1031407

research-article2021
JHTXXX10.1177/10963480211031407Journal of Hospitality & Tourism ResearchSellers, Nicolau / Prospect Theory Approach

Satisfaction and Expenditure

in Wineries: A Prospect Theory
Approach

Ricardo Sellers
University of Alicante
Juan Luis Nicolau
Virginia Tech

Visitor satisfaction has been shown to be a critical determinant of visitor expenditure

in wineries. Although the relationship between visitor satisfaction and expenditure
in wineries has been investigated in previous literature, we have unearthed potential
intricacies that emerge when this relationship is analyzed within the reference
dependence framework of prospect theory. To fill this gap, we use segment-based
reference points to capture the singularity of winery visitors, and results show that
demographics and psychographics confirm reference dependence. When reference
points are based on psychographics, loss aversion is confirmed (lowering visitor
satisfaction has a greater negative impact on expenditure than the positive impact
derived from increasing visitor satisfaction), while diminishing sensitivity is observed
for losses (the effect of the variations in visitor satisfaction shifts depending on the
distance from the individual’s reference point). Interestingly, when the reference
points are obtained through demographics, loss aversion is reversed. Relevant
managerial implications are outlined.

Keywords: satisfaction; expenditure; winery; loss aversion; prospect theory

Introduction

Wineries are mostly visited by wine enthusiasts and people who are interested
in wine regions (Charters & Ali-Knight, 2002). On account of the impact of this
experience on wineries and its subsequent potential spillover effect on the region,
analyzing the behavioral patterns of winery visitors is critical (Bruwer et al.,
2018). Chief among these behavioral patterns is the relationship between winery
visitor satisfaction and winery visitor expenditure. The effects of satisfaction on
behavioral dimensions, such as visitor expenditure, have been investigated in

Authors’ Note: This work was partially supported by the Spanish Ministry of Science, Innovation
and Universities under research project INTETUR (RTI2018-099467-B-I00).

Journal of Hospitality & Tourism Research, Vol. 47, No. 2, February 2022, 354­–374
DOI: 10.1177/10963480211031407 ogdr/.oi/p:stht

© The Author(s) 2021

354
 Sellers, Nicolau / Prospect Theory Approach 355

previous literature (Lee et al., 2018; Mitchell & Hall, 2004; O’Neill et al., 2002).
In this article, we attempt to unearth the potential intricacies that can emerge in
the relationship between winery satisfaction and expenditure within a reference
dependence framework (Kahneman & Tversky, 1979). This is certainly a gap in
the literature that we attempt to fill that can provide relevant implications, both
theoretical and managerial. Reference dependence is based on the two main
tenets of prospect theory: (a) loss aversion, through which losses have a larger
effect than gains (e.g., finding a lower than expected level of satisfaction can
result in a bigger effect on expenditure than getting a higher than expected level
of satisfaction); and (b) diminishing sensitivity, through which a change in a vari-
able (e.g., satisfaction) has a different effect depending on how far away this
change occurs from people’s benchmark.
Winery visits can be a major source of revenue for wineries because they
present a way to sell their products directly to the consumer (Kolyesnikova
et al., 2007). From a marketing viewpoint, wineries can regard the influx of visi-
tors as a learning opportunity for consumers and an avenue to build a strong
brand image not only for wineries but also for the regions in which these winer-
ies are located. In this context, understanding, in general, the behavior of winery
visitors is crucial to achieve the benefits of the influx (Yuan et al., 2005), and in
particular, the way satisfaction has an influence on expenditure is critical to take
advantage of the increasing interest in wineries (Lee et al., 2018).
The growing attraction to wineries can affect the regions in which these win-
eries are located. As a form of tourism, Hall et al. (2000, p. 3) broadly defined
wine tourism as a “visitation to vineyards, wineries, wine festivals, and wine
shows, for which grape wine tasting and/or experiencing the attributes of a grape
wine region are the prime motivating factors for visitors.”
Generally, studies on wine tourism have addressed one of the following
three topics (Thanh & Kirova, 2018). First, studies have discussed the destina-
tions’ strategies, which includes examining the initiatives that reinforce the
promotion of wine tourism destinations, the cost–benefit analysis of wineries,
and its effects on the image of the destination (Hojman & Hunter-Jones, 2012).
Second, research has been centered on the players that act in the wine tourism
industry and on the strategies followed by wineries (Dawson et al., 2011). For
example, Veres et al. (2008) have highlighted the relevance of setting up tast-
ing rooms at wineries, in which wine education is further cultivated, and
Thomas et al. (2018) have examined the “servicescape” of wineries. Third,
research has also examined the visitors’ perspective, such as aiming to charac-
terize the profiles of winery visitors (Charters & Ali-Knight, 2002; Lee et al.,
2018). This body of research has also looked into winery visitors’ segmenta-
tion (Alonso et al., 2007; Mitchell & Hall, 2006). Other topics have considered
the drivers—among which satisfaction plays a significant role (Mitchell &
Hall, 2006)—that motivate consumers to opt to visit wineries and the analysis
of the dimensions that can anticipate behavioral outcomes (Carlsen &
Boksberger, 2015; Lee et al., 2018; Ye et al., 2017).
356   JOURNAL OF HOSPITALITY & TOURISM RESEARCH

Taking the latter two elements (visitor satisfaction and behavioral outcomes),
the purpose of this article is to analyze the effect of satisfaction on a critical
outcome, namely, the expenditure of visitors in the winery. While the literature
has explored the relationship between these two dimensions, we argue that in a
reference dependence framework, the effect of satisfaction on expenditure can
reveal hidden relationships that are otherwise unobservable. Based on prospect
theory (Kahneman & Tversky, 1979), we propose a reference dependence
model, in which the two basic principles of this theory, namely, loss aversion
and diminishing sensitivity, are introduced. For this purpose, we generate the
segment-based reference points (rather than the traditional product-based refer-
ence points) to capture the singularity of winery visitors.

