Consumer as Stakeholder in Service Crises: Perspectives from Services Marketing

Author(s): Steve Baron, Kim Harris and Dominic Elliott

Reviewed work(s):
Source: Risk Management, Vol. 7, No. 2 (2005), pp. 49-63
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Risk Management:An InternationalJournal 2005, 7 (2), 49-63

Consumer

as

Stakeholder

Perspectives

Services

from

in

Service

Crises:

Marketing

SteveBaron,KimHarrisandDominicElliott'
Thispaper seeksto increaseunderstandingof thesubtletiesof theconsumerstakeholder
role in crises that affect service organisations.In so doing, it focuses on research
findings that have adopted a consumerperspective on service failures and service
recovery,and evaluatescurrentservicesmarketingresearchon thefundamentalnotion
of consumerparticipationin serviceproduction.A case studyof an organisationthat
was subject to two crises over a two-yearperiod is used to highlightthe elementsof
a services marketingapproach to service recovery,and to make clear the effect of
consumers'participationin services on theirbehavioursin service crises. Whilethere
is some evidence,in thecase study,of theappropriateness
of 'standard'servicerecovery
in servicesstrategies,it is arguedthatit is the implicationsof consumerparticipation
consumer-toespecially the roles of dysfunctionalconsumers,and the dynamicsof
consumerinteractions-that are the most importantin understandingthe consumer
stakeholderrole in service crises. In summary,the 'customeras stakeholder'approach
from services marketingadvocated in the paper further enhances the necessarily
multifunctionalrisk managementprocesses that companiesrequireto improvetheir
operationaland strategic resilience.
Key Words: Services marketing; consumer participation; service failure;
service recovery

Introduction
A featureof organisationalcrises is thatthey involve a wide rangeof stakeholders(Shrivastava,
1987; Smith, 1990; Elliott and McGuinness,2002). Althougha key stakeholdergroupis that of
customersor consumers,an emphasisof muchresearchin the field of riskandcrisis management
has concernedother groups. For example, Bennett (2005) focused on journalists,O'Haraet al
(2005) on workplacegroups, Quarantelli(2002) and Sj6berg(2005) on 'publics'.A centralaim
of this paperis to consider how a services marketingapproachmay informa crisis management
one.The 'customeras stakeholder'approachfromservicesmarketingaugmentsthemultifunctional
riskmanagementprocesses thatorganisationsrequireto improvetheirresilience. Marketingas a
discipline has historically advocatedthatorganisationsshouldfocus on the customer/consumer
with the primaryaim of creatingsatisfiedcustomers/consumers(VargoandLusch,2004a). In the
sub-discipline of services marketing, research has also encompassed the examination and
classificationof servicefailures,togetherwithempiricallysupportedstrategiesfor servicerecovery
(see for exampleAndreassen,1999; Boshoff, 1997;Hoffmanet al, 2003; Mattila,2001; Taxet al,
1998; Zemke and Bell, 1990; Zhu and Sivakumar,2001).
Service organisations,in both the privateand public sectors,have been the subjectsof crises in
the 21st century. For these organisations, the consumers'roles, as stakeholdersin the focal
operationalcrisis and post-crisisrecoveryphases (Smith, 1990), are clear to see. In July 2003 in

Copyright? 2005 Perpetuity Press Ltd

49

Risk Management:An International Journal 2005, 7 (2), 49-63

the UK, for example, an unofficial strikeby British Airways (BA) check-in staff at London's
Heathrowairportresultedin BA cancellinghundredsof flightsduringone of thebusiestweekends
of the year.Televisiontestimonyfrom some of the thousandsof strandedpassengersresultedin
worldwidenegativepublicityfor BA. BA sharesdroppedmorethanfive percent,andthe company
hadto 'pull' a multi-million-poundadvertisingcampaignthatwas planningto show flight delays
and empty check-in desks at rival airlines (USA Today,23rd July 2003). Also in the UK, the
HealthSecretary,JohnReid, admittedin June2004 thatthe methicillin-resistantstaphylococcus
aureus(MRSA) 'superbug'was 'the biggest threatfacing the NationalHealthService' (NHS).
The UK tabloid newspaperSundayMirrorwas contactedby hundredsof victims and relatives
outlining 'the devastatingexperiences at the hands of the superbug'(SundayMirror,27th June
2004). Many made claims that the lack of hospitalcleanliness was a contributoryfactor in the
spreadof MRSA. TreatingMRSA was reputedlycosting the NHS ?1 billion per year,and plans
have been made to spend an extra ?3 billion for researchand developmentinto the superbug
crisis.
This exploratorypaper examines the 'consumeras stakeholderin crises' throughthe lens of
marketing,and,in particularof the servicesmarketingsub-discipline.Ithighlightsthe implications,
for crisis management,of understandingconsumerparticipationin serviceproduction,and also
summarisesresearchon service failure and recovery.It is structuredas follows. First, a brief
historicaldevelopmentof servicesmarketingresearchis provided.Thisis followed by an analysis
of service recoveryeffortsandconsumerroles in a particularcase studyof a service organisation
involved in two crises between late 2003 and early 2005. Finally, as a result of the case study
findings, implicationsof a (services) marketingperspective on consumers as stakeholdersin
crises arediscussed.

