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IMDS 109,2

Customer segmentation based on commitment and ICT use

Irene Gil-Saura and Maria-Eugenia Ruiz-Molina
Department of Marketing, University of Valencia, Valencia, Spain

206

Received 16 May 2008 Abstract Revised 24 August 2008 Accepted 4 September 2008 Purpose The purpose of this paper is to determine and characterize groups of retail customers,

based on their perception of commitment to the retailer and the degree of use of its technological equipment. Design/methodology/approach A CHAID algorithm is performed and differences between the resulting segments are tested through the analysis of variance. Findings Four segments are obtained that differ signicantly in commitment to the retailer and level of use of the stores information and communication technology (ICT) facilities, as well as in other variables related to the retailer-consumer relationship. In particular, customer segments differ in their use of retailers payment facilities. Practical implications The study provides a typology of consumers that enable retailers to take efcient decisions regarding their technology investments and to design effective marketing strategies. Originality/value Although literature concerning interorganizational relationships has reported that commitment is inuenced to a great extent by supplier investment in technology, the relation between these variables in retailing has received little attention. The paper explores the relationship between commitment and use of retailers ICT solutions for retail customers. Keywords Communication technologies, Market segmentation, Retailing Paper type Research paper

Industrial Management & Data Systems Vol. 109 No. 2, 2009 pp. 206-223 q Emerald Group Publishing Limited 0263-5577 DOI 10.1108/02635570910930109

1. Introduction Marketing focuses on the establishment, development and maintenance of continuous relations between buyer and seller as a source of mutual benets for both parts (AMA, 2004). Marketing managers should be able to understand the factors that explain the establishment of long-lasting relations in order to manage their customer portfolio in an effective way (Srivastava et al., 2001). Given the existing highly competitive market, the literature recommends customer segmentation (Shani and Chalasani, 1992). Diverse variables, mainly of a descriptive nature, have been considered in this segmentation process. Nevertheless, due to the increasing complexity and diversity of consumer behavior, these criteria are less and less valid. Thus, following a relational approach, one of the suggested segmentation criteria is based on commitment (Story and Hess, 2006). In this way, by dening segments of consumers with different assessments of their commitment to their retailers, retail managers can design marketing strategies according to the characteristics of each type of customer. Notwithstanding, Lewis and Soureli (2006) have suggested that maintaining a portfolio of loyal clients involves increasing difculties in the present context in which
This research has been nanced by the Spanish Ministry of Education and Science ( Projects ref.: SEJ2004-05988 and SEJ2007-66054/ECON).

many economic sectors are moving from personal communications with the customer to phone or online customer service. In this sense, whereas the information and communication technologies (ICT) have allowed the fast growth of the service industry through enhanced safety, convenience, accurateness, exibility, variety, and reliability of business internal processes (Lapierre, 2000), improving the total efciency of the supply chain through higher levels of commitment and a long-term orientation (Kent and Mentzer, 2003), there are segments of consumers who consider the service suppliers technology as a source of dissatisfaction (Mick and Fournier, 1998; Parasuraman and Colby, 2001; Burke, 2002; Walker et al., 2002; Snellman and Vihtkari, 2003). Furthermore, given the wide and heterogeneous range of ICT solutions in marketing channels, several technological solutions might exert a signicantly different inuence in customer value in the context of retail-consumer relationships. Even if the relationship between commitment and ICT has been investigated and proven in the service industry, scarce attention has been paid in the retailing context. Thus, from a relational marketing approach, the present paper aims at analyzing the existence of differentiated segments of retail consumers regarding their commitment level and the inuence on this variable of the use of retailers ICT solutions. In particular, the study is developed on two sectors of personal consumer retail goods (grocery and textile/footwear) and two types of household goods stores (electronics-household appliances, and furniture-decoration). 2. Theoretical framework 2.1 Commitment and ICT in the service industry relationships Commitment, dened as the belief of an exchange partner that the ongoing relationship with another is so important as to warrant maximum efforts at maintaining it (Morgan and Hunt, 1994, p. 23), has been considered as one of the main determinants in the establishment of long-term relations between the provider and customer (Ulaga, 2003; Ryssel et al., 2004). Literature has reported the positive inuence that providers investment in ICT exerts on customer commitment (Kent and Mentzer, 2003). In particular, buyers feel more optimistic towards the future of the relationship with their providers when they perceive that they make an effort to maintain the relationship, with investments effected by providers generating trust in buyers over the extent of the sellers commitment to the relationship (Sharland, 1997; Kent and Mentzer, 2003). This nding has been explained by the fact that technologies can improve customer relationship management and service customization (Kaynama et al., 2003). Nevertheless, the mere implementation of ICT solutions does not guarantee that the provider will be able to establish closer relationships with customers (Larson and Kulchitsky, 2000), since their inuence depends on several factors , e.g. relationship atmosphere (Ryssel et al., 2004), market conditions (Sharland, 1997) which means that the cost of building a relationship may not be worth the investment costs, since the absence of these investments has neither an apparent impact on the perception of relationship value nor on the expected duration of the relationship. Furthermore, it has been pointed out that technology can generate a feeling of isolation, lack of control or ineptitude (Mick and Fournier, 1998). In particular, Snellman and Vihtkari (2003) observe that there is approximately the same number of complaints about an unsatisfactory service in traditional banking services and in