Determinants Of Consumer Expenditure In Wineries

To understand the winery visitors’ behavior and their level of spending, deter-
mining the key factors of the winery experience that drive this expenditure is
critical. Previous literature has highlighted that the profiling and segmentation
of winery visitors should be a priority owing to its relevance to the strategies of
wineries (Cho et al., 2017; Lee et al., 2018). In this literature on segmentation,
two approaches can be used to segment the winery visitors’ market (Del Chiappa
et al., 2019; Mitchell & Hall, 2006): demographic characteristics, such as gen-
der, age, or income, and psychographic characteristics, such as motivations, val-
ues, attitudes, or lifestyles. In the context of wineries, wine knowledge and
interest are also frequently considered (Rahman & Reynolds, 2015).
The importance of demographic variables has been strongly supported in the
literature to explain winery visitor behavior. For example, Dodd and Bigotte
(1997) defined two groups of winery visitors according to their age and income
level. Alonso et al. (2007) found various expense levels for distinct age groups,
stating that a high income does not correlate with high expenditure. Mitchell and
Hall (2001a) stated that differences exist between winery visitors in terms of
gender. They found that females give importance to the ambience of the winery
and socializing opportunities. Marzo-Navarro and Pedraja-Salinas (2010) pro-
posed various market segments based on demographics that can lead to distinct
consumption patterns. Given their objective nature, demographic variables can
facilitate the identification of consumers and implement marketing strategies
(Charters & Ali-Knight, 2002).
On the other hand, although psychographic variables may explain—better
than demographics—the behavior of winery visitors, their subjective nature rep-
resents a big challenge for companies which wish to use psychographics for
strategic planning (Molina et al., 2015). The importance of psychographic char-
acteristics has been previously addressed to segment winery visitors and to
explain their behavior (Barth & Salazar, 2010). According to previous literature,
two product-related psychographic variables are critical in determining the win-
ery visitors’ behavioral patterns: (a) Interest in wine, which is strongly related to
wine involvement, which is a central construct in the analysis of consumer
 Sellers, Nicolau / Prospect Theory Approach 357

behavior that may affect the decision to purchase a product (Hollebeek et al.,
2007). For example, Hollebeek et al. (2007) found that consumers who are heav-
ily engaged in the winery experience attribute great relevance to the region
where the wine is produced while being less sensitive to price; Charters and Ali-
Knight (2002) observed a link between the degree of interest in wine and peo-
ple’s motivation to go to wineries; and Nella and Christou (2014) classified
winery visitors into three segments, namely, low, medium and high involve-
ment, revealing that the assessment of the winery experience and wine purchases
are contingent on this classification; (b) Knowledge of wine, which refers to the
“familiarity that a consumer has with a product” (King et al., 2012), and has
been used to segment wine consumers (e.g., Bruwer & Buller, 2012). For exam-
ple, Alonso et al. (2007) found evidence of the differences among winery visi-
tors based on their wine knowledge. They observed that visitors with greater
wine knowledge than others exhibit higher spending after the visit.
Apart from demographics and psychographics, satisfaction—as a third ele-
ment—emerges as a critical explanatory dimension of the consumption behavior
of winery visitors in terms of expenditure (Lee et al., 2018; Mitchell & Hall,
2004; O’Neill et al., 2002; Thanh & Kirova, 2018). These authors emphasize
this connection in the context of winery visitors on account of its experiential
character. In the winery experience, the senses have played a central role in pro-
viding visitors with enjoyment (Getz, 2000). Hence, certain authors have focused
their attention on the customer experience (Bruwer & Alant, 2009). By focusing
on the effect of consumer satisfaction on purchase behavior, the underlying idea
is that wineries usually offer a holistic experience that may influence consumer
behavior during the visit (Mitchell & Hall, 2004) and after the visit (O’Neill
et al., 2002). In this sense, Bruwer and Alant (2009) and Mason and Paggiaro
(2012) have emphasized the need to consider satisfaction as a central construct
because satisfaction driven by the whole winery experience may affect behavior.
Moreover, Back et al. (2021) and Leri and Theodoridis (2019) have found that
the intention to visit the winery is determined by visitor satisfaction, and Park
et al. (2019) have also observed that satisfaction has a moderating effect on
revisit intentions; in particular, these authors found that, while there is a point of
satiation after which revisit intentions start to lower, this satiation point (mea-
sured by the number of optimal visits) becomes higher as satisfaction increases.
Although the effect of satisfaction on the winery visitors’ consumption has
been studied and is well-established in the existing literature, we go a step fur-
ther and analyze the potential intricacies that can be uncovered when this effect
is set in the reference dependence framework provided by prospect theory. In
fact, our central explanatory variable, for which this article states its hypotheses,
is the level of satisfaction in the context of prospect theory. Thus, once we have
reviewed the effects of demographics and psychographics to provide the frame-
work in which the hypotheses are developed, we next justify and state the satis-
faction-related hypotheses in the reference dependence framework of prospect
theory.
358   JOURNAL OF HOSPITALITY & TOURISM RESEARCH