Services marketing research and insights: a brief history

The marketingmanagementschool of thoughtthatembracesthe marketingconceptandcustomer
orientationcan be tracedback to the early 1950s (Vargoand Lusch, 2004a). Attentiongiven to
the specific study of the marketingof servicesis normallyrecognisedas beginningin the 1970s
(Fisk et al, 1993), with Shostack's (1997) paperbeing seen as the catalyst and motivation for
researchaddressingexchange phenomenathathad been largely ignoredin the (then) dominant
manufacturingoutputapproachto marketing(Vargoand Lusch, 2004b).

Fundamentalsof service research

Unsurprisingly,earlyresearchin servicesmarketingwas focused on whatmadeservicesdifferent
fromgoods, andon the marketingimplicationsthatfollowed fromthe differences.The identified
characteristicsof services, ie intangibility,heterogeneity,perishabilityand inseparability,have
provided a core to the structureof services marketingtextbooks from the early 1980s to the
present.Eachof thecharacteristicsis seen as a negative-a problemto be facedwith themarketing
of services which, by implication,is not presentto the same extent in the marketingof goods.
Thus, for example, the intangibility characteristicof services is felt to increase risk for the
purchasingconsumer,because of the absence of the reassuringeffect of touching the physical
productto form qualityjudgements(BaronandHarris,2003). In a similarvein, heterogeneityof
services is seen as a challenge,as services arerelativelymoredifficultto standardisethangoods,
and perishabilityis seen as a greaterproblemfor services given that they cannot generally be
inventoriedto smooth out fluctuationsin supply and demand.The inseparabilitycharacteristic
relatesto the simultaneousnatureof productionand consumptionin services (as opposed to the
separated,sequentialprocess of production,purchaseand consumptionof goods), and it is this
characteristicof services, and its implicationsfor consumerparticipationin service production,
thatis exploredfurtherin this section.

50

Consumer as Stakeholderin Service Crises

Risk Management:An InternationalJournal 2005, 7 (2), 49-63

Oneof the simplestandyet mosthelpfulframeworksarisingfromtheearlystudiesof the marketing

of services, is the 'servuctionsystem' (Langeardet al, 1981), reproducedhere as Figure 1. It
representsthe elements of person-to-personencountersthattypifiedmost services of the time. In
the part of the system that is visible to a consumer of the service, it shows that a consumer
(labelledA) interactswith employeesof the serviceorganisation(contactemployees),the physical
serviceenvironment,andotherconsumers(labelledB). (So, for examplethe NHS hospitalpatient
will interactwith doctors,nurses,cleanersandotheremployees essentialto the service provision,
with the physical elements of the hospital,such as wards,beds, washingfacilities, etc, and with
otherpatients). Each of the interactions,and the cumulative effect, can affect the consumer's
holistic experience with the service. The part of the system that is invisible to the consumer
consists of elements that supportthe process, for example computersystems and staff training
programmes.The visible partof the servuctionsystem is particularlyuseful as it emphasises the
consumerpresenceduringservicedelivery,andalso the presenceof otherconsumers.Consumers
Aparticipatein the productionof theirown service experience,andthereforeplay, togetherwith
ConsumersB, the roles of co-producersof the service. Thus, service productionis seen in its
entirety,not just as a task of managingthe service employees andthe physical environment.
Figure I. The servuction system

Inanimate
environment

Invisible
organisation
andsystem

Customer
A

Contactwith
personnelor
service

Customer

provider
Invisible

Visible

Bundleof service
benefitsreceivedby
customerA
Source:Langeardet al, 1981.
Thesocio-technicalenvironmenthaschangedconsiderablysince the 1980s.The servuctionsystem
was developedpriorto the adventof the vast arrayof technology-basedservicesthatareavailable
to today's consumers (Meuteret al, 2000). Furthermore,it clearly could not acknowledge the
fast, global communicationprocesses thatare available for 21st-centuryconsumersto use both
beforeandafterthe serviceencounter.Therefore,morerecentadaptationsof the servuctionsystem
include the additional interface with the physical system provided by information and
communicationtechnology (see, for example,Baron et al, 2000).
Thereare signs in the early 2000s that services marketingis emergingfrom the shadows of its
parentdiscipline, marketing.Vargoand Lusch (2004a), building on argumentsfrom Gronroos
(1994) and Gummesson(1995), arguethatmarketinghas a new dominantlogic in which service
provisionis fundamentalto economicresearch,andthatall marketing,notjustservicesmarketing,
shouldbreakfreefromgoods marketing(VargoandLusch,2004b).Theycall into questionwhether
thefourcharacteristicsof services-intangibility, heterogeneity,perishabilityandinseparability-

SteveBaron, Kim Harris and Dominic Elliott

51

Risk Management:An International Journal 2005, 7 (2), 49-63

should be seen as hurdlesto be overcome by services marketers;on the contrary,with regardto

inseparability,they arguethat,ratherthanstrivingto overcomeit by, for example,minimisingthe
interferenceof consumersin the service production(Beaven and Scotti, 1990), a trulyconsumer
perspectiverendersseparabilityimpossible, and would regardofferings without some form of
consumerinvolvementas disadvantaged.As illustratedin Figure1, consumer-to-consumer
('c2c')
interactionsoften takeplace duringa service experience.The 'new dominantlogic' suggestsalso
thatattemptsto minimiseconsumerinterferenceof c2c interactionsarebothmisguidedandunlikely
to be practicallypossible.

