Table 2. Correlation Matrix. Poor Poor Poor physical Switching outcome interaction environment Low Price Anger intention quality quality quality commitment unfairness incident Satisfaction Switching intention 1.000 Poor outcome quality 0.408 1.000 Poor interaction quality 0.285 0.554 1.000 Poor physical environment 0.128 0.324 0.463 1.000 quality Low commitment 0.344 0.495 0.522 0.353 1.000 Price unfairness 0.424 0.495 0.306 0.190 0.581 1.000 Anger incident 0.359 0.324 0.250 0.035 0.232 0.257 1.000 Satisfaction _0.470 _0.629 _0.490 _0.396 _0.568 _0.526 _0.397 1.000

Cronbach alpha 0.725 0.855 0.858 0.765 0.832 0.895 Variance extracted 0.794 0.761 0.951 0.678 0.500 0.812
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perceived commitment on satisfaction, too. The direct effects of poor outcome quality and low perceived commitment on switching intention are significant in Model 2, while they are no longer so in Model 3, where the relation between satisfaction and dissolution is admitted. Table 4 reports the results of the estimation of the three rival models after introducing perceived price unfairness and anger incident, variables that precipitate relationship termination. First, Model 1, the model reflecting the mediating function of satisfaction, was tested. Looking at the results of the estimation, it can be confirmed that apart from poor interaction quality and price unfairness, the determinant factors of termination have a significant effect on consumers global satisfaction, and in the expected direction, while satisfaction itself has a negative and significant effect on the intention to dissolve the relationship. The variables that predispose or precipitate relationship termination act indirectly on dissolution through satisfaction. It appears that the first conditions for satisfaction to exert a mediating effect in the dissolution process are in general fulfilled. Model 2 presents a significant chi-square statistic and some acceptable goodness-of-fit indicators that are slightly better than those of Model 1.

Table 3. Estimation of Rival Models: Predisposing Factors. Relation (Path) Model 1 Model 2 Model 3 Direct effects B t B t B t Poor outcome quality _0.387 _4.900 _0.394 _5.030 _0.386 _4.884 Satisfaction Poor interaction quality 0.014 0.155 0.034 0.378 0.015 0.170 Satisfaction Poor physical environment _0.106 _1.712 _0.119 _1.685 _0.108 _1.737 qualitySatisfaction Low commitment _0.444 _5.988 _0.465 _6.304 _0.443 _5.964 Satisfaction SatisfactionSwitching _0.537 _8.744 _0.350 _3.195 intention Poor outcome quality 0.336 3.104 0.192 1.681 Switching intention Poor interaction quality _0.003 _0.022 0.050 0.416 Switching intention Poor physical environment _0.103 _1.399 _0.157 _1.882 qualitySwitching intention Low commitment 0.342 3.437 0.127 1.095 Switching intention R2 Satisfaction 0.625 0.640 0.624 R2 Switching intention 0.288 0.314 0.329
Goodness of fit _2 (df) 243.9 (143) (p _ 0.00) 243.7 (140) (p _ 0.00) 234.8 (139) (p _ 0.00) GFI / AGFI 0.91 / 0.89 0.90 / 0.88 0.91 / 0.89

RMSEA 0.050 (p _ 0.50) 0.055 (p _ 0.23) 0.051 (p = 0.45) CFI / PNFI 0.98 / 0.89 0.98 / 0.87 0.98 / 0.87

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Table 4. Estimation of Rival Models: Predisposing & Precipitating Factors. Path Model 1 Model 2 Model 3 Direct effects B t B t B t Poor outcome quality _0.307 _3.702 _0.308 _3.729 _0.308 _3.704 Satisfaction Poor interaction quality 0.028 0.309 0.027 0.294 0.030 0.326 Satisfaction Poor physical environment _0.146 _2.434 _0.145 _2.427 _0.148 _2.473 qualitySatisfaction Low commitment _0.388 _4.153 _0.388 _4.138 _0.388 _4.116 Satisfaction Price unfairness _0.038 _0.498 _0.038 _0.487 _0.034 _0.442 Satisfaction Anger incident _0.217 _4.510 _0.215 _4.469 _0.214 _4.439 Satisfaction Satisfaction _0.539 _8.751 _0.323 _2.944 Switching intention Poor outcome quality 0.132 1.171 0.009 0.075 Switching intention Poor interaction quality 0.092 0.747 0.149 1.211 Switching intention

