An explanation of consumer trust recovery in a food retailer

An organization trusted by consumers enjoys a number of benefits. Unfortunately, instances of trust-damaging events involving organizations happen often. Damaged consumer trust in an organization has numerous negative consequences for the organization and for consumers. Currently, there is a paucity of theory about consumer trust recovery. So, understanding why and how consumer trust recovery occurs is timely, and theoretically and practically relevant. However, the findings from this study suggest that we need to distinguish between two kinds of consumer trust recovery. The first (I call it unconscious consumer trust recovery) refers to trust recovery that occurs without the consumer being fully conscious of it. In other words, a consumer is aware of their damaged trust during the scandal, but is not aware that their trust in the organization has improved. The consumer does not think about his or her recovered trust, just as they did not think about their level of trust before the scandal. The consumer trust is habitual. The second (I call it conscious consumer trust recovery) refers to an improvement in damaged trust where the consumer is fully conscious of their trust recovery. In other words, in conscious trust recovery the consumer is aware that the scandal damaged their trust in the organization. Also, after the scandal, in contrast to unconscious trust recovery, in conscious trust recovery the consumer is also fully aware that he trusts the organization as much or more than during the scandal. My aim is to inductively develop a theory explaining each type of consumer trust recovery. To do so, I use Charmazian grounded theory methodology, because this methodology is developed for theory-building from data and is aligned with the philosophical underpinnings of this study. The empirical context for this study is the meat adulteration scandal (“the horse meat scandal”) in 2013 in the UK. I collect and analyse empirical data about both types of trust recovery in an organization from 31 consumers that experienced both types. My analysis shows that when consumers perceive the scandal as less important, they experience unconscious trust recovery. This happens because the reduced importance of the scandal leads to a shift in consumers’ attention, which in turn leads to their inattentiveness to the scandal. Consumer inattentiveness is an immediate antecedent of unconscious trust recovery. Conscious consumer trust recovery occurs because consumers see cues indicating to them that the food retailer has improved product control systems, which in turn leads to consumer perceptions of the organization’s renewed ability. Consumer perception of renewed ability is an immediate antecedent of their conscious trust recovery. My findings lead me to make three main theoretical contributions to the theory of trust recovery in general and to consumer trust recovery in particular. The first contribution lies in showing that there are two types of consumer trust recovery in an organization, not one, as previously conceptualised, and that the same consumers can experience both types. The second contribution is a theory of unconscious consumer trust recovery in an organization that involves three concepts: consumers’ perceived importance of the scandal, consumers’ shift of attention, and consumer inattentiveness. The third contribution is the finding that conscious recovery of consumer trust occurs even when existing theory of trust recovery would predict that it would not. This study can help managers aiming to repair consumer trust in an organization by identifying a set of antecedents and underlying mechanisms that can guide such trust repair.

Evaluating consumer price perception: a mental accounting and frame dependent perspective

In this thesis, we evaluate consumer purchase behaviour from the perspective of heuristic decision making. Heuristic decision processes are quick and easy mental shortcuts, adopted by individuals to reduce the amount of time spent in decision making. In particular, we examine those heuristics which are caused by framing – prospect theory and mental accounting, and examine these within price related decision scenarios. The impact of price framing on consumer behaviour has been studied under the broad umbrella of reference price, which suggests that decision makers use reference points as standards of comparison when making a purchase decision. We investigate four reference points - a retailer's past prices, a competitor's current prices, a competitor's past prices, and consumers' expectation of immediate future price changes, to further our understanding of the impact of price framing on mental accounting, and in turn, contribute to the growing body of reference price literature in Marketing research. We carry out experiments in which levels of price frame and monetary outcomes are manipulated in repeated measures analysis of variance (ANOVA). Our results show that where these reference points are clearly specified in decision problems, price framing significantly affects consumers' perceptions of monetary gains derived through discounts, and leads to reversals in consumer preferences. We also found that monetary losses were not sensitive to price frame manipulations.