Servicefailure and recovery

Recoveringservicefailureshas been identifiedas 'a commonfrontlinetacticto enhancecustomer
satisfaction and customerperceptions of service quality' (Brown et al, 1996:32). The area of
service recovery and service failures has attractedmuch attentionin the services marketing
literature'as a resultof the premisethatservice failuresareinevitable,butdissatisfiedcustomers
are not' (Michel, 2001:20).
The researchon servicerecoveryandservice failurehas been wide-ranging,andstructuredaround
the notions:
* thatservice failuresmay or may not lead to service recovery;
* thatservice recoveryresults in outcomes; and
* thatoutcomesresultin consequences for a service organisation.
Servicefailure.Manyauthorsreferto the inevitabilityof servicefailuresin mostservicebusinesses.
Equally,thereis a recognitionthat improved service design may reduce the numberof service
failures(Ahmed,2002; Brownet al, 1996), andthe role of the customercontactpersonin creating/
avoiding service failuresis often emphasised(see, for example, Schlesingerand Heskett,1991).
There have been attemptsto categorise service failures. Michel (2001), for example, identifies
failures of advice, process, interaction,documents,information,conditions, systems and third
parties.Lewis andSpyrakopoulos(2001) preferto categorisefailuresaccordingto serviceprovider
error,customererrorand associated organisationerror.Such categorisationsare believed to be
manageriallyhelpful,but fail to reflect on the potentialcrises resultingfromthe magnitudeof the
failure.Forexample,the airtrafficcontrollers'strikemay be a service failureor servicecrisis for
an airline, dependingon a numberof factors, such as the time takento recover the failure, the
expense involved, andthe time of year (eg Christmas/NewYear).
Servicerecovery.Researchon servicerecoveryhasthreestrands.First,servicerecoveryis discussed
in terms of organisationalphilosophy or strategy(Brown et al, 1996); here it is regardedas an
integralcomponentof consumerretention,andhence of relationshipmarketing.Second,thereis
a process approachto service recovery (Colgate, 2001), where the emphasis is on effective
measurementof servicerecoveryantecedents,processes andoutcomes,andon the identification
of representativesatisfied and dissatisfied customers.Third,there are attemptsto identify the
contingenciesthatmay determineservice recoverypolicies. HoffmanandKelley (2000) specify
the contingenciesas relationshipdepth, durationof encounter,relationshipproximity,criticality
of consumption,degreeof customisationand switchingcosts. Mattila(2002) concentrateson the
interplayof service type and magnitudeof failureon customers'evaluationsof service failures.
In each strand,the managerialimportanceof achievinga greaterunderstanding
of servicerecovery
(and service failures)is emphasised.Despite this, scholarlyresearchin service recoveryis still
said to be in 'in its infancy stage' (Mattila,2002:583).

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Consumeras Stakeholderin Service Crises

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Outcomesof service recovery.These are mostly consideredin termsof consumerand employee

levels of (dis)satisfaction.Lewis and Spyrakopoulos(2001), drawingon the work by Bitner,
Booms and colleagues on (dis)satisfactionwith service encounters,categorisecriticalincidents
relatingto service recoveryas:
*

employee responseto service delivery failures;

* employee responseto customerneeds/requests;
* unpromptedemployee actions; and

problemconsumers.

Alternatively,outcomes (or recovery experiences) have been classified, and sub-categorised

accordingto the notion of consumerperceivedjustice: distributive,proceduraland interactional
(Hoffmanand Kelley, 2000; Michel, 2001). Here it is advocatedthat,for many types of service
failure, an individualconsumer is seeking justice throughsome or all of the following forms:
compensation,apology(distributivejustice);promptness,flexibility(procedural
justice);empathy,
honesty,commitment(interactionaljustice).
Whicheverform of classification is applied, there is an underlyingassumptionthat a service
failurecan be recoveredthroughappropriateemployee/consumerinteractions.
Consequencesfor a service organisation. When service recoveryis not undertakeneffectively,
the negativeconsequencesfor the organisationaresummarisedas lost customers,negativewordof-mouth, employee dissatisfaction (Lewis and Clacher, 2001), lack of loyalty, voice (ie
complaining)andexit fromthe organisation(Colgate, 2001). The consequencesareoften linked
to issues of attributionregarding the initial service failure and/or lack of adequaterecovery
(Swansonand Kelley, 2001; Lewis and Clacher,2001). The consequences,in the main, seem to
be at the individualconsumerlevel, althoughthere is an implicit argumentthat the cumulative
effect of the consequencesof not having effective service recoverymechanismswill damagea
service organisation.
Servicesmarketingcontributions
In summary,when consideringconsumersas stakeholdersin serviceorganisationcrises, services
marketingresearchmay provide insights, throughoffering:
* a focus on the fundamentalnotionof consumerparticipationin serviceproduction,including
consumer-to-consumerinteractions;and
* a consumer-centricapproachto service recovery.
A case studyof the crises surroundingthe passengercruise shipAurorais now examinedwith a
view to evaluatingthese potentialcontributions.
Case study: the Aurora-from

crisis to crisis

Mariners'folklore attributesbad luck to ships when the champagnebottle fails to breakat the
launch.The cruise shipAurorasufferedsuch a fate in 2001, andits subsequenthistoryhas added
spice to the seafaringstorybook.It broke down on its maiden voyage, costing its owners P&O
Cruises?6 million, and subsequentlywas the focus of two furthercrises for P&O, one in 2003
and anotherin 2005. The details of these two lattercrises are now presented.