Effect of Winery Visitor Satisfaction on Expenditure in a Reference

Dependence Framework

According to prospect theory (Kahneman & Tversky, 1979), people’s

assessment tends to be reference-dependent because they compare the perfor-
mance of a service to a benchmark. The consequence of these discrepancies is
the existence of potential hidden effects on a specific outcome (e.g., level of
expenditure). Specifically, within reference dependence of prospect theory
there are two central characteristics: (a) loss aversion, which indicates that
negative discrepancies (losses) have a larger effect than positive differences
(gains; e.g., the effect derived from finding the experience in a winery less
satisfactory than expected will have a bigger effect on the level of expenditure
than finding that experience more satisfactory than expected); and (b) dimin-
ishing sensitivity, which entails that a given increment (or decrement) in a
variable (satisfaction) has a different effect depending on how far away this
increment occurs from people’s benchmark.
Various applications in hospitality and tourism have utilized the tenets of pros-
pect theory. Nicolau (2008) has tackled the prices in various types of tourism prod-
ucts, Kim and Canina (2015) have examined satisfaction in travel destinations, Xu
(2019) has compared hotel attributes with customer satisfaction, and Chattopadhyay
and Mitra (2020) have examined the determinants of the peer-to-peer tourist accom-
modation price. However, no analysis has been conducted in the context of winer-
ies. The potential effects of prospect theory in the context of winery visits is unique,
as we can discover relevant intricacies in the relationship between satisfaction and
expenditure in a framework in which numerous winery visitors are considered
“wine experts” or at the very least, “wine lovers.” Thus, their degree of satisfaction
compared with their reference group should have an effect on an outcome variable,
such as expenditure. Hence, this article attempts to investigate whether obtaining a
higher (or lower) level of satisfaction than that of an individual’s reference group,
which is defined via demographics or psychographics, has a distinct effect on
expenditure when visiting a winery.
On account of the arguments based on prospect theory, we expect the devia-
tions of satisfaction from the individual’s reference group, regardless of whether
this group is defined in demographic or psychographic terms, to explain the
level of consumer expenditure when visiting a winery. Consequently, we pro-
pose the following hypotheses:

Hypothesis 10: The effect of winery visitor satisfaction on expenditure is not

reference-dependent.
Hypothesis 1a: The effect of winery visitor satisfaction on expenditure is
reference-dependent.

While demographics and psychographics can capture the various personality

traits of a person, we expect that the standard properties of prospect theory, that
is, loss aversion and diminishing sensitivity, can apply to the relationship
 Sellers, Nicolau / Prospect Theory Approach 359

between satisfaction and expenditure. Accordingly, the following hypotheses

are stated as follows:

Hypothesis 20: Lower than expected satisfaction does not bring a negative impact on
winery visitor expenditure that is higher than the positive impact derived from higher
than expected satisfaction.
Hypothesis 2a: In line with the loss aversion principle, lower than expected satisfac-
tion brings a negative impact on winery visitor expenditure that is higher than the
positive impact derived from higher than expected satisfaction
Hypothesis 30: Changes in satisfaction that are closer to the reference point will not
cause a larger impact on visitor expenditure than changes in satisfaction that are fur-
ther away from reference points.
Hypothesis 3a: In line with the diminishing sensitivity principle, changes in satisfac-
tion that are closer to the reference point will cause a larger impact on visitor expen-
diture than changes in satisfaction that are further away from reference points.

Research Design

Sample and Variables

To gather the data required for this article, an online survey was conducted in
Spanish using the Qualtrics (www.qualtrics.com) platform. The population of
interest was comprised of people who had visited a Spanish winery. All respon-
dents were adults that had visited at least one winery in the past 24 months.
Respondents that had visited more than one winery for the past 24 months were
instructed to think only about their most recent winery visit. We pretested the
questionnaire on a sample of five face-to-face interviews and five online respon-
dents. The survey was conducted between April 1st and April 21st, 2019 and
was promoted through the Spanish Association of Wine Tourism (www.enotur-
ismodeespaña.es), Vinetur (www.vinetur.com), and social networks (Twitter and
Facebook). We collected 524 responses. We discarded 79 questionnaires because
respondents had not visited a winery in the past 24 months and 18 questionnaires
due to incomplete responses. The final sample comprised 427 participants.
Spain is arguably an adequate study field because not only is the country one
of the world’s top destinations (UNWTO, 2019) but also one of the world’s larg-
est wine producers (OIV Report, 2019). Wineries view this synergy between
tourists, visitors, and wine as a great opportunity for their development (Marzo-
Navarro & Pedraja-Iglesias, 2012).
To make the reference dependence model operative, we defined the follow-
ing dependent and independent variables, whose descriptive statistics are shown
in Table 1.

