Christophe THOUVENOT’s teaching fields are B2B Marketing, Innovation Marketing, Customer Relationship Management and Sales Strategy. He researches Customer Satisfaction, Technology Innovation Marketing and Product. He is adjunct lecturer in Marketing and a doctoral student in DBA at Grenoble Ecole de Management. He has 20 years of experience at Philips Consumer Electronics in Sales, Product Management, Market Management and Business Developments, in Europe and in the United States.
The objective of this dissertation is to study the strategic importance of product returns leniency on product returns and on the firm’s market performance. Given the high costs of product returns, there are very mixed views in the field and in the academic literature on product returns leniency. On the one hand, offering a very lenient product return policy to customers allows a company to enjoy higher sales, which generates higher revenues and higher margins. On the other hand, a generous product return policy will probably generate more product returns and consequently higher costs to a firm. The way companies define their product return policy is influenced by their market and strategic orientations, and as a consequence, their product return leniency will have an impact on the product returns that they have to manage, and on their market performance. This research is based on six different hypotheses. The initial four hypotheses cover the links between the four market and strategic orientations that characterize most companies (market, competitor, selling and production orientations) and product return leniency. The fifth hypothesis clarifies the link between product return leniency and actual product returns and the sixth hypothesis studies the link between product return leniency (PRL) and market performance. These hypotheses are controlled by the characteristics of the companies (sales growth, size, B2B or B2C, sales channel and industry), by their business environment (in terms of demand uncertainty, technological turbulence and competitive intensity) and by the geographical area in which they operate. Having surveyed 166 C-level managers with different responsibilities, operating in different industries and in 18 different countries, the conclusion is that both customer and selling orientations have an influence on PRL: customer orientation increases PRL while selling orientation decreases PRL. As a result, PRL simultaneously increases product return rates and has a positive impact on market performance. Data were collected electronically in a questionnaire built on 86 research-qualified questions, using a 7-point Likert scale. One hundred sixty-six answers were collected, well above the minimum of 100 complete questionnaires that were needed to test the model and be statistically relevant. Structural equation modeling was used to analyze the data and test the model.