As stated in my earlier post ‘antecedents to consumer confusion‘, I shall focus on consequences of consumer confusion in this post. The earlier post focused on three important antecedents to consumer confusion namely; expectations, attribute confusion and information confusion in the context of financial services industry (i.e. banks, insurance. credit card, mortgage and other such investment firms).

In this post I will focus on three consequences of consumer confusion: (1) attribute satisfaction; (b) information satisfaction and (c) overall satisfaction.

consumer confusion

Using quantitative methodology and established scales in the fields of psychology and consumer behaviour, we empirically tested the antecedents and consequences of consumer confusion. The findings suggest that expectations, attribute confusion and information confusion significantly affect overall confusion.

Furthermore, we also found that attribute confusion significantly affects attribute and information satisfaction however expectations do not. It was observed that information confusion significantly affected information satisfaction but did not affect attribute satisfaction. We also found the significant impact of overall confusion; attribute satisfaction and information satisfaction on purchase decision. Our results concur with the earlier research, that consumer confusion is a multi-dimensional phenomenon with significant impact on behavioural intentions. There are several theoretical and managerial implications from the above findings.

Increasing understanding of consumers and decreasing confusion is one of the major aims of any organization. Moreover, in markets like financial services, where many similarities of expectations, attributes and information exist within consumer minds, reduction in consumer confusion can become a source of competitive advantage. The framework for this study provides managers first hand idea of where and how consumer confusion is caused. This will assist managers in optimizing their organizational resources to manage the multi-faceted phenomenon of consumer confusion. Managers treating consumer confusion as a single tier construct may receive undesirable results. For example, just improving the product or service feature may reduce attribute confusion. However, poor communication and highly raised expectations may still elevate the overall confusion. Similarly, a good communication campaign with a less differentiated product or service may also elevate confusion in consumers’ minds.

The findings indicate that information confusion has an impact on information satisfaction and which in turn, has a strong influence on purchase decision. In the context of financial services industry, this issue merits consideration particularly where consumers are faced with wide ranging technical and complex information on the financial products which can create implications for purchase decision.

Managers can also use the study instrument in developing competitive intelligence by comparing the confusion caused by theirs as well as competitors’ products or services. This, we believe will yield rich managerial insights for firms and develop a better and unique campaign in comparison to competitors. The findings highlight the importance of prior expectations in causing confusion. This means that if the company communicates itself via advertisements and other means as a single entity and does not act like one in real-life, there are increased chances that it will make the consumers feel confused. The companies will have to simplify their offer to attract consumers. This is also reflected in the phenomena of attribute and information confusion. To avoid attribute and information confusion, managers will have to differentiate their product and simplify their communication to the consumers. While this might not be easy especially because of the legal requirements associated with FSI products, it is highly desirable.

The impact of confusion on satisfaction and purchase decision also needs further attention. It was observed that expectations did not affect the attribute or information satisfaction. This suggests that consumers do not see their expectations to be affecting their satisfaction, which is contradictory to earlier research in the area. Moreover, the significant impact of attribute confusion on attribute and information satisfaction indicates that the tangible and intangible aspects associated with the service have significant impact on consumer engagement with the service. This requires much close scrutiny by managers as there is little differentiation observed in FSIs with regard to attribute differentiation. If in further studies, this is found to be the case, then managers need serious reconsideration with regards to their branding, positioning and differentiation efforts. The significant impact of attribute confusion on attribute and information satisfaction concurs with earlier studies which focused on technology products. This suggests that the impact of confusion on satisfaction is not just industry specific. Therefore, managers could use our study dimensions to check the impact of confusion within other industries.

The findings also reveal the significant impact of information confusion on information satisfaction. However the impact is non-significant in the case of attribute satisfaction. Therefore, we suggest the use of attribute and information satisfaction as separate constructs in future studies rather than using overall satisfaction as a single construct. Furthermore, the study findings also highlight the complexity of relationship between the constructs. Managers should ensure that they treat these constructs as stand-alone rather than assuming a causal relationship.

Reference:
Paurav Shukla, Madhumita Banerjee, Phani Tej Adidam (2010), “Consumer Confusion in the Financial Services Industry: Antecedents and Consequences”, in Advances in Consumer Research Volume 37, eds. Margaret C. Campbell and Jeff Inman and Rik Pieters, Duluth, MN : Association for Consumer Research.

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It is only the later part of the 20th century financial services institutions (FSIs) started morphing into a different shape altogether. Previously, a bank provided only banking services (i.e. mostly a place where you can deposit and withdraw money or similar assets). However, banks changed their role in a short span of time from consumer banking to multiple financial service providers (i.e. banking, mortgages, insurance, credit cards, capital and bond market services, internet banking, phone banking, investment finance, etc.). This new management of consumer credit and consumer debt had interesting implications for their marketing financial services.

