(The) impact of expectancy disconfirmation on market share

Abstract

A consumer’s perception of disconfirmation between expected quality and realized quality influences his or her satisfaction level, post-purchase behavior, and therefore other consumer’ purchase decision. In this study, we investigate the relationship between initial expectancy disconfirmation and consequent market performance in the presence of word of mouth (WOM) communications and loss aversion. The WOM among consumers in the area of our interest is so complicated that the current analytical and empirical approaches do not provide any effective analysis tools. Therefore, we adopted an agent-based computer simulation approach and developed a consumer purchasing behavior model based on a set of assumptions that are well-supported in the current literature. The simulation was performed in a virtual market where many virtual consumers interact with each other and make purchase decisions for one of the two competing products in a category. The findings of this study extend the results of previous research and provide more general framework to understand the profitability of disconfirmation in various situations where relative quality and market size are different. Major findings are (1) in the competitive environment, the situation of positive disconfirmation is not always profitable in any case, (2) only in the case of relatively low quality or small market size, the negative disconfirmation can lead to gains in market share or market pie, (3) the gain, however, comes at the expense of the lower average level of consumers’ experienced quality, (4) these results are not that sensitive to WOM intensity, and (5) without loss aversion, it is always better off to overstate quality. In the empirical study on the Korean motion picture industry, the impact of expectancy disconfirmation for a movie on the consequent box office revenue was investigated though regression analysis. The empirical results support the results from the experiment analysis: (1) higher expe...