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A CONCEPTUAL MODEL FOR THE REPURCHASE INTENTIONS IN THE AUTOMOBILE SERVICE INDUSTRY:THE ROLE OF SWITCHING BARRIERS IN SATISFACTION REPURCHASE INTENTIONS RELATIONSHIP

Karin Boonlertvanich, Burapha University, Thailand

ABSTRACT

The purpose of this study is to examine the role of switching barriers, i.e. the interpersonal relationships,the attractiveness of alternatives and the switching costs, in effecting of customer satisfaction relating torepurchase intentions. Utilizing hierarchical moderated regression analysis, the proposed model wasstudied in the automobile service industry. The findings show that the interpersonal relationships do havea negative moderating impact on the satisfaction-repurchase intentions relationship, while the differencein the attractiveness of alternatives and switching costs do not. Further analysis revealed that, despite itslack of influencing impact, the attractiveness of alternatives exhibits a positive moderating effect when thelevel of satisfaction or repurchase intentions is low.

Keywords: Repurchase intention, Customer satisfaction, Interpersonal relationship, Attractiveness ofalternatives, Switching costs.

1. INTRODUCTION

Research suggests that the repurchase intention is the key driver in a companys profitability and shouldbe set as one of the key strategic goals of the company (Fornell, 1992; Reichheld, 1996). Previousstudies proposed that customer satisfaction is the primary antecedent to repurchase intentions (e.g.Oliver & Swan, 1989; Cronin & Taylor, 1992; Oliver, 1999). Despite extensive studies on customersatisfaction-repurchase intention relationship, the lack of predictive power of such studies has beenrecently revealed (Szymanski & Henard, 2001). This research addresses this key issue of whether therelationship between satisfaction and repurchase intention is dependent on a variation of switchingbarriers. Three types of switching barriers are considered here: interpersonal relationships, attractivenessof alternatives, and switching costs (Jones et al., 2000). Such barriers are important because they mayimpose both a direct effect on retention behavior and a moderating effect on the satisfaction-repurchaseintention relationship.

While satisfaction is a strong predictor of repurchase intentions, interpersonal relationships have alsobeen widely investigated as another factor influencing customer repurchase intentions (Dwyer et al.,1987, Colgate and Danaher, 2000; Day, 2000). In addition, attractiveness of alternatives and switchingcosts also play an important role in determining the impact of satisfaction on repurchasing intentions (Jones et al., 2000; Yang & Peterson, 2004). Incorporating these constructs into a model for repurchaseintentions has been recently identified as an important next step by other researchers (Garbarino &Johnson, 1999; Jones et al., 2000, Singh & Sirdeshmukh, 2000).

In this research, we proposed and tested a conceptual model for repurchase intentions in the auto serviceindustry incorporating both direct and moderating influences from switching barriers. This type of serviceindustry differs from other conventional services usually found in prior studies such as beauty salons orbanking services, etc., in the sense that it is focused more on the service on things rather than on thepersonal (Lovelock, 1983). A proposition that the repurchase intentions depends on both the satisfaction

and level of switching barriers, if supported, would (1) provide a better understanding on the existingsatisfaction-repurchase intentions model, (2) help explain the moderating effect of switching barriers onsatisfaction-repurchase intentions relationship, especially in the auto service industry which is consideredas a non-personal type of service (Bowen, 1986; Lovelock, 1983), and (3) provide business implicationsfor satisfaction-retention management.

INTERNATIONAL JOURNAL OF BUSINESS RESEARCH, Volume 9, Number 6, 2009 1

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2. CONCEPTUAL FRAMEWORK, LITERATURE REVIEW, AND HYPOTHESES

Based on the literature review (Jones, 1998; Yang & Peterson, 2004), a conceptual model was developedas shown in Figure 1. The model indicates that the satisfaction-repurchase intentions relationship ismoderated by three other switching barriers, namely, interpersonal relationships, attractiveness ofalternatives, and switching costs. There are three main hypotheses associated with the model. The firsthypothesis indicates the direct effect of overall satisfaction on repurchase intentions. The second set ofhypotheses, H2a H2c, focus on the direct relationship between switching barriers and repurchaseintentions. The last hypotheses, H3a H3c, focus on the moderating effects of switching barriers inassociation with overall satisfaction and repurchase intentions, i.e. the effect of these three moderators

jointly interacting with the level of satisfaction to determine the level of the repurchase intentions.