First, in trying to cover every corner of the envisaged legal problems, banks already had lengthy contract papers. However, with multiple services consumers were now subjected to a combination of plentiful and conflicting information, an excessive number of brands, and product replications.

Second, this one-stop service philosophy was brought about to create ease in transactions. However, as the number of services increased, the complexity did too. However, on the other hand, it created false confidence within the consumers regarding their financial judgment. Each of the above mentioned financial services require different set of skills to manage them however, a single provide and one-stop-shopping made consumers think that capital and bond markets investments were as easy as banking.

Researchers suggest that product variety can have a significantly positive effect on consumer decision making however, results from empirical studies found that over-choice and overload of information deters customers from engaging with a service provider due to confusion over a product’s value.

The multiplicity of financial services, which created the false confidence, may have similar results relating to consumer confusion and service value judgments as observed in other industries where product proliferations occurred. However, prior studies have not looked at consumer confusion in financial service industries.

In a recent paper, published in the association for consumer research conference, my co-authors and I, attempted to conceptualize and empirically test a model of consumer confusion in financial services industry. I am going to address the first research question in this post focusing on ‘what are the causes of consumer confusion in financial services industry?’

Looking at prior studies we believe that confusion is fuelled by consumers’ general expectations, attribute similarity between products or services (i.e. attribute confusion), and overload, conflict or ambiguity of information (i.e. information confusion).

Expectations
Most researchers share a similar opinion that consumer expectations, prior to a service encounter, impact on customers’ evaluation of service performance. In the service literature the expectations construct has been divided into two parts namely, predictive expectations and evaluative expectations. The predictive expectations construct is associated with the level of performance and evaluative expectations construct is associated with an estimation of performance. For example, a consumer holding all his financial transactions including banking, mortgage, credit cards, and personal loans among others with a single FSI (approximately 40.5% of all FSI customers in the UK belong to this category) calls the customer services department for an emergency situation such as stolen cards or identity fraud. At this juncture, the consumer expects the call to be answered in reasonable time (predictive expectations) and also expects that whoever answers the call is in the right frame of mind and possesses knowledge related to the problem (evaluative expectations). In most of the FSIs, all the service departments operate separately and therefore the consumers will be asked to call each of them separately leaving the consumer angry, anxious and confused as to is he or she dealing with a single FSI or multiple FSIs? Therefore, we believed that expectations have a direct relation with overall consumer confusion.

Attribute confusion
Several researchers suggest that tangible and intangible attributes of products or services such as the similarity of the offer, lead to consumer confusion. For example brand image influences the manner in which consumers perceive a product. Similarity in available tangible and intangible features of products, services and brands in the FSI sector creates the likelihood of consumer confusion. For example, when a consumer looks at a brochure from any FSI with regard to a specific service, the terms of the services or the look and feel may hardly be different. Being a multi-ethnic and multi-cultural team we could observe this phenomenon in more than 1 country and therefore thought about the impact of attribute confusion on overall confusion.

Information confusion
Information relating to a product or service aims not only at informing but also persuading consumers to make a specific choice. We already know that consumers have limitations in their capacity to assimilate and process large amounts of information, which may lead to information confusion. Furthermore, researchers have suggested that information confusion influences the effectiveness of consumer decision making. This impact can be attributed to two phenomena namely; (a) consumers’ inability to locate the relevant information due to the sheer volume of information (overload); (b) oversight in identifying critical insights out of the information presented (ambiguity) and (c) variety of information provided through various information sources (conflict).

In this marketing research study we measured the impact of the above three antecedents on consumer confusion. Without going into the details of measurement, scaling and structural models, I shall now focus on the results.

The findings suggest that the hypothesized antecedents namely; expectations, attribute confusion and information confusion significantly affect overall confusion.

Increasing understanding of consumers and decreasing confusion is one of the major aims of any organization. Moreover, in markets like financial services, where many similarities of expectations, attributes and information exist within consumer minds, reduction in consumer confusion can become a source of competitive advantage. The framework we used for this study provides managers with a first hand idea of where and how consumer confusion is caused. This will assist managers in optimizing their organizational resources to manage the multi-faceted phenomenon of consumer confusion. Managers treating consumer confusion as a single tier construct may receive undesirable results. For example, just improving the product or service feature may reduce attribute confusion. However, poor communication and highly raised expectations may still elevate the overall confusion. Similarly, a good communication campaign with a less differentiated product or service may also elevate confusion in consumers’ minds.

In the next blog post, I shall focus on the second part of this study which relates to the consequences of consumer confusion.

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