Customer segmentation and ICT use 207

IMDS 109,2

208

services based on new technologies. This is explained on the basis of rude or uncaring employee behavior in traditional banking services and temporal factors as the most frequent causes of dissatisfaction, whereas in technology-based services the most usual failures are related to errors in service design. Additionally, technology can be a source of satisfaction or dissatisfaction depending on customer attitude towards technology (Parasuraman and Colby, 2001; Walker et al., 2002) and/or employee response (Meuter et al., 2000; Bitner, 2001). Finally, there may be differentiated assessments regarding the retailers technologies and their inuence on rm results depending on the sector of activity. In this regard, Burke (2002) suggests that technological applications must be designed according to the particular requirements of the customers and the characteristics of the products sold by the store. For instance, the author states that customers require more information and contact with sales personnel for less frequently purchased product categories, such as electric household appliances, whereas technical support enabling process automation and time savings are more appreciated for frequent-use goods, e.g. grocery. 2.2 Antecedents and consequents of relationships in retailing The relational marketing literature has pointed to the existence of a relationship between commitment and customer value that is inuenced by customer perception of the benets and sacrices and switching costs of the relationship with the service provider. Additionally, commitment is related to several variables such as perceived quality, trust, customer satisfaction with the retailer, as well as loyalty towards the store (Reynolds and Beatty, 1999; Hennig-Thurau et al., 2002; Yen and Gwinner, 2003; Park and Kim, 2003; Marzo-Navarro et al., 2004). Ulaga and Eggert (2002) dene customer value as the trade-off between the multiple benets and sacrices of a suppliers offering as perceived by customers. The benets that customers receive as a result of their exchanges in their long-term relationships with service providers have been called relational benets (Gwinner et al., 1998; Hennig-Thurau et al., 2002). Three types of relational benets have been identied, i.e. condence benets, social benets and special treatment benets (Gwinner et al., 1998; Patterson and Smith, 2001; Hennig-Thurau et al., 2002; Yen and Gwinner, 2003; Park and Kim, 2003). Condence benets include psychological factors, such as less anxiety and the perception of an inferior risk in the result of the transaction. Social benets refer to the establishment of personal bonds between customers and store employees, which are translated into familiarity and even friendship. Finally, special treatment benets combine economic benets and service customization, e.g. discounts, time savings, and additional services not available to other customers derived from the consideration of special client due to the relationship history. In contrast to relational benets, the literature on customer value has emphasized the importance of monetary as well as non-monetary sacrices of the relationship and switching costs, e.g. search costs for alternative providers, costs of establishing a new relationship, the need to explain preferences and provide information to the new supplier, functional risk derived from the fact that the new supplier may be not as good as the previous one, and the loss of special treatment benets and social bonds (Brady et al., 2001; Patterson and Smith, 2001, 2003; Lewis and Soureli, 2006).