Overall

Satisfaction

Repurchase

Intentions

Switching Costs

Attractiveness of

Alternatives

Interpersonal

Relationships

H1

H2a

H2b

H2c

H3a

H3b

H3c

Direct Effect Moderating Effect

Overall

Satisfaction

Repurchase

Intentions

Switching Costs

Attractiveness of

Alternatives

Interpersonal

Relationships

H1

H2a

H2b

H2c

H3a

H3b

H3c

Direct Effect Moderating Effect

Figure 1: Conceptual Model of Satisfaction - Repurchase Intention Relationship

2.1 Repurchase Intentions

Repurchase intentions simply refer to the likelihood of using a service provider again in the future.Repurchase intentions, along with loyalty, willingness to pay a price premium, word-of-mouth, andcomplaining represent the five behavioral intentions described by Zeithamal et al. (1996). It is probablyone of the most important concepts in marketing (Fornell, 1992).

Although measuring actual repurchase action is an ideal, it is difficult to observe and also difficult tomeasure. As a compromise, most researchers tend to employ behavioral repurchase intention measureinstead. Nonetheless, under many circumstances, repurchase intention may not lead to a repurchaseaction, and an actual repeated purchasing may not actually follow from the positive intentions due to othervariables.

In the auto repair service industry, customer repurchase intentions is one major driver of businesssuccess as the entry of new competitors becomes easier and the cost of attracting and processing newcustomers are getting higher. Repeat customers make a significant contribution to the companys profit


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because they usually demand less time and attention for their services. In addition, loyal customers areinclined to forgive customer-service mishaps, display decreasing sensitivity to price, and disseminatepositive word-of-mouth information about the business to others. As a result, customers, with highrepurchase intentions, can be a major source of sustained growth and profit. (Anderson & Mittal, 2000)

2.2 Satisfaction

Customer satisfaction studies remain the single largest category of marketing research, demonstratingthe practical importance of this construct (Oliver 1999). It can be considered in terms of a level ofsatisfaction for a specific service encountered or an overall evaluation of all encountered services from aparticular service provider (Bitner, Booms, & Tetreault, 1990; Cronin & Taylor, 1992; Parasuraman,Zeithaml, and Berry, 1994; Yi, 1991). Consistent with previous studies (Fornell, 1994), we focus on theoverall satisfaction rather than satisfaction on a specific transaction. The overall satisfaction of a particularservice provider is evaluated based on the cumulative satisfaction associated with products or servicesand various facets of that firm over time. As a result, it can be considered as a better predictor ofcustomer repurchasing intentions.

In understanding the cause of satisfaction, many researchers viewed service quality as the determiningfactor causing satisfaction (Oliver, 1993; Yang & Peterson, 2004). Customers compare pre-purchase

expectations with perceived actual service quality and make judgments about service experiences basedon those comparisons (Olshavsky & Spreng, 1989).

2.3 Satisfaction Repurchase Intentions Relationship

The relationship between satisfaction and intentions to repurchase has long been the main focus inmarketing literature (Reichheld & Teal, 1996). Many have found that satisfaction is regarded as anantecedent of repurchase (e.g. Bearden and Teel, 1983; Cronin and Taylor, 1992; Oliver, 1997;), whileothers suggest that higher satisfaction does not necessary result in actual higher repurchase behavior(Jones & Sesser, 1995; Stewart, 1997). According to Reicheld (1993), only 40% of satisfied customersrepurchased the same brand of automobile they were satisfying. Hence, the relationship betweensatisfaction and repurchase intention seems to be more complex than expected. For instance, Garbarino

& Johnson (1999), Delgado-Balester et al. (2003) and Ranaweera & Prabhu (2003) found that trust, inaddition to satisfaction, also has strong positive effects on customer retention.

In this study, customers intention to repurchase was measured by the behavioral intention to continuewith their present service repair shops, and their inclination to recommend the company to other persons.This measure has proven to be useful in previous research (Zeithaml, Berry & Parasuraman, 1996, Joneset al., 2000; Yang & Peterson, 2004).

Similar to prior research (e.g. Fornell, 1992; Oliver & Swan, 1989; Zeithaml et al., 1996; Oliver, 1999),higher levels of satisfaction are hypothesized to lead to higher levels of repurchase intentions. Thisrelationship seems to be applicable to the auto repair industry; therefore, the following hypothesis isadvanced:

H1: Higher levels of overall satisfaction are associated with higher intentions to repurchasethe service.