Steve Baron, Kim Harris and Dominic Elliott

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Crisis 1: the virus outbreak

When the Novo virus broke out on the Aurora in late 2003, an international problem was
triggered(see, for example, Vasagarand Tremlett,2003; Searle et al, 2003). A non-exhaustive
list of stakeholdersincludes the almost six hundredpassengers and crew who were confined
to cabins; the passengers and crew unaffected by the virus; P&O, the owners of the cruise
ship; Greek and Spanish government agencies; potential cruise customers; the lawyers who
sought to contact Aurora passengers with a view to encouraging litigation; and the world's
media. The cruise was intended to last for 17 days, with specified stops at ports located
aroundthe Mediterranean.The scale of the virus outbreakrequiredthe speedy allocation of
furthermedical personnelandresources(Dolan, 2003). This, and the extended scope triggered
by the negative reactions of the Greek and Spanish authorities(Greek port authoritiesrefused
the ship permission to dock in Athens and the Spanish government closed its border with
Gibraltarto Aurora passengers), took P&O by surprise.The company sought to control the
tangible health problems, but found the scope of the political and media-inducedcrises more
difficult to manage. The media crisis was further exacerbated by the ease with which
passengers could use moder technology to communicate with family, friends, lawyers and
the media, and thuscreatinganotherlayer of uncertainty.P&O's credibilitycame into question,
some passengers criticising the company for its slow and tardy response. The media reexamined past virus outbreaks on P&O cruise ships, thereby questioning the company's
ability to manage. Although ostensibly a crisis triggered by the cumulative impact of many
passengersand staff catching a virus, the scale and scope of the crisis were greatlyexacerbated
by other stakeholders and by the extensive media scrutiny, fuelled in part by the desire of
some customers for compensation (Hamilton, 2003).

Crisis 2: the cruise that wasn't

Over 1700 passengerspaid between ?9800 and ?42,000 for a 103-day cruise on the Aurora,
takingin 23 countries.The ship was due to set sail from Southamptonon 9th January2005. Due
to engine problems,the departuredate was delayed and the Aurora left Southamptonon 11th
January.It developedfurtherengineproblemsimmediately,andreturnedto portfor morerepairs.
At this point,theAurora'sproblemsattractedmediaattention,with a shorttriparoundthe Isle of
Wight being linked to the prices the passengershad paid. Headlines of the form 'Jinxedcruise
shipAurorastill stuckin the Solent'(The Times,12thJanuary2005) indicatedthe media'sstakeholdingin the emergingcrisis. P&Orecognisedthepassengersas stakeholders:they wereoffered
free drinkswith meals and at all 12 of the bars,and theirmoney back if they wantedto call off
theirholiday.At this point 385 passengersleft the ship.
It was not until 19thJanuarythatAuroraattemptedonce more to set sail. Again, problemswith
the propulsionsystem caused it to 'limp back' to Southampton.So, finally, on 20th January(11
days afterthe originalsailing date)the cruisewas cancelledandthe passengersdisembarked.By
this time, the story was a main featureon UK terrestrialand satellite news programmes,and the
cameraswere on the disembarkingpassengers.On 21st January,for example, the BBC 24-hour
news programmeshowed interviews with Aurorapassengerswho were wheeling their (many)
suitcases on to the dock at Southampton.'Surprisingly',accordingto the news report, 'many
passengershad enjoyedtheirshorttrip', andthis was supplementedwith interviewsthatwere, in
the main, supportiveof whatthe companyhaddone in the difficultcircumstances.Less to P&O's
liking, the reporttracedback throughAurora's history,even referringto its nicknameof the
'plague ship', recallingcrisis 1 above.
Possibly in view of the bad publicity from some passengers,and perceived exaggeratedclaims
for compensation(Vasagar,2003) associatedwith crisis 1, P&O issued the following statement
on 20th January2005:

54

Consumeras Stakeholderin Service Crises

Risk Management:An InternationalJournal 2005, 7 (2), 49-63

of 25 percentof theamount
Passengerswill be refundedtheirfull farewithcompensation
paidfortheirholidayto be usedas a futurecrediton a cruiseholidaybookedbeforetheend
of January2007. (Prynn,2005)
They also provided free drinks/meals for the passengers, and brought in some well-known
entertainers,over the 11-day period. Overall,the cancellationof the cruise cost P&O over ?20
million.

A services marketing perspective

The aim of this section is to address the issue of consumersas stakeholdersin service crises
throughadoptinga consumer-orientedperspective.The case studyabove providesa mechanism
for drawingattentionto the identifiedconceptsof servicerecoveryandconsumerparticipationin
serviceproduction,concepts thatare continuallydiscussedandrefinedin the services marketing
literature,but are relatively less recognised in theses of crisis management.