Poor physical environment _0.057 _0.700 _0.106 _1.283 qualitySwitching intention Low commitment 0.064 0.526 _0.142 _1.015 Switching intention Price unfairness 0.289 2.800 0.327 3.175 Switching intention Anger incident 0.260 3.964 0.190 2.739 Switching intention R2 Satisfaction 0.649 0.650 0.646 R2 Switching intention 0.291 0.372 0.403
Goodness of fit _2 (df) 223.8 (141) ( p _ 0.00) 203.9 (136) ( p _ 0.00) 195.3 (135) ( p _ 0.00) GFI / AGFI 0.91 / 0.89 0.92 / 0.90 0.92 / 0.90 RMSEA 0.045 ( p _ 0.74) 0.042 (p _ 0.83) 0.039 (p _ 0.90) CFI / PNFI 0.98 / 0.88 0.98 / 0.85 0.99 / 0.85

Moreover, since the difference between the chi-square values of the two models (_2(5) _ 19.9) is significant and Model 2s explanation of dissolution is clearly superior, we must admit that the direct-effects model is superior to the mediating-effect one. In this model the perceived deficiencies in service quality and the low commitment do not have a significant effect on switching intention, while unfair price and anger incident do. Although poor service quality and low commitment do not appear to have a direct impact on switching intention, the results obtained in the estimation of the models for the case of the predisposing variables (Table 3) show that the presence of unfair price and critical episode is the reason why

none of the direct effects of perceived deficiencies in service quality and low commitment on switching intention are significant. These results seem to be in line with the idea that certain variables have a weak effect on switching intentionwearing down consumers and predisposing them to have a negative attitude towards the firmwhile others have a strong effect on switching intentionprecipitating the decision to change suppliers. In view of this, Hypothesis H1 is accepted. Finally, Model 3 was compared with Model 1 and Model 2. Of the three models, Model 3 presents the best goodness-of-fit indicators. As the differences in the chi-square statistic are significant (_2(6) _ 28.5) and (_2(1) _ 8.6), this is the model that best fits the data, and hence the one that best represents the dissolution process. Model 3 is a mixed model, combiningfor a more complete explanation of dissolutionthe direct effects of the determinant variables with the mediating effect of satisfaction. As Baron and Kenny (1986) propose, the mediating variable (satisfaction) has a significant effect on the dependent variable (switching intention), although unfair price and anger episode continue to have a significant direct effect on switching intention. In short, from the estimation of these three models, it can be concluded that of the variables that precipitate dissolution, Baron and Kennys (1986) conditions are fulfilledand consequently a mediating effect of satisfaction existsonly for the variable anger incident: it has a direct and significant

effect on satisfaction (Model 1) and on switching intention (Model 2), although this latter remains when the relation between satisfaction and switching intention is opened in Model 3. In the case of price, the only effect that this variable exerts on switching intention is direct, since, as the test of Model 1 shows, it does not have a significant effect on global satisfaction. If the estimations made in the two steps are considered together, there is sufficient evidence to accept Hypothesis H2, except in the case of the variable unfair price.With regard to the comparison between the variables that predispose and precipitate relationship dissolution, it has been shown in the results of the first estimation that for the variables that predispose to dissolution (outcome quality and commitment) the mediating effect of satisfaction is clear: All the conditions are fulfilled so that the mediating effect cancels out the direct effect. In contrast, in the second estimation, satisfaction does not moderate the effect of unfair price on switching intention. The anger episode, in turn, affects the switching intention through satisfaction (mediation), although it continues to have a significant direct effect, too (the mediating effect does not cancel out the direct effect). Hence Hypothesis H3 is also accepted, except for the case of interaction quality and physical environment quality. DISCUSSION 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
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of study (Bansal & Taylor, 1999; Keaveney, 1995). In this stream, this work has the aim of demonstrating that the termination process involves the intervention of some variables that slowly weaken the relationship, predisposing consumers to ending it, along with other variables that induce them to switch suppliers immediately, precipitating termination. The proposed model suggests that poor quality and the perception of a weak commitment or lack of interest on the part of the firm towards consumers are variables that predispose to relationship dissolution, insofar as they progressively undermine consumers trust in the firm. The empirical test of this model has demonstrated that the direct effect of these variables on switching intention is not even significant, although they do positively affect dissatisfaction. Along with these variables, it has been shown that other factors act as immediate triggers of the switching intention, namely a price policy perceived as being unfair and consumers experience of a conflictive event or an episode that generates their suspicion. Their effect on switching intention is strong and significant. Thus, these are variables that precipitate the switching intention