2.4 Switching Barriers

Switching barriers have been considered a relevant factor influencing customer retention, since theyexplain why dissatisfied customers decide to stay with their current provider (Colgate & Lang, 2001).However, it has been argued that imposing higher switching barriers to increase customer retention maydo more harm than good in the long run (Jones et al., 2000).


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Following a conceptualized definition of switching barriers from Jones et al. (2000), the three types ofswitching barriers considered as determinant of customer retention in this study are interpersonalrelationships, the attractiveness of alternatives, and perceived switching costs.

2.5 Interpersonal Relationship

Interpersonal relationships are the personal relationships between customers and their service providercultivated beyond core service performance and include other social benefits (Berry & Parasuraman,1991; Turnball & Wilson, 1989; Gwinner et al., 1998; Butcher et al., 2002). In order to create positiveinterpersonal relationships, the service providers, including everyone from the receptionist to the repairman, need to satisfy customers human and social needs such as desire for friendship, companionship,and belonging (Manning & Reece, 2001).

Prior research, e.g. Price & Arnould, 1999, Jones et al., 2000,Vazquez-Carrasco & Foxall, 2006, foundthat interpersonal relationships bond customers to their service providers, hence: our second hepothesisis:

H2a: Stronger interpersonal relationships are associated with higher repurchase intentions.

2.6 The Moderating Role of Interpersonal Relationships

Information overload and auto-technical complexity may be an additional reason that buyers choosecertain service providers over others. Decision makers are bound by the amount of information that theycan absorb and analyze (March & Simon, 1958). If a purchaser perceives one service provider as moretrustworthy than another or is more confident in one service provider than in another, this could lead tomore frequent purchases or higher repurchase intentions.

As such, social benefits obtained from interpersonal relationships help mitigate the probability of switchingto other providers when satisfaction is lower than expected (Frenzen & Davis, 1990; Berry &Parasuraman, 1991; Dick & Basu, 1994), i.e. mitigating the association between satisfaction andrepurchase intention. Thus, a further hypothesis of this study is:

H3a: The stronger the interpersonal relationship the weaker the relationship betweensatisfaction and repurchase intentions.

2.7 Attractiveness of Alternatives

Depending on the quantity and quality of competing alternatives, customers may perceive a benefit inchanging providers (Oliver, 1997). Attractiveness of alternatives refers to the level of perceived benefitsgained from switching to competing alternatives compared to the cost of switching service from thecurrent one. The higher the attractiveness of alternatives, the more likely the customers will switch theirservices to alternative offerings as being superior with respect to cost-benefit tradeoff (Kalyanaram &Little, 1994; Sivakumar & Raj, 1997, and Jones et al. 2000).

Prior research, e.g. Rusbult 1980; Farrel and Rusbult 1981, Rusbult et al. 1986, indicated that the level ofthe attractiveness of alternatives is negatively associated with customer loyalty, thus repurchaseintentions. In other words, as the quality of alternatives decreases, the probability of switching from theexisting service provider decreases. Thus, another hypothesis of this study is:

H2b: Lower levels of attractiveness of alternatives are associated with higher levels ofrepurchase intentions.


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2.8 The Moderating Role of the Attractiveness of Alternatives

In line with Ping (1993) and Jones et al. (2000), it can be expected that the linkage between customersatisfaction and repurchase intentions will be stronger under the condition of high attractiveness ofalternatives. Conversely, the less attractive the alternatives, the more favorably customers perceive theoffers from their existing providers (Jacoby et al., 1974), and therefore the less association betweensatisfaction and the switching consideration. In line with Jones (1998) and Jones et al. (2000), weconclude with the hypothesis:

H3b: The lower the attractiveness of alternatives the weaker the relationship betweensatisfaction and repurchase intentions.

2.9 Perceived Switching Costs

In some cases, customers may repeatedly utilize service from a provider, due to the difficulty of changingto a different service provider. In accordance with Jones et al. (2000), switching costs include time,money, and effort as perceived by the customer, when switching from one service provider to another.For instance, the consumer already knows the routines of their current service process through theirhistorical time spending with the current provider, which can be considered as a kind of specific

investment, and these investments will be lost when switching to another provider. In addition, thedistance of the service providers location is also another source of switching costs.