Furthermore, Morgan and Hunt (1994) have stated that the development of long-term relationships depends to a great extent on relationship characteristics, such as commitment and trust. The more intensive the implementation of ICT by the retailer, the higher the level of commitment between the channel members, since additional bonds between the parties to the relationship are generated. Nevertheless, ICT does not generate trust, since trust stems from affective bonds and is not planned (Rebolledo et al., 2005). Additionally, several studies have emphasized the importance of customer satisfaction as a result of the relationship and antecedent of customer loyalty towards the store (Dick and Basu, 1994; Bloemer and Ruyter, 1998). In contrast, it has been argued that several satised customers might show loyal behaviors such as purchase repetition of purchase because of pure convenience, lack of alternatives or inertia (Schultz, 2005). In this sense, satisfaction discourages the search for alternatives, but does not act as a barrier for provider switching behaviors as effectively as commitment does. Thus, commitment requires satisfaction, but the latter does not lead to commitment unless trust is present. These arguments assume the denition of loyalty as the combination of a positive attitude and purchase repetition (Dick and Basu, 1994). Committed customers do not only show loyal behaviors but also imply themselves emotionally in the continuity of the relationship (Story and Hess, 2006), with satisfaction as a weak predictor of customer loyalty (Oliver, 1999). While customer loyalty cards and customer relationship management have proved to be effective for achieving customer loyalty in retail establishments (Chao et al., 2007; Smith, 2008), the contribution of other technologies has not been explored yet. Even if ICT investment decisions are highly inuenced by internal conditions e.g. rm size (Chuang et al., 2007; Chen and Dwivedi, 2007), learning organization (Fairuz et al., 2008), owner characteristics (Chuang et al., 2007), etc. customer characteristics and their relationship with the company should be considered when evaluating investments (Ryssel et al., 2004). In view of the above evidence, it is expected that commitment and intensity of use of the retailers ICT will enable segments of heterogeneous consumers to be identied that differ signicantly regarding these variables as well as their antecedents and consequences of the relationship with the retailer. 3. Methodology In order to achieve the proposed objectives, a quantitative research is performed through a survey. A questionnaire is elaborated considering the most relevant variables pointed out in the literature as well as a series of consumer classication variables. Table I shows the main characteristics of the research. The database of retailing companies is obtained from the available secondary information. In particular, we have selected retail companies with the highest value of assets for each retail activity. The retailers have been located from the national classication of economic activities and/or tax on economic activities codes in the SABI database, that contains the annual reports of major Spanish companies. The consumers sample was randomly selected at the exit of the store following a probability-sampling process in order to guarantee that the sample is representative of the population in

Customer segmentation and ICT use 209

IMDS 109,2

Universe

210

Geographical scope Sample size Sample design Data collection period Statistical techniques

Table I. Technical details of the research

Statistical software

Customers of retail stores selling Grocery Clothing/footwear Electronics/electrical appliances Furniture/wood/decoration Spain 400 consumers (100 for each activity) of 51 stores Personal survey at the store exit September-October 2007 Descriptive analysis CHAID PCA Analysis of reliability of scales ANOVA SPSS version 15.0

terms of gender and age. Both the retailer sample (n 51) and the consumer sample (n 400) are proportionally distributed. Regarding the questionnaire, the items are measured on a ve-point Likert scale from 1 ( strongly disagree) to 5 ( strongly agree) and have been adapted from the literature, as detailed in Table II. Cronbachs a coefcient was calculated to verify scale reliability. Finally, sociodemographic data to classify interviewees is gathered, e.g. gender, age and level of studies, as well as some measures of the relationship with the retailer, such as length of patronage and percentage of expenditure in the store on total expenditure in this product category. With this data, a principal component analysis (PCA) is performed in order to group the items used to measure perceived relational benets in factors. Secondly, an automatic interaction detection (AID) is conducted considering commitment as the key variable in the segmentation process. The AID is a nonparametric statistical analysis technique that is used to study the relation of dependency between a dependent
No of items 1 16 4 1 15 6 1 1 1 7

Variable Commitment Perceived intensity of use of ICT Assessment of retail ICT Satisfaction with the retailers technology Relationship benets Sacrices and switch costs Quality of the relation with the store Trust Satisfaction with the retailer Global loyalty

Adapted from Hennig-Thurau (2004) Authors proposal Wu et al. (2006) Authors proposal Gwinner et al. (1998) Patterson and Smith (2001) Wong (2004) Ball et al. (2006) Authors proposal Srinivasan et al. (2002) and Anderson and Srinivasan (2003)