1. Dependent variable. The level of expenditure in the winery is the money spent
by the consumer during the visit, which was measured through a quantitative
variable. As this information relies on respondents’ memory, it can be biased;
360   JOURNAL OF HOSPITALITY & TOURISM RESEARCH

Table 1
Descriptive Statistics

Mean/
Variable Proportion SD

Dependent variable
Expenditure 17.67 20.51
Expenditure (>0) 30.06 18.51
Independent variables–main variables
Satisfaction with the staff 5.76 .990
Satisfaction with the winery facilities 5.24 1.16
Satisfaction with the environment 5.62 1.26
Satisfaction (average) 5.54 0.93
Independent variables–control variables
I often attend wine tastings 3.97 1.78
Wine culture should be promoted more intensely 5.10 1.46
I read wine magazines 4.26 2.00
I am interested in wine 4.58 1.76
Interest in wine (average) 4.47 1.51
I am a wine specialist 3.32 1.68
I know different wine areas (protected designations of origin) 4.78 1.42
I have a huge knowledge of the wine culture 4.02 1.74
Knowledge of wine (average) 4.04 1.34
Age 18-24 Years 18.7
Age 25-34 Years 26.0
Age 35-44 Years 31.4
Age 45-54 Years 15.0
Age >55 Years 8.9
Gender (Female) 48.7
Monthly income €1637.7a 552.90
Income < €900 17.6
Income €900-€1500 26.0
Income €1501-€2000 26.0
Income €2001-€2500 17.6
Income > €2501 12.9

aObtained via midpoint coding by considering the average of each interval and the
number of respondents assigned to each interval.

nevertheless, the average of this variable (€17.67) is very similar to the amount
(€18.27) reported by Acevin (2018) for 2017.
2. Independent variables. The central variable is satisfaction, which was measured
through three items in the questionnaire, in which the visitors reported their
degree of satisfaction with the following three dimensions of the visit using a
7-point Likert-type scale: staff, winery facilities, and landscape and environ-
ment. With regard to the two psychographic variables, “interest in wine” was
measured through the following four items: I often attend wine tastings; Wine
 Sellers, Nicolau / Prospect Theory Approach 361

culture should be promoted more intensely; I read wine magazines; and I am

interested in wine. “Wine knowledge” was measured through the following three
items, in which the visitors expressed their degree of agreement or disagreement
using a 7-point Likert-type scale: I am a wine specialist, I know different wine
areas (protected designations of origin), and I have a broad knowledge of wine
culture. These psychometric scales are adapted from Molina et al. (2015) and
Marzo-Navarro and Pedraja-Iglesias (2010). For these variables, an overall mean
of the different items was used to measure the participants’ satisfaction
(Cronbach’s α = .749), interest in wine (Cronbach’s α = .881), and wine knowl-
edge (Cronbach’s α = .773). In terms of reliability, we obtained the acceptable
values of the Cronbach’s α because all of them were greater than the generally
accepted threshold of .70.

As for demographic variables, the following characteristics were obtained:

(a) age of the consumer, which was measured through a categorical variable:
18-24, 25-34, 35-44, 45-54, and older than 55 years; (b) gender, measured by
a dummy variable that takes the value 1 if the consumer is male and 0 other-
wise, and (c) income, which was measured through a categorical variable
representing the consumer’s monthly income expressed in euros (lower than
€900, between €900 and €1500, €1501-€2000, €2001-€2500, and greater than
€2501).

Research Instrument

To test the reference dependence via loss aversion and diminishing sensitivity
in consumer expenditure in wineries, we introduced the basic characteristics
proposed in prospect theory (Kahneman & Tversky, 1979) into a regression
model, which is expressed as follows:

Expendituresi = α + β ⋅ STGaini + γ ⋅ STLossi + θ ⋅ STGaini2 + ϕ ⋅ STLossi2

+ δ1 ⋅ Knowledgei + δ 2 ⋅ Interesti + µ1 ⋅ Age18 − 34,i + µ 2 ⋅ Age> 45,i
+ρ4 ⋅ Genderi + τ1 ⋅ Income< ‹ 1501,i + τ2 ⋅ Income> ‹ 2001,i + εi

where Expendituresi is the amount of money spent in the after-visit purchase.

STGaini is the “gain in satisfaction,” which is defined as (Actual Satisfactioni −
Expected Satisfactioni) D1, where D1 = 1 if (Actual Satisfactioni − Expected
Satisfactioni) > 0 and D1 = 0 otherwise. STLossi is the “loss in satisfaction,”
which is defined as (Actual Satisfactioni − Expected Satisfactioni) D2, where D2
= 1 if (Actual Satisfactioni − Expected Satisfactioni) < 0 and D2 = 0 otherwise.
The psychographic variables are Knowledgei and Interesti, and the demographic
variables are agei (for the sake of parsimony in the number of parameters, the
two extreme categories on each side are grouped and the central category [age
35-44 years] is the baseline), genderi and incomei (as before, the extreme catego-
ries are grouped and the central category [Income €1501-€2000] is the baseline).
362   JOURNAL OF HOSPITALITY & TOURISM RESEARCH

εi is a random term. In addition, α, β, γ, θ, ϕ, δ1, δ2, µj (j = 1, . . . ,4), ρ and τj

(j = 1, . . . ,4) are the parameters of the model.
If the parameter associated with “loss in satisfaction” was greater than the
parameter related to “gain in satisfaction” (γi/βi > 1), a loss aversion was con-
firmed. If the parameter associated with the square of “gain in satisfaction” was
significantly negative (θ) and the parameter related to the square of “loss in
satisfaction” was significantly positive (ϕ), then the diminishing sensitivity was
confirmed. The parameters δj, j = 1, . . . ,5 are associated with the two psycho-
graphics and the three demographics.
As indicated previously, the “expertise” of numerous winery visitors made
the context of this study unique. Specifically, one of its singularities is the refer-
ence point we should use. Rather than using the product-based benchmarks
prevalent in the literature (Kim & Canina, 2015), we could resort to segment-
based reference points to capture the differences between the individual’s satis-
faction and his or her comparison group to analyze the effects of these differences.
In line with the literature on winery experiences, which emphasized the use of
demographic and psychographic segmentations (Mitchell & Hall, 2006), we
generated two comparison groups for each individual.
To calculate the expected satisfaction, we identified the potential segments in
the sample and calculated the average satisfaction of each segment. This average
was used as the expected satisfaction of the comparison group that the visitor
belonged to. We utilized the Ward hierarchical cluster analysis algorithm, which
was applied to the demographics (age, gender, and income) and the psycho-
graphics (knowledge and interest) separately to obtain the optimal number of
segments for each type of characteristics. According to Lewis and Thomas
(1990), the optimal number of segments was obtained when the segments
observed could explain at least 65% of the global variance, whereas the increase
in the total variance derived from adding a new segment was more than 5%.
From each of the two segmentations (demographics vs. psychographics), the
average value of satisfaction for each segment would be obtained and used as
the expected value of the individual’s comparison group.