The impact of switching costs on repurchase intentions has received relatively little attention in theliterature (Guiltinan 1989; Dick & Basu 1994; Burnham et al., 2003; Jones et al., 2000). Empiricalevidence exists that switching costs are positively associated with customer loyalty (Gremler, 1995;Burnham et al., 2003; Blut et al., 2007). We therefore hypothesize that:

H2c: Higher levels of switching costs are associated with higher repurchase intentions.

2.10 The Moderating Role of Switching Costs

The above hypothesis regarding to the direct effect of switching costs on repurchase intentions is hardlyin doubt. What we seek to find is a better insight on the moderating effect of switching costs onsatisfaction-repurchase intentions relationship.

Research has revealed that switching costs could be assumed as a significant moderating effect oncustomer loyalty through satisfaction (Lee, Lee & Feick, 2001; Hauser, Simester &Wernerfelt 1994; Joneset al., 2000; Yang & Peterson, 2004). When switching costs are substantial or the switching processesare difficult, dissatisfied customers are likely to maintain business relationships with existing serviceproviders and resist the dissolution of the relationship (Port, 1980; Jaworski et al., 1988).

In the auto repair service industry, the level of switching costs can be view as both high or low. It seemsto be high because of the expertise required to fix a car and also the historical repair on the car helpssolve a new problem easier. It seems to be low because of the standardized design of the car

components and requires no special treatment as that of other service industries such as hospitals. As aresult, the moderating role of switching cost warrants further investigation.

Given past findings which suggest that switching costs play a significant moderating role in satisfactionand loyalty relationship, it may be assumed that the switching costs may impose a similar impact on therelationship between satisfaction and repurchase intention.

In other words, when perceived switching costs are high, customers may remain with their existingproviders despite their dissatisfaction, exhibiting lower association between satisfaction and repurchaseintention, due to perceptions that switching costs outweigh switching benefits. Thus:


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H3c: The higher the switching costs the weaker the relationship between satisfaction and

repurchase intentions.

2.11 Auto Service Industry

Based on Bowen (1990), services can be classified into three types, which are (1) high-contact,customized, personal services, such as restaurants, hospitals and hotel services, (2) moderate-contact,standardized, personal services, such as cafeterias, fast food restaurants and budget airlines services,and (3) moderate-contact, semi-customized, non-personal services, such as photo-finishing, appliancerepair, shoe repair and laundry and dry cleaning services.

Unlike previous research which has usually used the first two types of services for their satisfaction-repurchase intention studies, see Gwinneret al., 1998; Jones et al., 2000, we selected the last type ofservice for this study represented by auto repair service. Contrasted with the other two groups, autorepair services attend to things with less focus on interaction with customer. However, due to thecomplexity of terminologies and technologies used in auto services, this study is designed to give insightsinto how the interpersonal relationships and other switching barriers affect the satisfaction-repurchaseintentions relationship despite its belonging to non-personal service category.

3. RESEARCH DESIGN AND METHOD

3.1 Sampling and Data Collection

The conducted research surveyed from customers who recently received service from auto service repairshops in Samutprakarn, Thailand. A total sample of 400 surveys was collected. The cluster samplingmethod was used to select two provinces within Samutprakarn, which are Ampur Muang (225 surveysfrom 9 auto service shops), and Ampur Bangplee (175 surveys from 7 auto service shops).

In general, gender was approximately equally divided between (1) males and females (57.3% female)and (2) singles and married (47.5% single), whereas over half of the sample (1) was between 25 45

years old (64.6%), (2) had completed at least a college degree (56.3%), and (3) are working asprofessionals in private companies (53%), see Appendix A1 for details.

A majority of the sample (1) had less than 3 years of service experience with their current service shop(61.6%), and (2) received service one to two times per year (64.3%), see Appendix A2 for details.

3.2 Measures

Scale items for assessing key constructs, such as overall satisfaction, repurchase intentions,interpersonal relationship, attractiveness of alternatives and switching costs were adapted from priorstudies validated measures. The respondents were requested to indicate the extent to which they agreeor disagree, based on recent service transaction experience, by checking the appropriate response to the

questionnaire items regarding the key constructs of the study. For each item, except questions on overallsatisfaction and repurchase intentions, a five-point Likert scales anchored by 1 = strongly disagree and 5= strongly agree with 3 = neutral (neither agree nor disagree) as the midpoint were utilized. Questions onoverall satisfaction and repurchase intention were measured using a ten-point Semantic Differential scale.