Table II. Analyzed variables and scales

Note: The questions are fully developed in the tables in the results section

variable and several predicting variables (independent or explanatory variables) operating sequentially through analysis of variance (ANOVA) in order to detect those independent variables that contribute the most to explaining the variability in the dependent variable (Kass, 1980). In particular, the CHAID procedure subdivides a dataset into exclusive and exhaustive segments that are compared through the chi 2 statistic (Magidson, 1993). CHAID has been widely applied in Social Sciences, acquiring special relevance in market research for market segmentation (MacLachlan and Johansson, 1981). In the present study, CHAID has been used for characterizing customer commitment based on the intensity of use of the retailers ICT solutions. This is expected to provide heterogeneous segments that differ signicantly not only in the dependent and independent variables, but also regarding other variables. The resulting segments are compared through an ANOVA regarding other variables. In this way, we aim at determining if the subjects belonging to each group constitute a customer segment and, thus, also behave in a signicantly different way regarding variables that have not been considered for the CHAID. Finally, the distinguishing features of the customer segments are identied. 4. Results In order to classify retail customers based on their commitment with the retailer and their intensity of use of the retail technologies, a CHAID algorithm is used considering commitment with the retailer as the dependent variable, and the intensity of use of several retailers ICT solutions by the consumer as independent variables. All the variables were scored on a scale from 1 to 5. The results are shown graphically in Figure 1 and numerically in Table III. As can be seen, the CHAID algorithm generates four nal segments of consumers. In order to further characterize each nal segment, we test the signicance of the differences between segments regarding commitment and the intensity of use of the retailers ICT. The average values for each segment and the values of the ANOVA test are shown in Table IV. Regarding the dependant variable for the CHAID algorithm, i.e. customer commitment with the retailer, it is observed that the third segment shows a signicantly higher average value in comparison to the other segments. Customers in this segment are characterized by an intermediate use of the technologies implemented by the retailer. In contrast to the strong commitment segment, there are three segments with lower levels of commitment and different degrees of use of the retailers ICT solutions. In this sense, the rst segment shows signicantly lower levels of use of the retailers technologies than the other clusters. In particular, the lowest scores are observed for payment methods such as bank transfer payment, mobile payment or payment upon reception, whose scores are near to the minimum point on the scale. The fourth segment shows higher values regarding the intensity of use of the different technologies, with special emphasis on loyalty program/card and store card payment. The second segment shows intermediate values of use of the retailers technologies but near to the level of use of the segment of technological customers regarding internet and communication technologies usage to contact the retailer.

Customer segmentation and ICT use 211

IMDS 109,2

Node 0 Commitment ave.: 3.438 N = 400 Bank transfer payment F = 20.750 (corrected p-value = 0.000) =2 Node 1 Commitment ave.: 3.212 N = 160 >2 Node 2 Commitment ave.: 3.588 N = 240 Credit/debit card payment F = 9.390 (corrected p-value = 0.012) >4 =4 Node 3 Commitment ave.: 3.357 N = 70 Node 4 Commitment ave.: 3.682 N = 170

212

Store card payment F = 10.857 (corrected p-value = 0.011) =4 >4

Figure 1. Classication tree generated by CHAID algorithm

Node 5 Commitment ave.: 3.821 N = 106

Node 6 Commitment ave.: 3.453 N = 64

Node 1 3 5 6 Table III. Descriptive statistics of nal nodes

Final segment 1 2 3 4

Size 160 70 106 64

Average commitment 3.212 3.357 3.821 3.453

SD 0.872 0.799 0.644 0.795

Characteristics Bank transfer payment # 2 Bank transfer payment . 2 Credit/debit card payment #4 Bank transfer payment . 2 Credit/debit card payment .4 Store card payment #4 Bank transfer payment . 2 Credit/debit card payment .4 Store card payment .4

Notes: Risk estimate 0.621; standard error 0.053

In order to further explore the assessment of the retailers ICT in each segment, consumers are requested to rank on a scale from 1 to 5 their agreement with some assertions related to the technologies implemented by their retailers. The average values for each segment and the signicant differences between groups are shown in

F 12.83a 4.53a 44.62a 5.18a 77.05a 54.64a 650.71a 243.16a 228.00a 111.12a 137.63a 99.92a 51.33a 121.42a 122.16a 107.20a 133.00a

Differences between groupsd 1-3, 2-3, 3-4 1-4, 2-4 1-2, 1-3, 1-4, 2-4, 3-4 1-4, 2-4, 3-4 1-2, 1-3, 1-4, 2-3, 2-4 1-3, 1-4, 2-3, 2-4, 3-4 1-2, 1-3, 1-4, 2-3, 3-4 1-2, 1-3, 1-4, 2-3, 3-4 1-2, 1-3, 1-4, 2-3, 3-4 1-2, 1-3, 1-4 1-2, 1-3, 1-4, 2-3, 3-4 1-2, 1-3, 1-4 1-2, 1-3, 1-4 1-2, 1-3, 1-4, 2-3, 3-4 1-2, 1-3, 1-4, 2-3, 3-4 1-2, 1-3, 1-4, 2-3, 3-4 1-2, 1-3, 1-4, 2-3, 3-4

Commitment Overall, I feel committed to this retailer 3.21 3.36 3.82 3.45 Retailers ICT Bar codes/scanner 4.26 4.18 4.53 4.60 Self-service technologies 2.12 3.73 3.24 4.53 Loyalty program/card 2.13 2.26 2.10 2.96 Credit/debit card payment 4.59 3.71 5.00 5.00 Store card payment 2.51 2.81 1.81 5.00 Banking transfer payment 1.06 3.88 3.58 3.88 Mobile payment 1.06 3.72 3.04 3.45 Payment upon reception 1.11 3.71 3.01 3.69 Telephone 1.68 3.70 3.50 3.93 Fax 1.40 3.76 3.20 3.76 Email 1.66 3.75 3.52 3.88 Website 2.15 3.69 3.71 4.05 Ofce software 1.39 3.66 3.08 3.77 Design software 1.42 3.72 3.11 3.95 Website security solutions 1.44 3.65 3.11 3.84 Invoicing software 1.47 3.68 3.23 4.08 No. of companies 160 70 106 64 Percent 40.0 17.5 26.5 16.0