Servicerecoveryefforts
The consumers as passengers in crisis 1 (C1) were generally seen to be dissatisfied with the
organisation(P&O):
Theirtreatment
was a case of 'thehorsehadboltedbeforetheyshutthe door'.I won'tgo
it'sP&Oonceandonceonly.(Passenger
As farasI'mconcerned,
this
again.
through
Raymond
McCourt,reportedon BBCOnline,11thNovember2003)
The opposite was more often the case in crisis 2 (C2):
Wehavebeenwinedanddinedforfreeandspent12 dayson a marvellousship.Obviously
we areall disappointed,
butI thinkthevastmajority[of passengers]
havebeenstoicaland
on BBCNews,21stJanuary2005)
reasonable.
(PassengerJamesHanley,interviewed
Furthermore,passenger attributionsregardingthe service failure(s)were more forgiving in C2:
Tendays'holidayin a five-starhotel,all free-you can'task[P&O]foranythingmore,can
2005)
you?(Passengerinterviewedon BBCNews,21stJanuary
It is temptingto assume, therefore,that the service recovery processes in C2 were superiorto
those in C1, and furthermorethat P&O will stand to benefit from adopting superiorservice
recovery processes. This view would be supportedby research that focuses specifically on
satisfactionas an outcome of service recoveryinitiatives(for example,Boshoff, 1999; Hartet al,
1990; Smith and Bolton 1998). Service recoveryis taken to be a multi-dimensionalconstruct,
basedon consumers'searchfor distributive,proceduralandinteractivejustice. Boshoff's (1999)
model,for example,proposesthatservicerecoveryis madeup of six dimensions:communication,
empowerment,feedback, atonement,explanationand tangibles. These dimensions need to be
managedeffectively during service recovery. If so, satisfactionwith service recovery can be
increased (or dissatisfaction reduced), and ultimatelyconsumerloyalty can be maintainedor
increased.Such models have an intuitive appeal, and fit well with organisationalphilosophies
that place customer retention as a key component.They also provide a rationalefor specific,
common-sensepolicies (managerialchecklists)thatsupportemployeeresponsesto servicedelivery
failures. The following guidelines are indicative. For the dimension of 'communication',it is
recommendedthatthe service organisationshouldensurethatemployeescommunicateclearlyto
consumers,ask questionsto clarify the situation,show understanding,andbe reliableandhonest

SteveBaron, Kim Harris and Dominic Elliott

55

Risk Management:An International Journal 2005, 7 (2), 49-63

in theirefforts to redeemthe failure.For 'atonement',employees are urgedto be polite, and the

organisationshould ensure that consumers receive an apology and are compensatedfor any
financialloss. Under'explanation',employees andthe organisationareencouragedto give a full
explanationof why the problemhas occurred.
There is evidence, in the reportedaccounts of C2, that P&O's activities reflect some of this
justice was apparenteven at the first return
thinking.For example,communication/interactional
to porton 11thJanuary.A spokespersonfor P&Omaintainedthatpassengershadbeen kept fully
informed,and thatdrinkswere 'being offeredat dinnerand at the barfree of charge'(Naughton,
2005). Later,when the decision was finally made to cancel the cruise, the company issued an
apology:
this has causedpassengersandoffersits
P&OCruisesapologisesfor the disappointment
was
to
done
thateverything
assurance
getAurora'sGrandVoyageunderwaybefore
possible
decisionwastaken.
thisdifficultbutunavoidable
The free drinks,also partof an atonement/distributive
justice effort,once introducedbecame an
the periodof engine repair.Reputedly,
for
the
whole
of
of
the
of
behalf
passengers
expectation
of
passengersconsumed 1600 bottles of beer, 1800 bottles wine and champagne,146 bottles of
spirits and 1300 cocktails, all free, in the last 24 hours before the cruise was finally cancelled
(TheDaily Telegraph,22ndJanuary2005). Compensationwas generous(moneyback andfurther
cruise vouchers, building switching costs so as to maintainloyalty) and made very public. In
justifying this generosity,P&O's ManagingDirector,David Dingle, emphasisedthatthe people
on board were 'among our most regularand loyal passengers', linking consumer satisfaction
with service recoveryto consumer loyalty. Explanationsof the delays were regularlygiven to
passengers,but sometimeswith mixed effect:
If thecaptaincameonthetannoy,youknewit wouldbe goodnews,butif it wasthemanaging
onBBCNews,
NormaFretwell,interviewed
director,
yougotthatsinkingfeeling.(Passenger
21stJanuary
2005)
Whatwere the outcomesof these efforts?It was reportedthat 'mostof the passengerswere fairly
positive leaving the ship and praisedhow P&O had handled the problems' (BBC News, 21st
January2005). The consequence that the companywould hope for is maintainedor increased
loyalty of its customer base, with associated positive word-of-mouth.The service recovery
principlesoutlinedaboveappearto havecredibilitywhenfocusingon the 'consumeras stakeholder'
in C2.
In C1, do the lower levels of consumersatisfactionwith P&O's service recovery efforts result
from a failure to apply service recovery systems, or are there other underlyingreasons? This
questionraises some points of differencebetweenC2 and C1, andrequiresa more fundamental
considerationof consumers'roles in service settings.
crises:they involve
of organisational
Elliottet al (forthcoming)outlinefive commoncharacteristics
a wide range of stakeholders;there are time pressuresrequiringan urgentresponse; a crisis
usually resultsfrom a surpriseto the organisation;there is a high degree of ambiguity,in which
cause andeffects areunclear;anda crisis createsa significantthreatto anorganisation'sstrategic
goals. While C andC2 can both be labelledas crises accordingto these characteristics,arguably
C1 was subject to greatertime pressures,more surprisesand greaterambiguitythan C2, and
cruciallytherewere more stakeholdersinvolved in C1, which could even threateninternational
relations.Whilethe servicerecoveryliteraturerecognisesthatan organisationrequirescoordinated
effortsto develop procedures,policies andhumancompetenciesto deal with service failures,the
at the level of theindividualserviceencounter
unitof analysiswithintheliteratureis predominantly