Results And Discussion

Prior to proceeding with the parameter estimates, certain statistics controls

were required. First, we estimated the variance inflation factors, in which no
parameter exceeded the value of 10. Consistent with Neter et al. (1985), collin-
earity did not seem to be an issue. Still, given that in this preliminary analysis we
detected a high correlation of 78.5% between the variables “interest in wine”
and “knowledge of wine,” we then separated these variables when estimating
the models. Second, the Breusch–Pagan test rejected homoskedasticity (F =
2.816; p < .01 and F = 2.616; p < .05). Therefore, the White heteroskedasticity
standard errors were calculated for the parameter estimates. Finally, we tested
for the sample selection bias, which was critical for this application. Sample
selection bias could emerge when analyzing the factors that explained the
 Sellers, Nicolau / Prospect Theory Approach 363

expenditure of a winery visitor because this expenditure was only observed if an

individual decided to buy something after the visit. However, the expenditure
was unobservable otherwise. Not controlling for this bias could result in spuri-
ous parameter estimates. Following the sample selection correction proposed by
Heckman (1979), we introduced inverse Mill’s ratio (IMRi) in the following
baseline models:
Expendituresi = α + τ ⋅ Satisfactioni + δ1 ⋅ Knowledgei + µ1 ⋅ Age18−34,ii
+µ 2 ⋅ Age> 45,i + ρ4 ⋅ Genderi + τ1 ⋅ Income< ‹ 1500,i
+ τ2 ⋅ Income> ‹ 2001,i + ψ1 ⋅ IMRi + εi

Expendituresi = α + τ ⋅ Satisfactioni + δ 2 ⋅ Interesti + µ1 ⋅ Age18−34,i

+µ 2 ⋅ Age> 45,i + ρ4 ⋅ Genderi + τ1 ⋅ Income< ‹ 1500,i
+ τ2 ⋅ Income> ‹ 2001,i + ψ 2 ⋅ IMRi + εi
The results showed that the parameter ψ associated with the IMR was insig-
nificant in either equation. ψ1 was 6.278 (t = 0.565; p = .572), and ψ2 was 7.347
(t = 0.696; p = .487). These insignificant values meant that sample selection
bias should not be an issue in this empirical application. Technically, this result
showed that we could not reject the null hypothesis that the error terms of the
expenditure equation and the purchase equation were uncorrelated. Thus, as our
data were consistent with no selection, we could use the standard regression
model. In fact, we reestimated the previous two models without the IMR, and we
obtained slightly better values on the Schwarz information criterion, which were
8.532 versus 8.552 and 8.433 versus 8.453.
Once we checked for collinearity, heteroskedasticity, and sample selection
bias, we proceeded with the estimation of the models with reference depen-
dence. For this purpose, we need to estimate the reference points (expected
satisfaction) for each individual. The application of the Ward hierarchical
cluster analysis algorithm, along with Lewis and Thomas’ (1990) criteria (65%
of global variance and a minimum increase of 5% when adding a new seg-
ment), showed that the optimal number of segments based on demographics
and psychographics were six and five, respectively (see Tables 2 and 3). For
each of these segments, we calculated the average value of satisfaction (Table 4),
which was representative of the expected value of the individual’s comparison
group. The introduction of these variables allowed us to estimate the results
presented in Table 5.
Models 1 and 2 in Table 5 show the effect of satisfaction on winery visitor
expenditure, in which the values of the comparison groups (expected satisfaction)
are obtained through psychographics. Models 3 and 4 present the effect of satis-
faction on winery visitor expenditure, in which the values of the comparison
groups (expected satisfaction) are obtained through demographics. Models 1 and
3 include the variable “interest in wine” whereas excluding “knowledge of wine.”
The reverse applies to Models 2 and 4. We observed that the models with expected
364   JOURNAL OF HOSPITALITY & TOURISM RESEARCH

Table 2
Segments Based on Demographics

Number of Segments σ2a σ2(%)a Explained Variance Δσ2a

10 399.10 21.87 1.72 78.13

9 430.48 23.59 2.39 76.41
8 474.05 25.98 2.39 74.02
7 517.63 28.37 4.36 71.63
6 597.10 32.72 4.55 67.28
5 680.21 37.28 5.27 62.72
4 776.45 42.55 7.04 57.45
3 904.89 49.59 14.24 50.41
2 1164.70 63.83 36.17 36.17
1 1824.63 100.00 0.00 0.00

aIntragroup variance.

