Regardless of the apparent need for product
eliminations, many managers hesitate to act as
they fear deleterious effects on customer satisfaction and loyalty. Other managers do
carry out product eliminations, but often fail
to consider the consequences for customers
and business relationships. Given the relevance
and problems of product eliminations, research
on this topic in general and on the
consequences for customers and business
relationships in particular is surprisingly scarce. Therefore, this empirical study explores how and to what extent the elimination of a
product negatively affects customers and
business relationships. Results indicate that
eliminating a product may result in severe
economic and psychological costs to customers,
thereby seriously decreasing customer satisfaction and loyalty. This paper also shows
that these costs are not exogenous in nature. Instead, depending on the characteristics
of the eliminated product these costs are
found to be more or less strongly driven by a
company’s behavior when implementing the
elimination at the customer interface.
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