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Risk Management:An InternationalJournal 2005, 7 (2), 49-63

(see, for example, Lewis and Spyrakopoulos,2001). A service recovery 'approach'fails to

anticipatethe role other stakeholdersmay play in escalating dissatisfactioninto a crisis. For
example,in C1, the actionsof the GreekandSpanishauthoritiesfurtherexacerbatedthe potential
for customers' dissatisfactionby denying them access to parts of their itinerary.Transaction
analysis of individual encounters, it could be argued, fails to see the 'bigger picture', as
dissatisfactionescalates towardsa full-blowncrisis.
There is no reason to disbelieve that P&O applied sound service recovery policies to try to
reduceconsumerdissatisfactionin C1. However,in the morecomplex storylinesurroundingC1,
they did not work as well. Even worse, therewas evidence thatsome passengerswere behaving
in a dysfunctionalway, which causedresentmentfrom fellow passengers:
Somepeopledidn'thelpthemselvesby seekingpublicity.Headlineslike 'Leftadrifton ship
fromhell'.We hada laughaboutthat.(PassengerDaveDutton,reportedon BBC online,
November11th2003)
Everyoneis compensation
crazythesedays.Peoplesawa wayto makemoney-I hopethey
don'tget any.(PassengerJoanJohnson,reportedon BBConline,November11th2003)

Consumerparticipationin services
Fromthe crisis managementfield, thereis now a view thatorganisationalcrises are the product
of socio-technical failures, possibly resulting from the technological change which has
fundamentallyalteredthe relationshipbetween systems and their humanelements (Elliott and
Smith,2004). Inparallel,conceptualisationsin the servicesmarketingfield, recognisingconsumer
participationin services that was made explicit in the servuctionsystem, have resulted in the
identificationof a 'social-servicescape'(Tombsand McColl-Kennedy,2003). Here, it is argued
thatthe social environmentandpurchaseoccasion influenceconsumers'affective and cognitive
responses,andconsumersoften play key roles in influencingthe emotions of other consumers.
Due to the influenceof on-site customerparticipation,the social componentof the socio-technical
systemplays a different,arguablymore significant,role in a crisis within a service context than
in one within a manufacturingcontext.
The nature,form and impact of all manifestationsof consumerparticipationand response have
beenextensivelyresearchedwithinservicesmarketing(Bowen, 1986;Kelleyet al, 1990;LengnickHall et al, 2000; Lovelock andYoung, 1979; Mills and Moberg, 1982; Rodie and Kleine, 2000),
andyet appearto have receivedlittle attentionwithinthe crisismanagementliterature.According
to Mills et al (1983), therearemanyoccasionswhen consumershavetheresources(eg information,
ability and motivation) to performmore effectively than full-time employees. The ability of
consumersto performthe role of partialemployee has been termedtheir 'relationalcompetence'
(BendapudiandBerry, 1997), which is drivenby individualvariables(customercharacteristics),
situationalvariables(characteristicsof the service situation)and the interactionbetween them.
Justas employeesneed to be trainedto operateeffectively withina service setting, organisations
need to make sure that consumershave a clear understandingof the role they are expected to
perform,have the ability to performit and receive valued rewardsfor effective performance
(Bowen, 1986). The benefits to an organisationfrom effective consumerparticipationhave been
identifiedas increasedproductivity,theprovisionof value-addedservices,andenhancedcustomer
retentionand loyalty.
'Dysfunctional'consumerbehaviourWhile mainstreamresearchinto service recoverycontinues
to seek empiricalconfirmationof the relationshipsbetweenthe service recoverydimensionsand
satisfactionwith the service recovery(using, for example, the RECOVSATresearchinstrument
(Boshoff, 1999)), other authorshave emphasised that many consumers are acutely aware of

Steve Baron, Kim Harris and Dominic Elliott

57

Risk Management:An International Journal 2005, 7 (2), 49-63

organisations'efforts to employ such checklists. Furthermoresuch an awarenesscan be used by