and predominate over any other motive of disenchantment the consumer may have. This dual effect (gradual and weak compared to immediate and strong) on switching intention is confirmed when the mediating role of satisfaction in the dissolution process is analyzed. In the study carried out here, there is evidence that the variables that precipitate switching intention (price and anger episode) have a direct effect on dissolution, and only anger episode exerts an indirect effect through satisfaction, i.e., only in this case does the mediating role of satisfaction seem to be confirmed. Unlike Homburg, Hoyer, and Koschate (2005), who demonstrate the moderator effect of satisfaction in the relation between price increases and switching intention, the results appear to suggest that price unfairness has a strong and direct effect that precipitates the intention to dissolve the relationship and that satisfaction does not mediate in this relation. In contrast, the variables that are regarded as predisposing factors of termination have a weak direct effect on dissolution, and their effect is basically indirect via the reduction in satisfaction levels. Indeed, one of the dimensions of qualitythe interaction qualitydoes not appear to have any effect either direct or indirecton customers switching intentions. Switching suppliers is provoked by the perception that the outcomes of the service or the physical means employed by the supplier are inadequate, regardless of the treatment received. This result is analogous to that obtained

by Bell, Auh, and Smalley (2005) in their explanation of customer loyalty. These authors confirm that technical quality (the quality of the service output) has a strong effect on loyalty, while functional quality (the interaction between the service provider and customer and the process by which the core service is delivered) exerts a much weaker effect. In view of these conclusions, and with regards to the contribution of this work to the marketing literature, it provides empirical evidence
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about the switching process of services consumers, a phenomenon that appears to be more complex than might first have been expected, and that is in no way comparable to loyalty or customer retention. First, it has been empirically demonstrated the existence of various determinants of switching: on the one hand, variables that weaken the relationship and predispose to dissolution, and on the other, variables that precipitate dissolution. These categories have already been established in previous theoretical work, although their differentiated effects have not been tested until now. A second contribution refers to the role of satisfaction as intermediate channel through which consumers manifest their unhappiness prior to termination. The results advance the idea that the intention to terminate the relationship is immediate when the firm takes certain measures resulting in unfair pricing or a conflict with the customers,

but other actions or failings in their performance, for example poor service quality or low commitment to the customer, do not lead to an immediate switch. Instead, these factors create dissatisfaction or unhappiness that is the true cause of the termination in the end. With regards to the management implications, it hardly needs saying that the diagnosis of the motives behind consumers decisions to terminate the relationship may serve as guidelines for companies wishing to avoid customer defection. As Bansal and Taylor (1999) find, quality is not the service attribute that most influences consumer intentions. In this line, it has been shown that the perception of low quality levels and also of the firms weak commitment undermines consumers satisfaction in the firm and motivates, to a certain extent, their desire to switch suppliers, but other factors have greater impact on consumers intentions: the perception of an unfair price and the experience of critical episodes. This does not mean that the former variables play no role in consumer intentions, but rather that their effect is weakened in the presence of problems that consumers regard as more important. Firms should strive to determine the price range acceptable to their customers and to preventor resolve as well as possibleany negative experiences that the consumers may have with the firm. Continuing dissatisfaction with the firm on the part of consumers as a consequence of a quality that does not match expectations does not influence the individual as much as a one-off incident

in which the consumer experiences strong unease and suspicion towards the firm. Similarly a change in the price policy can lead consumers to take the irreversible decision to switch suppliers. In short, companies should make every effort to improve their customers perception of the service, and above all ensure that they do not experience situations that provoke irritation, unease, or extreme unhappiness. To conclude, as limitations of the work and future lines of research, firstly, it should be mentioned the analysis of the effect of switching intention on actual consumer behavior. In this respect, past work such as that of Bansal and Taylor (1999) has already suggested that intention has a weak effect on real behavior. This leads the researchers to consider
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the need to deepen the understanding of the variables that stop consumers from ending their relationships and lead them to remain, even when there is a switching intention. In this type of analysis it is useful to have longitudinal data available, as they guarantee a more detailed analysis of the process consumers follow towards dissolution. Another limitation of the current work is that it considers the predisposing and precipitating variables in the same time period. This prevents determining the long-term effect of these factors, as well as the consumers tolerance threshold to each of themtolerance of poor quality, of excessive

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APPENDIX. Variable Measurement. Variables Item Description Mean SD 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 company in the future 2.03 1.33 Independent Outcome quality* 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 quality* QUA3 The attitude of this companys employees demonstrates their 3.58 1.06 willingness to help me QUA4 The attitude of this companys employees demonstrates that they 3.35 1.05 understand my needs. QUA5 This companys workers are very competent 3.38 0.98 Physical environment QUA6 The offices and branches of my company are modern and well-equipped 3.54 1.07 quality* QUA7 The offices of my company give an image of professionalism 3.42 1.06 Perceived commitment* COM1 The company maintains a frequent and constant 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 Price* 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 Anger incident INC1 I have recently had an experience with this company that angered me 2.14 1.30 Mediator Satisfaction SAT1 Extent to which I am satisfied with this insurance company 2.22 1.04 (*) Recoded variables.