The repurchase intention items were taken from Oliver & Swan (1989). The overall satisfaction scale wasadapted from Crosby & Stephens(1987), Oliver & Swan (1989), and Jones et al., (2000). Theinterpersonal relationships scale measuring the strength of the relationship with service personnel wasadapted from Gremler (1995). The attractiveness of alternatives items were adapted from Ping (1993),Rusbult (1980) and Jones et al., (2000). Finally, the switching costs measures were adapted from Jones


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(1998), divided into various dimensions of switching costs including searching cost, sunk cost, learningcost, contract cost, continuity cost and setup cost.

Two control variables regarding service usage were employed in this study, namely the length of theservice period with the current repair shop and the usage frequency. These two variables were includedsince customer behaviors might also affect repurchase intentions. The length of service period with thecurrent shop was included as a covariate to explain extraneous variance that might occur because of thedifference in satisfaction and repurchase intentions judged by a shorter service period compared to thosebased on a longer service period. Service frequency might also be a better predictor of repurchaseintentions.

The survey construct was pretested and modified so that there was only one common factor within eacharea and all loading factors were greater than 0.4 cutoff (Nunnally & Bernstein, 1994). The internal validityof the measurement model was examined by calculating the composite reliability and percentage ofvariance explained (Fornell & Larcker, 1981). Of the remaining items, all the reliability alphas were abovethe recommended 0.70 (Nunnally & Bernstein, 1994). The percentages of variance explained for eachmeasure are more than 50% of the variance (Bagozzi & Yi, 1988). Therefore, reliability and validity of theconstructs in this study are acceptable.

In Table 1, we present descriptive statistics and construct correlations for the variables of interest. The

correlations among dependent variables, satisfaction, and switching barriers are fairly low, i.e. lower than0.70. In addition, analysis-of-variance inflation factors revealed that none of the variance inflation factors(1.04 1.60) were above the cutoff value of 10 (Aiken & West, 1991). These indicated that themulticollinearity among dependent variables is not an issue here.

Table 1. Mean, Standard Deviations, and Correlation Matrices.

SAT PER AA SwC RI

Satisfaction (SAT) 8.302 1.325 1 0.377* -0.170 0.225* 0.806*

Interpersonal Relationships (PER) 3.550 0.726 1 0.031 0.529* 0.400*

Attractiveness of Alternatives (AA) 3.284 0.750 1 0.081 -0.045

Switching Cost (SwC) 3.396 0.575 1 0.258*

Repurchase Intentions (RI) 8.397 1.516 1

* Correlation is significant at the 0.05 level (two-tailed).

CorrelationsMean SDVariables

4. HYPOTHESIS TESTING

An analytic procedure for testing moderator effects proposed by Baron and Kenny (1986) was followed.The hierarchical moderated regression analysis was appropriate in order to examine moderating effects(Aiken & West, 1991; Newsom et al., 2003).

Each construct with multi-items was measured through a single index by averaging the item scores foreach construct. Then, the score of all variables were standardized, i.e. mean centered then standardized

by its standard deviation.

The hypothesis testing results are reported in Table 2. Model I is a main-effect only model including onlydirect effects of satisfaction and switching barriers on repurchase intentions (H1 and H2a H2c). Model IIadds interaction terms between satisfaction and switching barriers to the main-effect model to test thehypotheses on the moderating effect of switching barriers (H3a H3c).


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Table 2. Moderated Regression Analysis of the Effect of Switching Barriers on Satisfaction Repurchase Intention Relationship