Customer segmentation and ICT use 213

Notes: a,b,cStatistically signicant at 1, 5 and 10 percent, respectively; din order to test the signicance of the differences between the types of retailers, the Tukey post-hoc multiple comparison test is used. Only the statistically signicant differences between groups at the 5 percent level are shown

Table IV. CHAID variables: average values and signicant differences

Table V, where it can be seen that there are signicant differences between the rst segment and the other three, in the sense that, generally, the rst segment awards the retailers ICT less value than the rest and declares itself to be less satised than the other three segments with the retailers technology. This lower satisfaction with the

1 Customer assessment of retailers ICT (a 0.851) This store invests in technology The ICT of this store is always the latest technology In relation to its competitors, the technology of this store is more advanced This store considers my opinion as a customer to coordinate and develop its ICT in order to improve the service and to better satisfy my needs Satisfaction with the retailers technology

Differences between groups 1-2, 1-3, 1-4 1-2, 1-3, 1-4 1-2, 1-3, 1-4 1-4, 2-4, 3-4 1-2, 1-3, 1-4 Table V. Intensity of use of the retailers ICT and customer satisfaction: average values and analysis of variance

3.04 3.72 3.73 3.70 23.95a 2.97 3.52 3.62 3.63 23.19a 2.93 3.38 3.58 3.58 21.29a 2.76 3.03 2.72 2.28 5.76a 3.01 3.79 3.67 3.50 31.54a

Notes: a,b,cStatistically signicant at 1, 5 and 10 percent, respectively; result of PCA with varimax rotation: one factor. Total variance explained: 73.1 percent. KMO: 0.810; determinant: 0.073; Barletts test of sphericity (sign. level): 0.000

IMDS 109,2

214

retailers ICT might explain the reduced intensity of use of the retailers technology by this rst segment, as stated above. Additionally, the existence of signicant differences in the relational benets was analyzed across the four segments (Table VI). As can be inferred from Table VI, segments 2 and 3 generally display higher scores in their assessment of condence benets in comparison to segment 4 and, more evidently, with the rst segment. The rst segment is the one that shows the lowest valuations for most of the items. However, there are no signicant differences in the assessment of the social benets derived from the relationship with the retailer across the four segments. Furthermore, these valuations are relatively low, since in no case do they surpass the midpoint of the scale. In this sense, when considering these results together with the high intensities of use of self-service technologies, we can infer that retailers technological developments may have driven to lesser contact between customers and the store sales personnel. Finally, regarding the special treatment benets there are signicant differences mainly between the rst segment and the rest. All in all, the rst segment evaluates relational benets less positively in comparison to the other three groups of retail customers.
Differences between groups 1-2, 1-3 1-2, 1-3 1-2, 1-3 2-4, 3-4 1-2, 1-3, 1-4 1.84 1.66 1.73 1.69 1.65 1.53 1.58 1.45 1.21 1.31 1.40 1.39 1.11 1.36 1.26 1.37 1.13 1.31 1.37 1.45 1.23 1.57 1.55 1.53 1.16 1.56 1.42 1.56 0.65 0.60 1.99 4.17a 4.96a 4.44a 6.89a 1-2, 1-4 1-3, 1-4 1-2, 1-3 1-2, 1-3, 1-4

1 Condence benets (a 0.771) I believe there is less risk that something will go wrong I feel I can trust this store I am condent the service will be performed correctly by this retailer I am less anxious when I shop at this store I know what to expect from this store I get the providers highest level of service Social benets (a 0.934) I am recognized by this stores employees I am familiar with the employee(s) that performs the service I have developed a friendship with this stores employees They know my name Special treatment benets (a 0.925) I get discount or deals from this store that most customers do not The prices I get from this store are better than those other customers get They do services for me that they do not do for most customers I am placed higher on the priority list when there is a line I get faster service than most customers
a,b,c

3.56 3.99 3.99 3.83 3.81 4.10 4.09 4.00 3.63 3.33 3.64 3.15 3.96 3.51 3.83 3.64 4.07 3.50 3.83 3.61