Table 3
Segments Based on Psychographics

Number of Segments σ2* σ2(%)a Explained Variance Δσ2a

10 139.89 8.00 0.95 92.00

9 156.47 8.94 0.98 91.06
8 173.66 9.93 1.21 90.07
7 194.79 11.14 1.45 88.86
6 220.15 12.58 2.58 87.42
5 265.34 15.17 3.89 84.83
4 333.45 19.06 7.25 80.94
3 460.21 26.31 9.58 73.69
2 627.72 35.88 64.12 64.12
1 1749.30 100.00 0.00 0.0

aIntragroup variance.

Table 4
Average Satisfaction (Expected Values) for Demographic and Psychographic
Comparison Groups

Demographic-based Segment Psychographic- Segment

Segment Segmentation Size based Segmentation Size

1 5.75 119 5.62 123

2 5.72 42 5.88 74
3 5.6 91 5.37 75
4 5.68 46 5.36 87
5 5.23 88 5.46 68
6 5.14 41
 Table 5
Effects of Visitor Satisfaction on Winery Visitor Expenditure With Reference Dependence

Model 1 Model 2 Model 3 Model 4

Parameter SD Parameter SD Parameter SD Parameter SD

STGain (psychographics) −8.342 9.674 −12.164 10.056

STLoss (psychographics) 11.176* 5.143 14.216** 5.365
STGain2 (psychographics) 7.417 7.634 10.786 7.712
STLoss2 (psychographics) 3.866*** 2.259 4.886* 2.387
STGain (demographics) 14.747* 6.786 13.011*** 8.041
STLoss (demographics) −1.062 4.214 2.980 4.460
STGain2 (demographics) −8.530 5.510 −6.645 6.227
STLoss2 (demographics) −1.478 2.729 −0.248 2.788
Interest in wine 6.453** 0.679 6.030** 0.709
Knowledge of wine 6.056** 0.727 5.197** 0.733
Age 18-34 years 0.829 2.088 −1.553 2.281 −0.288 2.139 −2.863 2.357
Age > 35 years −0.393 2.632 0.143 2.851 −0.386 2.598 0.062 2.792
Gender 5.619** 1.875 5.062* 1.991 5.657** 1.921 5.114* 2.028
Income <€1501 −3.120 2.671 −3.712 2.753 −2.548 2.667 −3.420 2.733
Income >€2001 1.289 2.824 −0.245 2.947 1.608 2.866 −0.084 2.983
Constant −0.093 5.299 7.016 5.065 −2.814 4.808 6.079 4.635
R2 .343 .273 .341 .269
Adjusted R2 .316 .243 .314 .238
F statistic 12.540** 9.006** 12.417** 8.825**

*p < .05. **p < .01. ***p < 0.1.

365
366   JOURNAL OF HOSPITALITY & TOURISM RESEARCH

satisfaction based on psychographics (Models 1 and 2) have slightly better

R-squared measures than the models with expected satisfaction based on demo-
graphics (Models 3 and 4); the models that include “interesting in wine” (Models
1 and 3) show better R2 measures than those that include “knowledge of wine”
(Models 2 and 4). The parameter estimates of Models 1 and 2 are robust in terms
of significance and sign, as are the parameters of Models 3 and 4.
Models 1 and 2 where the expected satisfaction is obtained through psycho-
graphics. We found that the parameters associated with loss in satisfaction
(STLoss) and with the squared of loss in satisfaction (STLoss2) were significant
and positive. The fact that we obtained significant parameters that capture refer-
ence dependence supported the alternative Hypothesis 1a, which posited that the
effect of winery visitor satisfaction on expenditure was reference dependent in
line with Kahneman and Tversky’s (1979) prospect theory. Interestingly, the
parameters related to the gain in satisfaction (STGain) and the squared of gain in
satisfaction (STGain2) were noninsignificant. As the loss parameter was signifi-
cantly greater than zero, we could state that it was also significantly greater than
the nonsignificant gain parameter. The result that the loss parameter is greater
than the gain parameter was consistent with the loss aversion principle of
Kahneman and Tversky’s (1979) prospect theory and with the alternative
Hypothesis 2a. Accordingly, this outcome shows that lower than expected satis-
faction brings a negative impact on winery visitor expenditure; and this negative
impact on expenditure is greater than the positive impact derived from higher
than expected satisfaction. This loss aversion meant that a reduction in satisfac-
tion by an amount s would lead to a decrease in winery expenditure greater than
the increase in winery expenditure, which were derived from an augment in
satisfaction by an equivalent amount s. In practical terms, the insignificant gain
parameter indicated that getting more satisfaction than the one expected in the
individual’s psychographic comparison group did not lead to an increase in
expenditure. However, given the significant loss parameter, getting less satisfac-
tion than what was expected for the individual’s psychographic comparison
group caused a significant reduction in expenditure.
With regard to the results obtained for the square variables, namely, STGain2
and STLoss2, the fact that the latter was significant and positive whereas the
former was insignificant indicated that the diminishing sensitivity was only
observed for losses. Consequently, these results are in line with the alternative
Hypothesis 3a as changes in satisfaction that were closer to the reference point
would cause a larger impact on visitor expenditure than changes in satisfaction
further away from reference points. This result was only observed in loss in
satisfaction (not for gain in satisfaction). The distance from an individual’s
level of satisfaction did not seem to have any effects. This parameter was
unsurprisingly insignificant because, as shown earlier, the gain parameter
itself was also insignificant.
These types of departures from the prospect theory are not unusual in the
hospitality and tourism literature. For example, the same pattern as the one
 Sellers, Nicolau / Prospect Theory Approach 367