t-

t-

Control Variables

Years of service usage 0.009 0.268 0.014 0.439

Frequency of service usage 0.034 1.045 0.039 1.191

Main Effects

Overall Satisfaction 0.728 *** 21.163 0.682 *** 18.454

Interpersonal Relationship 0.103 *** 2.648 0.112 *** 2.871

Attractiveness of Alternatives -0.032 -1.017 -0.042 -1.276

Overall Switching Costs 0.033 0.879 0.043 1.105

Interaction Effects

Overall Satisfaction

x Interpersonal Relationship -0.071 ** -2.090

x Attractiveness of Alternatives 0.023 0.679

x Overall Switching Costs -0.023 -0.495

2/ Adj. R

2

F for the model / Sig. F *** 71.975 ***

2

2

***

***

p

- **

p

- *

p

-

Main Effects Only

Main Effects &

Interaction Effects

For the result of direct effects on repurchase intentions, overall customer satisfaction is, as expected, agood powerful predictor of repurchase intentions, having a standardized coefficient of 0.728 (t= 21.163,p< 0.01). Consistent with the hypotheses H2a, interpersonal relationships are positively associated withrepurchase intentions. Contrary to Hypothesis H2b and H2c, the attractiveness of alternatives and theoverall switching costs were not associated with repurchase intentions, which is consistent with previousstudies and argument (Fornell, 1992; Jones et al., 2000, Lee et al., 2001, Yang & Peterson, 2004)

Results of the moderated regression model (Models II) lend support only for hypothesis H3a. Thesignificant interaction between interpersonal relationships and satisfaction indicates that the relationshipbetween satisfaction and repurchase intentions depends on the strength of the interpersonal

relationships. The interactions negative sign (= -0.071, t= -2.09,p < 0.05) supports our prediction that

as interpersonal relationships become stronger, the association between satisfaction and repurchaseintentions diminishes, see Figure 2 for the interaction plot of satisfaction and repurchase intentions onrepurchase intentions. Similarly, as satisfaction increases, the effect of interpersonal relationships onrepurchases intentions decreases.

However, contrary to hypotheses H3b and H3c, the contingency effects of the attractiveness ofalternatives and the level of switching costs are not supported (similar to results found by Yang &Peterson (2004), but contrary to Jones et al. (2000)).


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As a whole, the increased R2

in Model II were marginally significant (F = 4.097, p < 0.01). This indicatesthat including the moderating effect of switching barriers in the main-effect only model better explainscustomer repurchase intentions. In this case, the added moderating effect of interpersonal relationshipson the satisfaction repurchase intentions relationship enhances the predictive power of the model.

RepurchaseIntentions

Overall Satisfaction

Low High

Low Interpersonal

Relationship

High Interpersonal

Relationship

Figure 2. Interaction Plot of Satisfaction x Interpersonal Relationships

In addition, we trichotomized satisfaction and repurchase intentions scale and pursued further analysis.For repurchase intentions, two subgroups were formed and used as case selection criteria. Lowrepresents the lower third of these variables and High represents the upper third of these variables.

Similarly, another two subgroups were formed in terms of the value of overall satisfaction.

Table 3 shows the results from the moderated regression analysis on the four subgroups of data set. Forthe main effects, the direct effect of overall satisfaction on repurchase intentions remains significant for allcases; however, the direct effect of interpersonal relationships on repurchase intentions is statisticallysignificant only in the case of high repurchase intentions. Similarly, the moderating effect of interpersonalrelationships is only significant for the case of high repurchase intentions.

The results in Table 3 also indicate that the moderating effect from the attractiveness of alternatives onsatisfaction repurchase intentions will be statistically significant when either the level of repurchaseintentions or the level of satisfaction is low. See Figure 3 for the interaction plot between satisfaction andattractiveness of alternatives on repurchase intentions in the case of low satisfaction level. Thesemoderating effects both give positive signs indicating that for the low level of satisfaction or repurchaseintentions group, as the attractiveness of alternatives decreases, the association between overallsatisfaction and repurchase intentions diminishes.

In contrast to previous finding, e.g. Jones et al., 2000; Yang & Peterson, 2004, etc., of all the foursubgroups, switching costs have neither direct nor moderating effect on satisfaction repurchaseintentions relationships.


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Table 3. Moderated Regression Analysis of the Effect of Switching Barriers on Satisfaction Repurchase Intentions Relationships, by Levels of Repurchase Intentions and OverallSatisfaction.