9.79a 4.76a

3.84 10.60a 3.17 2.33c 3.45 3.82a 3.48 8.52a 2.32c 0.19

2.34 2.07 2.00 1.95 2.01 1.99 1.92 1.89

Table VI. Relational benets: average values and analysis of variance

Statistically signicant at 1, 5 and 10 percent, respectively; result of PCA with varimax Notes: rotation: three factors. Total variance explained: 68.1 percnet. KMO: 0.882; determinant: 2.49E-005; Barletts test of sphericity (sign. level): 0.000

Analysis of the evaluation of the relational benets by the different segments of retail customers is completed with the study of the differences in their assessment of the sacrices of staying with the retailer and the potential switching costs (Table VII). As result it is obtained that segments 2, 3, and 4 are those that concede more value to switching costs of changing retailer, in comparison to segment 1. This nding is coherent with the inferior assessment shown by the rst segment regarding relational benets, although it regrets the fact of losing a friendly and pleasant relationship with the retailer when changing store more than the other segments. In view of the above results, we test for differences across segments regarding other variables related to the relationship between retailer and customer (Table VIII). In particular, we examine the global valuation of relationship quality with the store, trust and satisfaction with the retailer as well as customer loyalty. In general, terms, the customers included in the rst segment show signicantly lower scores in comparison to the levels of the other groups as far as relationship quality, trust, satisfaction, and loyalty towards the retailer are concerned. These results are in accordance with the inferior assessment of the relationship benets by this rst group of customers, on the lines of the relational marketing literature (Reynolds and Beatty, 1999; Hennig-Thurau et al., 2002; Yen and Gwinner, 2003). Finally, in order to complete the characterization of the customer segments, Table IX shows the main sociodemographic characteristics for each group. Customers in the rst segment are older and a greater percentage of individuals has primary studies, representing one third of the customers included in this segment. The third segment contains the greatest percentage of individuals up to 35 years old (42.4 percent) and with higher education (26.4 percent). However, such differences do not turn out to be signicant at a level of 5 percent. Furthermore, there are no signicant differences across segments in customer gender. Regarding retail activity, although there are examples of the four types of customers in all analyzed sectors, there is a greater presence of customers of grocery and textile-footwear stores in the segments with lower commitment towards the retailer, i.e. segments 1 and 4. However, more than two thirds of the customers of the third
Differences between groups 1-2, 1-3 2-4 1-3, 1-4 2-4 1-2, 1-3, 2-4 1-2, 1-3

Customer segmentation and ICT use 215

1 Relational sacrices and switching costs (a 0.606) The time that I need to buy in that store is acceptable This store solves some of my problems Little effort is required to buy in this store Considering all things, I would waste a lot of time if I change store I will lose a friendly and comfortable relationship if I change If I change there is a risk the new one (store) would not be as good

F 4.60a 2.76b 6.18a 2.87b

3.73 4.04 3.97 3.80 3.40 3.64 3.50 3.17 3.85 4.04 4.21 4.23 3.45 3.14 3.47 3.55

3.14 2.30 2.70 2.89 10.27a 3.32 3.62 3.69 3.50 5.42a

Notes: a,b,cStatistically signicant at 1, 5 and 10 percent, respectively; result of PCA with varimax rotation: one factor. Total variance explained: 58.3 percent. KMO: 0.653; determinant: 0.683; Barletts test of sphericity (sign. level): 0.000

Table VII. Relational sacrices and switching costs: average values and analysis of variance

IMDS 109,2
Relationship quality (What is your overall assessment of the quality of your relationship with the store?) Trust (Overall, I have complete trust in this retailer) Satisfaction with the retailer Global loyalty (a 0.756) I consider switching to another storee As long as the present service continues, I doubt that I would switch stores I try to use this store whenever I need to make a purchase When I need to make a purchase of these products, this store is my rst choice I like using this store To me this store it is the best store to do business with Compared to other stores, I consider this store as excellent
a,b,c

Differences between groups 1-2, 1-3, 3-4 1-2, 1-3, 3-4 1-2 1-3, 1-4 1-2, 1-3 1-2, 1-3, 1-4 1-2, 1-3, 1-4 1-2, 1-3, 1-4 1-2, 1-3, 1-4

216

3.48 4.06 4.02 3.94 29.27a 3.48 3.93 3.95 3.64 12.83a 3.60 3.81 3.78 3.53 3.15b 2.02 2.54 2.35 2.33 3.55 3.80 4.00 3.86 4.54a 7.11a
a

3.43 3.81 3.83 3.61 10.55

3.40 3.81 3.90 3.87 15.58a 3.45 3.71 3.86 3.76 11.17a 3.35 3.77 3.78 3.84 17.01a 2.74 3.07 3.12 3.13 13.30a

