1. Introduction
Product returns are an important and necessary part of the
exchange process between companies and customers and
cost about $100 billion per year in lost sales to USA retailers
(Petersen and Kumar 2009). Retailers often impose strict
return policies to control such disturbing product return rates
(Bower and Maxham 2006; Hess et al. 1996; Wood 2001).
A return policy insures consumers against purchase mistakes
(Padmanabhan and Png 1997) such as a wrong choice that
gives rise to cognitive dissonance after purchase. If cognitive
dissonance after purchase positively influences consumers’
product returns intentions, it is interesting to explore the
connection between cognitive dissonance after purchase
arising from a purchase mistake, consumers’ product return
intentions following the mistake, and the retailer’s flexible
return policies. Cognitive dissonance has three non-distinct
phases; dissonance arousal, dissonance, and dissonance
reduction. Many past researchers have inappropriately
measured the dissonance arousal or the dissonance reduction
phase and represented it as cognitive dissonance. Another
problematic issue is the timing the measurement of cognitive
dissonance in relation to the stages of consumers’ purchase
decisions. Scholars suggest that there are four distinct stages
of consumer’s purchase decision namely: the alpha or predecision
stage, the beta or post-decision pre-purchase stage,
the gamma or post-purchase pre-use stage, and the delta or
post-use stage (Oliver 1997). Previous conceptualization of
the cognitive dissonance research primarily focused on the
beta and gamma stages. This study adapts to Sweeney’s (2000)
conceptualization and measurement of cognitive dissonance
after purchase which best fits the gamma stage, but extends it
to the delta stage as well. Such a conceptualization conforms
to the recommendations of previous literature (Montgomery
and Barnes 1993; Oliver 1997, Nadeem 2007).
After purchasing a product, consumers evaluate the chosenalternative along with the forgone ones (Brehm and Wicklund
1970). After the purchase, consumers tend to evaluate the
product casting their attention on the negative attributes of the
chosen alternative and positive features of the un-chosen ones
(Brehm and Wicklund 1970). In the US retail market, with
its fierce competition among retailers to satisfy consumers,
almost all retailers offer some kind of product return options
(Davis et al. 1998), although these vary significantly across
retailers (Padmanabhan and Png 1997). In any such situation
that involves some type of return options, it is reasonable
to assume that consumers will not show such irrevocable
commitment towards their purchase decision. Instead, when
they perceive cognitive dissonance after purchase, they will
be much more likely to reduce dissonance by forming return
intentions using the offered return facilities, thus restoring
psychological balance and comfort. Return proportions for
electronic retailers are at least 6% (Strauss 2007) and for
catalog retailers as high as 35% (Rogers and Tibben-Lembke
1998). For products such as personal computers return
proportions are as high as 25% (Mixon 1999).