Control Variables

Years of service usage -0.002 0.023 0.058 * -0.018

Frequency of service usage 0.034 0.081 -0.019 0.016

Main Effects

Overall Satisfaction 0.743 *** 0.674 *** 0.755 *** 0.591 ***

Personal Relationship 0.170 ** 0.104 0.113 0.011

Attractiveness of Alternatives 0.009 0.074 -0.112 0.237

Overall Switching Costs -0.048 0.122 -0.176 0.168

Interaction EffectsOverall Satisfaction

x Interpersonal Relationship -0.124 * -0.069 -0.083 -0.158

x Attractiveness of Alternatives -0.053 0.161 * 0.078 0.209 *

x Overall Switching Costs 0.086 -0.003 0.180 0.041

2/ Adj. R

2

F for the model / Sig. F 40.013 *** 27.498 *** 66.297 *** 27.114 ***

***p

- **p

- *p

-

When Repurchase Intentions

High Low

When Overall Satisfaction

High Low

RepurchaseIntentions

Overall Satisfaction (Low)

Low High

Low Attractiveness

of Alternatives

High Attractiveness

of Alternatives

Figure 3. Interaction Plot of Satisfaction x Attractiveness of Alternative for the Case of LowOverall Satisfaction


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5. DISCUSSION

5.1 Key Drivers of Repurchase Intentions

Despite some research indicating that satisfaction might not necessarily lead to repurchase intentions, forthe auto service industry, our results suggest that customer repurchase intentions can be increasedthrough enhancing customer satisfaction, i.e. meeting or exceeding customers service expectations.

In addition, for the role of switching barriers, interpersonal relationships are another critical driver forrepurchase intentions. Despite its belonging in the non-personnel service type of industry, auto repairservices exhibit a strong relationship between interpersonal relationships and repurchase intentions.

Surprisingly, the results indicate that, from the total sample analysis, the level of attractiveness ofalternatives and switching costs do not impose a significant direct effect on repurchase intentions.

5.2 Moderating Role of Switching Barriers

Despite of small marginal increase in the explained variance of repurchase intentions by adding theinteraction terms into the function, this marginal increase in predictive power is statistically significant,

based on the significant F-value in Table 2. This indicates that there were mediating effects of switchingbarriers, especially the interpersonal relationships, on satisfaction-repurchase intentions relationships.

However, the moderating effect of the switching costs is not significant. Yang & Peterson (2004) foundsimilar results and explained that this was caused by the conflicting roles of switching costs. On onehand, higher switching costs reduce customer satisfaction and eventually decrease customer repurchaseintentions. On the other hand, higher switching costs impose higher barriers for the switching providersand thus help increase customer repurchase intentions. These opposing consequences could lead to thelack of significant moderating effect of switching costs on satisfaction-repurchase intentions.

The moderating effect of the attractiveness of alternatives is also not significant for the whole sampleanalysis. However, with a closer analysis of subgroups, it reveals that the moderating effect of theattractiveness of alternatives does exist when customer satisfaction or repurchase intentions are low.

When customer satisfaction is low, customers tend to look for other alternatives and reconsider theirrepurchase decision. As a result, at a higher degree of competing alternatives, the association betweensatisfaction and repurchase intentions intensified, i.e. a little lower in satisfaction may lead to a greaterdrop in repurchase intentions compared to the case of low attractiveness of alternatives.

6. BUSINESS IMPLICATION

Increasing customer satisfaction has been long known as a key factor to increase repurchase intention;however, even if an auto repair shop has gained excellence in customer satisfaction, what else can havean impact on repurchase intentions? Courtesy, knowledgeable and helpful staff, the opening of acompetitor nearby or the cost of explaining past service record to the new shop are seem to have aneffect on repurchase intentions.

Here, we found that the relationship between satisfaction and repurchase intentions is intervened byinterpersonal relationships and attractiveness of alternatives, while not of the switching costs.

For service managers, when developing strategies, they need to consider that the impact of customersatisfaction on customer repurchase intentions is dependent on both the interpersonal relationships andattractiveness of alternatives, especially for the low level of satisfaction group of customers. This suggeststhat service managers may be able to increase repurchase intentions of their customers throughenhancing interpersonal relationships or marketing strategies. Thus, the service manager must not only


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be aware of the level of satisfaction regularly surveyed from the customers, but also of customersopinions on interpersonal relationships and attractiveness of alternatives.

7. LIMITATION AND FUTURE RESEARCH

First, this study was done on a cross-sectional basis; it would be desirable to carry out a longitudinalanalysis in order to better assess causality. Second, the auto service industry is selected, as a sample ofmoderate-contact, semi-customized, non-personal services. Other industries such as photo-finishing,appliance repair or laundry and dry cleaning services should also be investigated to confirm the resultsdrawn from this study.

