For Our Valued Customers Only: Examining Consumer Responses to Preferential Treatment Practices

Preferential treatment is a prevalent relationship marketing practice of companies treating some customers better than others. Using two studies, the authors explore the practice of preferential treatment and show that preferential treatment influences both consumers who receive it and those who do not. Two underlying mechanisms for this effect are identified. When treated unfavorably, fairness concerns arise, negatively affecting consumers' subsequent behavioral response toward the firm. On the other hand, when treated favorably, consumers experience feelings of gratitude, which positively influence their purchase behaviors and word-of-mouth. However, a presence of others who do not get the same treatment leads to feeling of embarrassment, consequently reducing fairness perceptions. As a result, receiving preferential treatment does not always lead to positive attitudinal and behavioral consequences. Overall, fairness and gratitude represent two mechanisms underlying the effect of preferential treatment on consumer subsequent behaviors and each has its distinct antecedents.