unscrupulous,or 'dysfunctional',consumersto the disadvantageof the organisation(Harrisand
Reynolds, 2003; 2004). The positive, benefit-basedconclusions of consumerparticipationare
based on the notion of a 'functional'consumer:one who acts in an honest andrationalway, and
who only complainswhen subjectedto a genuine service failure.In crisis situations,consumers
may have the opportunityor inclination to act in a dysfunctional way, ie play the role of
'jayconsumer'-a consumerwho deliberatelyacts in a thoughtlessor abusive manner,causing
problemsfor the organisation,employees or othercustomers(Lovelock, 1994).
Deliberate thoughtlessness(to take one aspect of jayconsumerbehaviour)is noticed by other
consumersandcan takeon an increasinglysignificantmeaningin the focal operationalandpostcrisis phases of crises. In C1, consumercommentsat the heightof the crisis provideillustrations:
I believesomeonecameon boardwithit (thevirus)whodidn'thavegoodpersonalhygiene
andI sawpeople
Wewereissuedwithwipesto use beforehandlingeverything,
standards.
usingthemto wipetrays,not theirhands.P&Ohaveto caterfor idiots.(PassengerSam
on BBCOnline,November11th2003)
Turner,
reported
ThisyearI havebeenon Oceana,OrianaandjustrecentlyAurora.I canonlyputtheblame
downto somepassengers,wheretheydon'twashtheirhandsaftergoingto thebathroom,
orotherfoodareas.(Passenger
thenproceedbackintotherestaurant
RayPrichard,
reported
on BBCOnline,November11th2003)
Jayconsumershave been found to exhibit many forms of behaviourin service settings (Harris
and Reynolds, 2004). One particularform, the 'compensationletter writer', refers to those
consumerswho complainillegitimately,with little or no justificationfor theircomplaint.Such
consumersare likely to be even more aggressive with theirclaims for compensation,once they
perceive, from a position as participantsin the service-relatedcrisis, that the organisationis
reactingto negative publicity.
Accordingto Vasager(2003), a female passengerin C1 (who had appearedon a Channel4 show
'Wife Swap') was quotedas saying:
andI will neverbe goingon a cruiseagain.Wewill be suing
It wasan absolutenightmare,
forbeingheldhostageon the ship.
However, she was criticisedby a fellow passenger,who observedthat:
called'WifeSwap'.Quite
Thepersonwho was shoutingloudestwas froma programme
whatsoever.
hasno credibility
frankly,anyonewhogoes on thatprogramme
Even worse from an organisationalperspective, there are the 'vindictive consumers', who,
according to Harris and Reynolds (2004:348), 'deliberatelyand maliciously verbally spread
negative wordof mouthconcerningan organisation',or 'attemptto evaderesponsibilityfor their
own behaviours through blaming organisational personnel'. Jayconsumersmay represent a
minorityin a service crisis setting,but theirbehaviourrepresentsa rogueelementthatis difficult
to control or predict through conventional service recovery strategies, which assume that
dissatisfaction,or even consumeranger,has some properjustification(Bougie et al, 2003).
interactions.In many servicesettings,a featureof consumerparticipation,
Consumer-to-consumer
highlightedby the servuctionsystem, is the opportunityfor consumersto interactwith each other
duringserviceencounters.Consumersareoften in a positionto talkon-sitewith otherconsumers,
and to help, advise or abuse them. Consumerroles have been identifiedin c2c interactionsthat
reflect generally altruisticmotives for the interactions,and thatresultin mutualhelp. McGrath

58

Consumeras Stakeholderin Service Crises

Risk Management:An InternationalJournal 2005, 7 (2), 49-63

andOtnes (1995) identifiedconsumersadoptingthe roles of proactivehelper,reactivehelperand

help-seekerin theirinteractionswith other shoppersin a US retailstoreenvironment.Empirical
researchundertakenin the UK providedadditionalevidence of these roles being played in retail
(Harriset al, 1999), leisure (Parkerand Ward,2000) and transport(Harrisand Baron, 2004)
services.These studiessoughtto drawattentionto the fact thatconsumerscan, andfrequentlydo,
act positively towardsotherconsumers,andtheirabilityandwillingness to shareknowledge and
offer advice can representeffective, additionalhumanresourcesto a service organisation.
In service crises, consumers are most likely to have experienced a relatively high level of
dissatisfactionthroughservice failure with the core or peripheralprovision. Harrisand Baron
(2004) have demonstrated,in the context of rail travel, that consumersmay respond to high
levels of dissatisfactionin a 'we're all in it together,so let's make the best of it' manner,rather
than with jayconsumerbehaviours.There is evidence that this may have been the case in C2,
throughreportsof (sometimes ironical) passengerperceptionsof the 11-daynon-event:
These are hardenedcruisers-it's the Britishbulldogspirit.(PassengerMauriceLee,
on BBCNews,21st January2005)
interviewed
Someof the peoplewereiratebutyou haveto be philosophical-worsethingshappenat
FredLeeson,interviewedon BBCNews,21stJanuary
sea. (Passenger
2005)
Weknowwherethehighstreetis andthe
We'velearnedall aboutthe city [Southampton].
interviewed
(Passengers
HenryandEdnaForrest,
postoffice,soit'snotallbeendisappointing.
on BBCNews,21stJanuary2005)
In the television coverage, disembarkingpassengerscommentedpositively on the 'bonhomie'
that existed on board, and on the quality of the entertainmentthat the company had organised
specially for them.
Harris and Baron (2004) contend that, where high levels of dissatisfaction exist, c2c
conversations have a stabilising impact on consumer expectations and perceptions of their
service experiences, through the reduction of customer anxiety, the enactmentof the partial
employee role (especially in the absence of rail employees), andthe supplyof social interaction
(often involving the sharing of mutual moans about the service). In turn, this helps defuse
consumers' dissatisfaction levels through raising their tolerance of service inadequacies and
increasing their capacity to cope with them. Although the Harris and Bacon study provided
some examplesof consumerscomplainingaboutotherconsumers,this was relativelyinfrequent,
and fellow consumers were rarely blamed for service failures. It seems reasonable to assume
that, if consumers startattributingblame for service failures to the behavioursor attitudesof
fellow consumers, then the stabilising effect of c2c interactionswill weaken, and triggers for
crises are more likely to occur.
Two differencesbetweenC 1 and C2 in relationto c2c interactionsareevidentfromreports.First,
in Cl consumerswere vocal in blaming otherconsumersfor the service failure,especially with
reference to the perceived thoughtlessness of other consumers regardinghygiene, and their
complainingbehaviours.In C2, therewere no reportedattributionsof blameto fellow passengers.
Second, measuresto controlinfection dictatedthatfellow consumerswere keptapart in C1:
Sometimesyou'dhardlyknowthere'sanybodyabout-you don'tsee a soul,whichis most
is a combination
of gloomandworry.(PassengerSheilaElton,
unusual.The atmosphere
reportedon BBCOnline,November11th2003)
In C2, by contrast,consumersrepeatedlyengaged with each otherin the barsand entertainment
events:

