Customer Confusion in Service-to-Business Markets - Foundations and First Empirical Results

Abstract

Customers today are more and more confronted with complex buying decisions. For complex purchases decision-makers typically have to trade-off between decision accuracy and decision costs. However, the decision-maker is often not able to fulfil this trade-off sufficiently. On the firm-level, non-optimal decisions of managers can have severe consequences. In fact, if we consider a service-to-business market (here the IT-outsourcing market), there is evidence that decision-making in purchasing often yields suboptimal outcomes. How can that be explained, or more specifically, what are the reasons for choosing a wrong outsourcing vendor? In line with consumer marketing research we maintain that due to the complexity of the market offering customers suffer from confusion which may have an impact on their decision-making process. The goal of the present paper is threefold: to clarify the nature of the construct "confusion", to demonstrate empirical evidence for the existence of customer confusion and to discuss consequences for a managerial context as well as for further research.

Keywords: business-to-business marketing, business services, buying behavior, confusion, consideration set

JEL Classification: D23, M31