2.1.2.6. Switching Costs
Jackson (1985) described switching cost as the sum total of economic, physical and psychological
costs. Porter (1998) opined that switching cost can be considered as the cost of migrating to
another service provider. Chen and Wang (2009) stated that switching costs may range from termination
costs imposed by current service provider to costs of joining another service provider.
Barroso and Picón (2012) chose Spanish insurance market for studying various dimensions of
switching costs and their antecedents as well as outcomes and proposed that switching cost is
a higher – order construct which is a composition of six dimensions namely (i) benefits loss
costs; (ii) personal relationships loss costs; (iii) economic risk costs; (iv) cost of searching and
evaluation; (v) set-up costs; and (vi) monetary loss costs. Each of these six dimensions reflected
customer’s perception of time, money or efforts involved in switching.
Gronhaug & Gilly (1991); Fornell (1992); Ping (1993, 1997) found switching costs to be positively
related to customer loyalty. Bateson and Hoffman (1999) argued that customer satisfaction and
switching costs are believed to be the most significant predictors of repurchase intentions or repeat
buying behaviour. Hauser, Simester, & Wernerfelt (1994) found that switching costs lessens
customers’ degree of sensitivity towards satisfaction levels. Similar effects of switching costs
had been observed for trust and perceived service quality by Aydin, Ozer & Arasil (2005) and
Wang (2010) respectively. Oliva, Oliver, & MacMillan (1992); Jones et al. (2000) stipulated that
switching costs influence customer loyalty through its interaction with customer satisfaction.
Yanamandram and White (2006) noted that customer’s perception of higher cost of switching
detains him from wandering off to the competitive offers.
2.1.2.7. Communication