found in this application (loss aversion and diminishing sensitivity for losses)
has also been observed in the context of reference prices by Nicolau (2008).
These kinds of anomalies can offer new insights into consumer behavior.
Models 3 and 4 where the expected satisfaction is obtained through demo-
graphics. We found that only the parameter associated with gain in satisfaction
(STGain) was significant. Although a different pattern was observed in this case
compared with the previous one, these results can still support the alternative
Hypothesis 1a because one reference dependence parameter was significant.
However, the parameters related to loss in satisfaction (STLoss), squared of
loss in satisfaction (STLoss2) and squared of gain in satisfaction (STGain2) were
insignificant. These results did not support alternative Hypotheses 2a and 3a,
thus favoring null Hypotheses 20 and 30. The fact that the gain parameter was
significant and was greater than the insignificant loss parameter was against the
loss aversion principle. This result showed evidence of a reversed loss aversion,
which was consistent with the results found in other applications (Walasek &
Stewart, 2015; Zheng et al., 2018). This finding indicates that an increment in
satisfaction by an amount s would lead to an increase in winery expenditure,
which would be greater than the decrease in winery expenditure derived from a
reduction in satisfaction by an equivalent amount s. In practical terms, the sig-
nificant gain parameter indicated that obtaining more satisfaction than the one
expected in the individual’s demographic comparison group led to an increment
in expenditure greater than the one obtained under lower satisfaction. However,
given the insignificant loss parameter, obtaining less satisfaction than the
expected for the individual’s demographic comparison group did not cause a
significant reduction in expenditure.
On the other hand, the insignificant parameters obtained for the square vari-
ables, STGain2 and STLoss2, were against diminishing sensitivity. Thus, the
impact of variations in satisfaction was independent of how close or far away
from the reference point the individual’s level of satisfaction was.
Consequently, considering the distinct effects of demographics and psycho-
graphics outlined in the literature review, both types of characteristics seemed to
capture various personality traits of a person. Thus, the definition of the indi-
vidual’s comparison groups had an influence on the effect of satisfaction on visi-
tor expenditure. For psychographic comparison groups, loss aversion and
diminishing sensitivity for losses were observed. By contrast, loss aversion was
reversed, and the diminishing sensitivity was absent in demographic comparison
groups.
With regard to the control variables, consistent estimates were found for all
four models. “Interest in wine” (Models 1 and 3) and “knowledge of wine”
(Models 2 and 4) were significant and positive, which meant that the more inter-
ested in wine and more knowledgeable about wine people were, the more they
would buy after visiting the winery. Interest in wine is a key construct in con-
sumer behavior research, and several authors have highlighted the link between
wine involvement and purchase/consumption (Rahman & Reynolds, 2015). Our
368   JOURNAL OF HOSPITALITY & TOURISM RESEARCH

results supported this idea in the sense that the interested consumers would
spend more money after their visit. The positive relationship between “knowl-
edge of wine” and expenditure found in this article was consistent with Mitchell
and Hall’s (2001b) research, in which wine knowledge was linked to monthly
wine expenditure. With regard to the “age,” “gender,” and “income,” only “gen-
der” was significant, thus indicating that male visitors tended to spend more
money on purchasing wine after their visit than female visitors; this finding was
consistent with that of Bruwer et al. (2013).

Conclusions And Implications

Even though the effects of satisfaction on behavioral dimensions, such as

visitor expenditure, have been investigated in previous literature (Lee et al.,
2018), this article unearths some intricacies that can emerge in the satisfaction–
expense relationship within the reference dependence framework provided by
prospect theory. Therefore, this article has filled this gap by introducing loss
aversion and diminishing sensitivity in the model proposed. The empirical appli-
cation allows us to draw the following conclusions:

1. Differentiated patterns of reference dependence between visitor satisfaction and

winery expenditure are found in comparison groups, which are defined by demo-
graphics versus psychographics. Both characteristics can lead to reference
dependence (at least one reference dependence parameter is significant).
However, they can pick up different elements of winery visitors. Furthermore,
their expectation of satisfaction may vary depending on the comparison group
that is used.
2. In the models wherein the expected satisfaction has been obtained through psy-
chographics, the variables that seem to have an impact on visitor expenditure are
“loss in satisfaction” and the “squared of loss in satisfaction.” Consequently, the
loss aversion is confirmed (lowering visitor satisfaction has a greater negative
impact on expenditure than the positive impact derived from increasing visitor
satisfaction), and the diminishing sensitivity is observed for losses (the effect of
a variation in visitor satisfaction shifts depending on the distance from the indi-
vidual’s reference point).
3. In the models wherein the expected satisfaction has been obtained through
demographics, the variable that seems to have an effect on visitor expenditure is
“gain in satisfaction.” Given that the gain parameter is significantly greater than
the loss parameter, a reversed loss aversion is found (the increment in expendi-
ture derived from obtaining greater satisfaction was larger than the reduction in
expenditure derived from lower satisfaction).

