Free upgrades with costly consequences: can preferential treatment inflate customers’ entitlement and induce negative behaviors?

Polyakova, Alexandra, Estes, Zachary and Ordanini, Andrea (2020) Free upgrades with costly consequences: can preferential treatment inflate customers’ entitlement and induce negative behaviors? European Journal of Marketing. ISSN 0309-0566

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Abstract

Purpose
Companies often provide preferential treatment, such as free upgrades, to customers. The present study aims to identify a costly consequence of such preferential treatment (i.e. opportunistic behavior) and reveal which type of customer is most likely to engage in that negative behavior (i.e. new customers).

Design/methodology/approach
Across two experimental studies, the authors test whether preferential treatment increases customers’ entitlement, which in turn increases their propensity to behave opportunistically. Moderated mediation analysis further tests whether that mediated effect is moderated by customers’ prior relationship with the company.

Findings
Preferential treatment increases feelings of entitlement, which consequently triggers customers’ opportunistic behaviors. New customers are more likely to feel entitled after preferential treatment than repeat customers, and hence new customers are more likely to behave opportunistically. Preferential treatment also increases customers’ suspicion of the company’s motives, but suspicion was unrelated to opportunistic behavior.

Research limitations/implications
Future research may focus on other marketplace situations that trigger entitlement and explore whether multiple occurrences of preferential treatment provide different effects on consumers.

Practical implications
Present findings demonstrate that preferential treatment can evoke opportunistic behaviors among customers. The authors suggest that preferential treatment should be provided to customers who previously invested in their relationship with a company (i.e. repeat customers) rather than new customers.

Originality/value
Prior research has focused more on the ways companies prioritize their repeat customers than how they surprise their new customers. The present research instead examines preferential treatment based on customers’ relationship with a firm (i.e. both repeat and new customers) and demonstrates behavioral and contextual effects of entitlement.

Item Type: Article
Schools and Departments: School of Business, Management and Economics > Strategy and Marketing
Subjects: H Social Sciences > H Social Sciences (General)
Depositing User: Alexandra Polyakova
Date Deposited: 09 Jan 2020 08:10
Last Modified: 12 Mar 2020 16:15
URI: http://sro.sussex.ac.uk/id/eprint/89239

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