Table VIII. Relationship quality, trust, satisfaction and loyalty: average values and analysis of variance

Statistically signicant at 1, 5 and 10 percent, respectively; result of PCA with varimax Notes: rotation: one factor. Total variance explained: 52.8 percent. KMO: 0.876; determinant: 0.145; Barletts test of sphericity (sign. level): 0.000; einverted scale

segment, that are highly committed to the retailer, operate with electronics and furniture-decoration stores. Table X summarises the characterization of the four groups of customers identied based on the variables with statistically signicant differences. The CHAID algorithm grouped consumers in four segments with differentiated characteristics. The rst segment, that we have labeled as traditional customer with low commitment, gathers 40 percent of the sample of retail customers. It mainly includes customers of grocery and textile-footwear stores, that display signicantly lower levels of commitment and use of the retailers technologies. Although the customers in this segment maintain a long relationship with the retailer, poor scores are given to retailers ICT, relational benets and switching costs, relationship quality, trust and customer loyalty towards the retailer. In contrast to this rst segment, the fourth segment, that we have named technological customer with low commitment and loyalty program, represents 16 percent of the sample and, even if there is no signicant difference in commitment in comparison to the rst segment, it exhibits a high intensity of use of the retailers ICT solutions and better scores for the assessment of the retailers technology, relational benets and costs, relationship quality and trust. Since customers in this segment especially appreciate loyalty programs that offer them special conditions in their purchases thanks to the continuity of their relationship with the retailer, as well as store card payment facilities, they show higher levels of loyalty towards the retailer in comparison to the other segments. The second segment, that shows a balanced participation of customers from the four sectors of retail activity, also displays higher levels of use and valuation of the retailers

Categorical variables 44.40 percent 55.60 percent 4.40 25.00 38.80 21.30 7.50 3.10 33.10 percent 50.60 percent 16.30 percent 30.6 28.1 19.4 21.9 1 6.44 1.89 25.7 21.4 25.7 27.1 2 6.22 1.74 12.3 20.8 36.8 30.2 3 4.71 2.08 31.3 28.1 18.8 21.9 4 6.83 1.98 24.60 percent 55.10 percent 20.30 percent 21.70 percent 51.90 percent 26.40 percent 35.90 percent 51.60 percent 12.50 percent 9.75 22.99a percent percent percent percent percent percent 7.10 27.10 48.60 14.30 2.90 0.00 percent percent percent percent percent percent 6.60 35.80 36.80 16.00 4.70 0.00 percent percent percent percent percent percent 9.40 25.00 32.80 26.60 4.70 1.60 percent percent percent percent percent percent 18.67 48.60 percent 51.40 percent 50.90 percent 49.10 percent 39.10 percent 60.90 percent 2.64

x2

Gender Male Female Age 18-25 years old 26-35 years old 36-45 years old 46-55 years old 56-65 years old More than 65 years old Educational level Primary studies Secondary studies University studies Retail activity Grocery Clothing/footwear Electronics/electrical appliances Furniture/decorations Numerical variables Length of patronage Proportion of product expenditure in this store F 3.23b 2.69b

Differences between groups 1-3, 3-4 02-Mar

Note:

a,b,c

Statistically signicant at 1, 5 and 10 percent, respectively

Table IX. Respondent and store characteristics

Customer segmentation and ICT use 217

IMDS 109,2
Variable

Segment 1: traditional customer with low-commitment

Segment 2: technological customer with low commitment and high value Low Medium High High

Segment 3: highly committed customer High Medium High High

Segment 4: technological customer with low commitment and loyalty-program Low High High High

218

Table X. Characterization of customer segments

Commitment Low Intensity of use Low of retail ICT Low Customer assessment of retail ICT Low Satisfaction with the retailers technology Relational benets Condence Low Low Special treatment Sacrices and Low switching costs Relationship Low quality Trust Low Loyalty Low Length of High patronage Medium Proportion of product expenditure in this store Predominant Grocery retail activity Textile-footwear Total number of 160 retailers Percent 40.0

High High High High High High Medium Low

High High High High High High Low High

Medium Medium High Medium Medium High High Medium

70 17.5

Electronics Furniture 106 26.5

Grocery Textile-footwear 64 16.0

ICT than the segment of traditional customers, similar to the fourth segment. Nevertheless, it shows higher scores than the fourth segment regarding variables related to relationship with the retailer i.e. relational benets and switching costs, relationship quality, trust and loyalty. Since customer value has been dened as a trade-off between relationship benets and costs (Ulaga and Eggert, 2002), we have denominated this segment technological customer with low commitment and high value. Finally, the third segment is signicantly different from the other segments because of its higher level of commitment with the retailer and its better valuations in the variables related to the relationship with the retailer , i.e. relational benets and switching costs, relationship quality, trust and loyalty. Thus, we have named this segment highly committed customer. The intensity of use of the retailers technologies in this segment is intermediate in comparison with the other segments. In this segment that gathers more than a quarter of the sample, there is a large number of customers of electronics and electric household appliances as well as furniture and decoration stores.

