Why Customers Stay: An Analysis of Service Quality and Switching Cost on Choice Behavior using a Catastrophe Model

Abstract

Convenience stores in Taiwan have had remarkable successes with retailing delivery services by integrating e-commerce and logistics systems to form a new retail delivery model: "online shopping with pick-ups at convenience stores." Though ingenious, intensified competition and increasingly complex customer behavior, it has become increasingly difficult for marketing practitioners to maintain customer loyalty. To help solve this problem, this study explores the relationships between the service quality and switching cost on choice behavior using a catastrophe model. It also applies GEMCAT II to actual market data to demonstrate the model's use in choice behavior. The present analysis shows that, service quality and switching cost are the two major factors that influence choice behavior, and that a catastrophe phenomenon can occur with a high switching cost