With regard to the theoretical contributions, several theoretical implications

are to be considered: (a) introducing the reference dependence in satisfaction
measures when modeling the behavioral outcomes, such as expenditure, can
shed new insights in the satisfaction–expense relationship (although
 Sellers, Nicolau / Prospect Theory Approach 369

the literature has dealt with this relationship in the context of wineries, the
inclusion of reference dependence has allowed us to uncover new effects of
satisfaction on expenditure). (b) The use of segment-based reference points
(rather than the traditional product-based reference points) has proven to be
effective in detecting different patterns in the satisfaction–expense relationship.
Stemming from the prevalent distinction between demographic and psycho-
graphic segmentations that the literature on winery visitors has established, two
types of benchmarks have been generated (psychographic segment-based refer-
ence points and demographic segment-based reference points) to capture the
different traits of consumers.
Several managerial implications have been pointed out, such as:

1. Comparing consumer satisfaction with the expected satisfaction of the compari-

son group to which the consumer belongs can add relevant insight to the expen-
diture patterns. Rather than just considering satisfaction levels as absolute
measures, regarding these levels as relative measures is relevant to decision mak-
ers. Notably, the results from this research (in which the reference points are
derived from an individual’s comparison group) offer a new angle on the satis-
faction in winery visitors.
2. When the customer base of a winery is defined in terms of psychographics, loss
aversion can emerge. Therefore, when the service provided by a winery fails to
fulfill the consumers’ expectations, this loss aversion means that the negative
impact on expenditure is greater that the positive impact of an increase in satis-
faction of the same amount. For instance, a decrement in the rating of satisfaction
from 6 to 5 (in a 7-point Likert-type scale) can be perceived as a decrease in the
quality of service, which influences expenditure. If managers can solve this qual-
ity reduction and attempt to raise the satisfaction to 6, the increment from 5 to 6
will not produce the same size of variation (with a different sign) in expenditure
as the previous decrement. The variation in satisfaction from 5 to 6 will cause a
lower positive impact on expenditure than the negative impact derived from the
variation from 6 to 5. Hence, the pragmatic consequence is that the “efforts” to
obtain the satisfaction back to the previous upper levels must be greater than the
“distraction” that caused the reduction in satisfaction.
3. For wineries that define their market segment in accordance with psychograph-
ics, diminishing sensitivity will protect a winery’s reputation (materialized by
high levels of satisfaction) from service failures than wineries with lower levels
of satisfaction. For psychographic-related reference points, the diminishing sen-
sitivity has been found for losses. In practical terms, if the service received is
worse than expected, variations in satisfaction further away from the reference
point will result in lower marginal impacts than equivalent variations closer to
the reference point. The negative impact of bad experiences on expenditure will
be lower if the satisfaction changes from 6 to 5 than if the satisfaction level shifts
from 3 to 2. Therefore, in the event of a service failure, wineries with high and
low levels of satisfaction must try their best to implement service recovery
370   JOURNAL OF HOSPITALITY & TOURISM RESEARCH

strategies. However, wineries with high levels of satisfaction may have some
leeway (assuming that the service failure is not major), whereas wineries with
low levels of satisfaction need to work hard to solve issues and compensate its
customers because the negative influence of a bad experience can reduce the
consumer expenditure of these wineries.
4. For wineries that define their market segment through demographics (in which
reversed loss aversion is found), strategies and tactics seem to be less complex
than for wineries that use psychographics. The fact that the variable “gains in
satisfaction” brings an increment in expenditure that is greater than the decre-
ment derived from “losses in satisfaction” has given these wineries some
advantage. For the demographic-based segment, despite the logical argument
that a winery that is performing better than expected has a positive effect on
expenditure, falling short of these expectations will not harm this segment
much. The result is opposite in the case of psychographic-based segments.

Given that the questionnaire was distributed only in Spanish, the respondents
were Spanish, what might constitute a limitation of the sample.

Limitations And Future Research

Regarding limitation, although online surveys have been proven to be a more

efficient, cheaper, and quicker way to gather information than face-to-face inter-
views, these surveys can introduce some bias derived from the self-selection of
the interviewees. Particularly, our survey was conducted in Spanish and our
sample does, therefore, not consider international tourists visiting Spanish win-
eries. Also, a broader variety of psychographic variables, such as attitudes, val-
ues, and lifestyles, could reflect the other dimensions of consumer behavior. As
for future research lines, the simultaneous use of segment-based reference points
and product-based reference points can be used to enrich the results. Determining
which reference points (segment-based vs. product-based) have a better explan-
atory power would shed some light on the fact that both benchmarks can offer
various perspectives, which entails that these two reference points can comple-
ment each other.

Concluding Remarks

Although the relationship between visitor satisfaction and expenditure in

wineries has been investigated in previous literature, the motivation of this study
emerges from the lack of research that incorporates the paradigm of prospect
theory into this satisfaction–expenditure relationship in wineries. We have
unearthed relevant intricacies in this relationship and found that reference
dependence is supported. Also, when reference points are based on psycho-
graphics, loss aversion is confirmed, while diminishing sensitivity is observed
for losses only. Interestingly, when the reference points are obtained through
demographics, loss aversion is reversed. Theoretical implications related to the
 Sellers, Nicolau / Prospect Theory Approach 371

way the satisfaction–expenditure relationship should be analyzed are pointed

out, and managerial implications provide new angles as to the way wineries
tackle visitor satisfaction and the differential effects of visitor characteristics—
demographics versus psychographics—on expenditure.

ORCID iDs
Ricardo Sellers https://orcid.org/0000-0002-9108-1904
Juan Luis Nicolau https://orcid.org/0000-0003-0048-2823

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Submitted May 17, 2020

Accepted January 21, 2021
Refereed Anonymously

Ricardo Sellers, PhD (e-mail: [email protected]), is a doctor in economic and busi-

ness sciences and professor of marketing and market research in the Marketing
Department of the University of Alicante. He has been a visiting professor at the
University of Florence. He is currently the director of the marketing department. Juan
Luis Nicolau, PhD (e-mail: [email protected]), is the J. Willard and Alice S. Marriott
Professor of Revenue Management in the Virginia Tech Pamplin College of Business.