Lastly, our sample was drawn from a suburban area of Bangkok, where the density of service repairshops is less compared to the metropolitan area. This may account for the relatively weak interactionbetween the attractiveness of alternatives and switching costs on satisfaction-repurchase intentionsrelationship. It would be interesting and may result in different conclusions should this model be in othercountries.

AUTHOR PROFILE:

Dr. Karin Boonlertvanich is a lecturer in Graduate School of Commerce, Burapha University, Thailand.He earned his Ph.D. at Georgia Institute of Technology in 2005.


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Appendix

A1: Demographics of the Samples

Demographics Number Percentage

Sex

Male 229 57.3

Female 171 42.8

Age

< 25 56 14.0

25 - 34 155 38.8

35 - 44 103 25.8

45 - 54 64 16.0

> 54 22 5.5

Marital Status

Single 190 47.5Married 189 47.3

Divorced 21 5.3

Education Attainment

Secondary School or lower 89 22.3

Diploma 86 21.5

Bachelor Degree 184 46.0

Graduate Degree 41 10.3

Occupation

Professional 212 53.0

Entrepreneurs 105 26.3

Student 37 9.3

Government officer 35 8.8

State Enterprise Officer 4 1.0

Retired, Housewife 4 1.0

Self-emloyed 3 0.8

A2: Auto Service Usage Profile

Service Repair Shop Usage Number Percentage

Duration of service with this service shop

Less than 1 year 89 22.3

1 - 2 years 96 24.0

2 - 3 years 61 15.33 - 5 years 72 18.0

More than 5 years 38 9.5

N/A 44 11.0

Frequency of service with this service shop

Once per year 128 32.0

Twice per year 129 32.3

Three times per year 48 12.0

More than three times per year 95 23.8


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A3: Measurement Constructs

Construct Measures

Satisfaction (SAT)

SAT 1

SAT 2

SAT 3

SAT 4 SAT 5

SAT 6

Interpersonal Relationship (PER)

PER 1 I feel like there is a relationship developed between this service

0.83 0.68 0.85 68.74

PER 2

PER 3

PER 4

Attractiveness of Alternatives (AA)

AA 1

AA 2 If I need to f ind other service shops, there are many other good

0.84 0.74

AA 3

AA 4 There can be other service shop which I would probably be at least

0.89 0.80

AA 5 I know of oher service shops where I could be more satisfied

0.86 0.77

Switching Costs (SwC)

Search Costs (SH)

SH 1 It would take a lot of time and effort to locate other shop in case for

0.68 0.55 0.87 61.02

SH 2 I would have to search for many other shops, if I changed from this

0.78 0.68

SH 3

SH 4 If I have to changed shop, I have to spend a lot of effort to find a

0.80 0.69

SH 5 It consumes a lot of wasted time, money and effort to switch to

0.83 0.73

SH 6 Sunk Costs (SC)

SC 1 A lot of energy, time and effort have gone into building and

0.88 0.71 0.82 74.50

SC 2

SC 3 Learning Costs (LC)

LC 1 If I were to switch service shops, I would have to learn how things

0.84 0.72 0.88 73.37

LC 2 I would be unfamiliar with the service process of a new service

0.84 0.72

LC 3 If I changed service shop, I would have to learn how the system

0.88 0.78

LC 4 Changing service shops would mean I would have to learn about

0.86 0.74Contractual Costs (CC)

CC 1 This service shop provides me with particular previleges I would

0.79 0.63 0.85 68.96

CC 2 I have been continuously received certain benefits from this service

0.83 0.69

CC 3 There are certain benefits I would not retain if I were to switch

CC 4 Continuity Costs (CT)

CT 1 I am not sure what the level of service would be if I switched to a

0.84 0.71 0.87 71.64

CT 2 If I were to change service shop, the service I might receive at the

0.83 0.69

CT 3 I feel the risk of changing to another service shop because of

0.86 0.75CT 4 The service from another repair shop could be worse than the

0.85 0.73Setup Costs (SE)

SE 1 It would take a lot of time and effort on my part to explain to the

0.94 0.77 0.87 88.40

SE 2

Repurchase Intention (RI)

RI 1

RI 2

RI 3

RI 4

Factor

Loading

Item-Total

Correlation

% of Variance

ExplainedAlpha


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