Defensive Marketing Strategy by Customer Complaint Management: A Theoretical Analysis

TLDR

The study develops an economic model of defensive marketing strategy for complaint management based on Hirschman's exit‑voice theory and proposes maximizing complaints from dissatisfied customers within cost constraints. The authors construct an economic model of defensive marketing strategy for complaint management grounded in Hirschman's exit‑voice theory. The findings reveal that maximizing complaints can lower overall marketing spend by substantially cutting offensive marketing costs, with savings often exceeding compensation expenses, thereby questioning the goal of reducing complaints.

Abstract

On the basis of Hirschman's exit-voice theory, an economic model of defensive marketing strategy is developed for complaint management. Though many firms strive to reduce the number of customer complaints about their products, this objective is found to be questionable. Instead, analysis suggests complaints from dissatisfied customers should be maximized subject to certain cost restrictions. The authors also show that defensive marketing (e.g., complaint management) can lower the total marketing expenditure by substantially reducing the cost of offensive marketing (e.g., advertising). The savings in offensive marketing are often high enough to offset the additional costs associated with compensating complaining customers, even if compensation exceeds the product's profit margin.