The present report has been commissioned by the Consumers Directorate of DG Justice and Consumers from the Joint Research Centre’s Econometrics and Applied Statistics Unit as part of a broader collaborative effort that aims to extend and revise the statistical indicators, methodology, and presentation of information that underpin both the ‘Consumer Markets’ and the ‘Consumer Conditions’ Scoreboards, within the more general framework of internal market integration. The present document has been conceived to address the refinement and further development of the Consumer Markets Scoreboard (CMS). As a result, the main objectives of this report are twofold:
1. To provide a comprehensive review of the theoretical framework and methodology behind the CMS, and to assess the statistical soundness and robustness of the existing Market Performance Indicator (MPI).
2. To review the empirical tools that can be used to analyse micro-level data on market performance, as perceived and reported by the experienced consumers responding to the Market Monitoring Survey (MMS).
In this light, the report is structured in two parts. The first part commences with a survey of the literature about consumer satisfaction and market performance studies (chapter 1.1), which is divided in three main sections. The first section focuses on the different theoretical approaches and behavioural models that have been proposed to analyse the consumer decision-making process and subsequent satisfaction outcomes. The second section of the literature review focuses on the issue of how to empirically assess consumer satisfaction. Finally, the third section addresses the links between consumer satisfaction and profitability and economic growth.
After the literature review, chapter 1.2 discusses the methodological framework for the assessment of consumer market satisfaction. The theoretical foundations of the assessment and the prospective list of indicators have been revised in line with the findings from the literature review. Additionally, a new component based on the individuals’ subjective perception of the perceived value of the goods or services available in the market has been proposed to further refine the conceptual framework underlying the CMS.
In chapter 1.3, the statistical soundness of the 2014 Market Performance Indicator (MPI) is reviewed and assessed. For that purpose, both descriptive statistics and correlation structure analyses of the components aggregated within the indicator are performed. The results confirm that the statistical structure of the MPI is fairly balanced and that, as expected, the countries’ scores obtained in terms of aggregate markets (goods and services) are correlated.
In the section devoted to the uncertainty and sensitivity analysis of the MPI (chapter 1.4), the starting point for the analysis has been to check to what extent the scores and rankings resulting from the indicator are sensitive to subjective modelling choices, in particular to the choice of weights and the aggregation scheme. As explained therein, the results presented in the current report—based on aggregate data from the CMS 2014—tend to confirm the robustness of the scores and rankings of the MPI across countries and across markets.
The first part of the report concludes with a section (chapter 1.5) which aims to set in a wider context the results from the previous sections and to discuss possible avenues for further analysis.
The general objective of the second part of the report is to explore the heterogeneity in consumer experiences across consumer markets. The first section of the second part (chapter 2.1) presents an overview of studies exploring the sources of heterogeneity in consumer motivation, preferences and behaviour. From chapter 2.2 to chapter 2.4, individual level data from the MMS 2015 are used for the empirical investigation of consumer markets performance as subjectively perceived by consumers themselves. Econometric tools such as multiple linear regression models, logistic regression and multinomial logistic regression have been used to perform the analyses. Explanatory variables in those models are in line with the literature, and include socio-demographic characteristics of survey respondents such as age, gender, education, occupation, internet usage, mother tongue and income. Additional explanatory variables accounting for market specific conditions and cross-country or cross- cultural differences have also been included in the models. The results obtained therein show that socio-demographic characteristics shape consumer assessment of market performance. Regional and cross-country differences have also a significant impact on the results. Furthermore, there is significant evidence that consumers are influenced by the specific conditions encountered in the different markets and assess their consumption experiences within them accordingly.
When looking at socio-demographic trends, results of the multivariate analyses performed on the overall MPI scores indicate that women are statistically significantly more positive than men. The middle age group (35-54 year-olds) is negatively associated with higher MPI scores. People with higher levels of education tend to give significantly more negative scores. Ratings are significantly higher when respondents belong to the categories of housepersons and pensioners, and conversely seem to be the lowest when respondents are self-employed. Both those who never use the internet and those who use it very frequently (daily) assign significantly more positive ratings. Those whose mother tongue is not an official language tend to be more negative in their overall market assessments. Furthermore, negative associations have also been found to be very intense for those consumers in a very difficult financial situation.
With regard to regional differences, overall ratings are significantly lower in the Eastern and Southern regions. On the other hand, ratings appear to be significantly higher when considering Eurozone countries and New Member States. When looking at the different markets and market groupings, goods markets perform significantly better than services when assessed through the overall MPI scores. In general, the assessment of market performance is found to be significantly poorer for those services markets related to clusters such as banking, utilities and telecoms.
However, when analysing the results obtained from the MMS 2015 data, we must also highlight that the situation may differ heavily across the individual components of the MPI (comparability, trust, problems and detriment, expectations and choices). Additionally, outside the realm of the MPI, complaints and switching behaviour are two additional dimensions of market performance included in the MMS 2015 and assessed by survey respondents. Heterogeneity in consumer assessment has also been found in the empirical analyses undertaken on these dimensions.
The second part of the report concludes with a section devoted to summarise the main findings of the empirical analyses.
Finally, a brief summary of overall results and conclusions is presented at the end of the report.