Steve Baron, Kim Harris and Dominic Elliott

59

Risk Management:An InternationalJournal 2005, 7 (2), 49-63

... it was a normalcruisewithus all goingto talksandseminars,line dancingandhaving

normalmeals-and havingfreedrinks,I do admitthat.(Passenger
JohnMiller,interviewed
on BBCNews,21stJanuary
2005)

Implications
Fromthe servicesmarketingliterature,an understandingof service failuresandservicerecovery
strategiesis evolving. Althoughthe reportedresearchhas a consumerorientation,a managerial
perspective flavours the current wisdom. Thus research on the determinantsof consumer
(dis)satisfaction with service recovery processes tends to be driven by a desire to provide
management with checklists for service recovery actions that have empirical validity. The
discussion surroundingthe perceivedservice recoveryeffortsof P&O Cruises,in relationto C2,
provides some justificationfor the applicationof these ideas in the managementof a service
crisis. Such service recoverystrategies,however,may only have limited application.
First,the transaction-specificfocus thatdominatesservicerecoveryresearchmayrenderresulting
strategiesless effective in servicecrisis situationsas the numberof stakeholdersincreases,andas
the consumerstakeholderrole is less centralto thecrisisresolution.This mayexplaintherelatively
less evidence of theresolutionof consumerdissatisfactionin C1. Second, the adoptionof service
recoverysystems,utilisingthe elements of the multi-dimensionalnatureof servicerecovery,can
be expensive. Most of the ?20 million cost thatP&O incurredthroughthe eventualcancellation
of the C2 cruise has been attributedto the measures used to alleviate potential passenger
dissatisfactionwith the organisation.Third,andrelatedto the above, the strategiesarebased on
the premisethatreductionof consumerdissatisfactionwith service recoveryis relatedpositively
to desirableconsequences,such as consumerloyalty towardsthe organisation.The satisfactionloyalty relationshiphas been questioned (see, for example, Bougie et al, 2003), and reported
consumer dissatisfaction with P&O's responses to C1 appears not to have deterred 'loyal'
passengersbooking for the intendedcruise in C2.
However, from the services marketingand more general marketingand consumerbehaviour
literature,in keeping with the argumentfor a new dominantlogic for marketing,fundamental
ideas relatingto consumerparticipationin serviceproductionmay prove to be the most helpfulin
understandingthe consumerstakeholderrole in servicecrises.The case studiesgive face validity
to two emergingstrandsof research:'jayconsumerbehaviours'andthe impactof c2c interactions.
Both are as yet under-researched
areas,but appearto have relevance to a wide range of service
Tentative
organisations(forexample,thecrises at BA andthe NHS mentionedin the Introduction).
assertionsfromthe analysisof C andC2 arethattherearebenefitsto be gainedfrommonitoring
all forms of consumerparticipation,but of particularinterestarejayconsumerbehaviours,which
could inflame a crisis, and the stabilisingimpactof c2c interactionson consumerdissatisfaction
levels. Interestingly,C1 and C2 have (inadvertently)attainedsome of the propertiesof a field
experimentwith respect to c2c interactions,where in the former case such interactionswere
limited, whereasin the latterthey were encouraged.There is scope for researchthatexamines,
more formally,the relationshipbetween the opportunityto interactwith fellow consumersand
the subsequentperceptionsof a serviceexperience.Theparticulareffects of consumerparticipation
are probably too subtle to be detected by the self-completion satisfaction surveys (such as
RECOVSAT)thatarecommonplacein the serviceindustries,and which rarelyseek feedbackon
behaviours of fellow consumers; more imaginative procedures for monitoring consumer
perceptions(includingthose of othercustomers'behaviours)are called for.
The importanceof the role played by individualcustomersandtogetheris one thathas not been
fully explored. The services marketingapproachoutlined in this paper augmentsfurtherthe
multi-functionalriskmanagementprocessesthatorganisationsrequireto improvetheiroperational
and strategicresilience.

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Risk Management:An International Journal 2005, 7 (2), 49-63

Notes
1

Steve Baronis Professorof Marketing,Kim Harrisis Readerin Services Marketing,andDominic

Elliott is Professor of Strategic Management and Business Continuity, Management School,
Universityof Liverpool;email: d.elliott@liv.ac.uk.

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