Friends or Enemies? The impact of partial competitor referral on consumer purchase

Abstract

Partial competitor referral is a common sales influence tactic used to increase consumers’ likelihood of purchasing a focal product (e.g., a painting or table) by referring consumers to a competitor that offers a non-focal product (e.g., a frame or chairs). This study examines the impact of two types of partial competitor referrals, i.e., recommending a competitor with strategic vs. tactical advantages, and their impact on consumers’ purchase intention. Five studies showed that recommending a competitor with strategic (vs. tactical) advantages on a non-focal product increases consumers’ purchase intention of the focal product. Credibility of the referral signal and trust of the seller (e.g. goodwill, integrity, and competence trust) mediate the effects. Skepticism toward salespeople, the presence of monetary incentives for referrals, and seller-competitor product assortment overlap moderate the effects. Additionally, we found that recommending a competitor with strategic (vs. tactical) advantages on a non-focal product decreases consumers' future purchase intention for the non-focal product. Theoretical contributions and practical implications of our research are discussed.