Consistently with its greater loyalty, this segment spends a higher percentage in the store in comparison to the other three segments, even though it is the segment with the most recent relationship with the retailer. 5. Conclusions The literature recognizes the need to segment consumers in order to guarantee the effectiveness of marketing policies in a highly competitive market. From the results obtained in the present paper, we understand that customer commitment and intensity of use of the retailers technologies can be two valid criteria for customer segmentation in these establishments and to facilitate managers decision making processes related to technological developments and marketing policies. In this way, retailers can design their policies according to the most usual types of customers of the store. In this regard, application of the CHAID algorithm has resulted in four segments of retail customers that have been named as follows: Traditional customer with low commitment, technological customer with low commitment and loyalty program, technological customer with low commitment and high value, and highly committed customer. Although the presence of these four types of customers is observed in the different retail activities, the traditional customer with low commitment and the technological customer with low commitment and loyalty program are more usual in grocery and textile-footwear stores. This nding allow us to conclude that although a signicant part of the customers of these retail stores show low levels of commitment with the retailer, loyalty programs and payment facilities are effective to guarantee customer loyalty in some segments of customers. Retailers might identify the type of customer through the observed intensity of use of the stores technologies, especially those related to methods of payment (bank transfer, credit or debit card and store card), and implement marketing policies according to the segment specications. Furthermore, it is important to point out the existence of high levels of use of the retailers technologies by a large part of customers, in particular, payment facilities. Nevertheless, whereas some segments of customers appreciate the retailers effort to replace personnel with efcient and time-saving technology, this fact may be considered as a source of dissatisfaction with the store, according to the scores shown by the segment of traditional customers, e.g. low valuations of social benets and dissatisfaction with the retailers technology. Thus, we understand that this paper fulls an identied need to study the relationship between commitment and ICT use in business-to-consumer relationships and, in particular, in the retailing industry. More specically, we have obtained a typology of retail customers based on their commitment towards the retailer and their ICT use. 6. Discussion Our results provide evidence of the need for the retailer to study the characteristics of its customers regarding commitment and technology predisposition, as well as relational benets in order to optimize the mix between technological developments and personal contact according to the needs of its customers. The retailer can increase the effectiveness of its actions through the design of actions oriented to each segment and, in particular, to the group of consumers that are more prone to have a more stable relationship with the store. In this sense, regarding the group of highly committed

Customer segmentation and ICT use 219

IMDS 109,2

220

customers and those of low commitment with high value, a series of actions could be designed in order to guarantee their loyalty, such as special treatment benets or incentives to convert customers acquaintances into store customers. Technological customers with low commitment and loyalty program might react positively to the retailers investment oriented to efcient and time-saving solutions, as well as data mining software that enables the accumulation of information on the customers total expenditure in the store and the use of these data for promotional purposes, e.g. special discounts, incentives. In particular, credit facilities provided by the store might be specially important for this type of customer who is already familiar with the use of credit cards. In fact, consumer access to credit has been pointed out as an important factor in the creation of an optimal environment for business development (Handrinos et al., 2007). Finally, regarding traditional customers, who show low levels of commitment and loyalty towards the retailer, a detailed analysis of their expectations of store service should be effected. In particular, the introduction of value through the PERVAL scale developed by Sweeney and Soutar (2001) and its dimensions of functional (quality and price), social and emotional value might shed additional light on the type of strategy to follow with this type of customer. Notwithstanding, the sociodemographic details may only be applicable to the country under study and ICT literacy and readiness are also different across regions and/or countries. This may have some impact on marketers initiatives to segment their customers based on these variables and, therefore, there is a need to replicate this study in other contexts in order to guarantee the validity of our results. Furthermore, we understand that the relations between the variables included in our study should be further explored, in this sense, the present work opens new research lines. Thus, the following step should be the study of commitment and its effect on loyalty, considering as antecedents of these variables the valuation of relational benets, sacrices and switching costs. It would be possible; also, to explore other variables such as relationship quality, trust and global customer satisfaction, since for the latter we have not obtained signicant differences between the four segments. Finally, differences between segments across retail activities should be examined in greater depth in order to identify the peculiarities of these segments in each type of retail store.
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