G.Nilay YÜCENUR1DQG1LKDQd(7ø1'(0ø5(/2
INTRODUCTION
AbstractWith the improvement of the customer based management approaches, the firms have to consider the costumers’ needs and wants in their activities and also they have to look the events and products with customers’ perspective. In this paper, the variables are analyzed which have effects on customers’ loyalty such as service quality, sacrifice, service value and customer satisfaction in passenger transportation with airways. Also the interrelationships are analyzed among these variables. The model which was proposed by Demirel et al. (2006) is used for predicting customers’ loyalty in airway sector. In an application section there are 224 questionnaires from 6 different airway companies in Turkey for domestic flights. The data was analyzed with SPSS 12.0 and LISREL 8.80 packet programs. SPSS 12.0 was used for analyzing reliability and normality and LISREL 8.80 was used for analyzing model fit and structural equation model analysis such as path diagram.
Keywords Airways, loyalty, satisfaction, service quality, service value, structural equation
Loyal customers are very important for all firms in all sectors but especially for passenger transportation sectors. In airways, the firms’ main structure are based on customers’ needs and wants. In this sense, the firms have to support the high quality products and services in their activities. Service quality levels affect the firm’s competitive advantage and they determine market share and profitability. The key variables normally considered when modeling passengers’ decision-making processes include service quality with expectation and perception, sacrifice, service value, customer satisfaction and customers’ loyalty.
In this paper, the variables are analyzed which have effects on customers’ loyalty such as service quality, sacrifice, service value and customer satisfaction in passenger transportation with airways. Also the interrelationships are analyzed among these variables. The model which was proposed by Demirel et al.
(2006) is used for predicting customers’ loyalty in airway sector. In an application section there are 224 questionnaires from 6 different airway companies in Turkey for domestic flights. The data was analyzed with SPSS 12.0 and LISREL 8.80 packet programs. SPSS 12.0 was used for analyzing reliability and normality and LISREL 8.80 was used for analyzing model fit and structural equation model analysis such as path diagram.
With the model which is used in this paper service quality can be measured in passenger transportation. Our study both synthesizes and builds on the efforts to conceptualize the effects of service quality, sacrifice, service value and customer satisfaction on customers’ loyalty.
The rest of this study is structured as follows: The first part describes literature review about service quality in airway services.Next part discusses the Procedure, methodology, the research model, criteria and results of empirical study. The final results of the empirical study are presented and discussed in the final section.
THEORETICAL BACKGROUND
Recent marketing research defined loyalty as a deeply held commitment to repurchase or repatronize a preferred product or service consistently in the future. Customer loyalty research has provided theoretical justification for viewing satisfaction as an important antecedent to loyalty, and has empirically showed significantly positive relationships. Prior research frequently suggests that loyal customers are likely to provide new referrals through positive word of mouth. They buy more products and resist competitive ressures. Guest loyalty was used as an intervening variable that has a time dimensional effect on repeat
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2 Nihan Çetin Demirel, <ÕOGÕ]7HFKQLFDO8QLYHUVLW\)DFXOW\RI0HFKDQLFDO(QJLQHHULQJ,QGXVWULDO(QJLQHHULQJ'HSDUWPHQW%HúLNWDú Istanbul, Turkey, [email protected]
purchase and word of mouth. Benefits and trust are the most important antecedents to guests’ loyalty and loyalty results in increased product use [2].
In the airline industry context the problem is whether management can perceive correctly what passengers want and expect. Moreover, expectations serve as standards or reference points for customers. In evaluating service quality, passengers compare what they perceive they get in a service encounter with their expectations of that encounter. Assessing passenger expectations is not a static exercise as passengers are becoming increasingly sensitive to quality. However, not all service dimensions are equally important to all passengers, because no two passengers are precisely alike, especially when demographics; purposes of travelling and ethnic background is considered [3].
The key variables normally considered when modelling passengers’ decision-making processes include service expectation, service perception, service value, passenger satisfaction, and airline image.
Understanding what consumers expect from a service organization is important because expectations provide a standard of comparison against which consumers judge an organization’s performance. Airlines need to understand what passengers expect from their services. To date, the effect of air passengers’ expectations on service perception and passenger satisfaction has not been fully investigated, even though it is an important commercial consideration [4].
In the passenger airline industry, only the customer can truly define service quality. The quality of airline service is difficult to describe and measure due to its heterogeneity, intangibility and inseparability. Never theless, quite a few conceptual and empirical studies have been devoted to investigate the service quality issues in the passenger airline industry. Various schemes for defining service quality dimensions or attributes have been proposed from the perspective of passengers. Most of these schemes are presented as quality measures for examining the relationships between service quality and related issues such as airline choice, customer satisfaction, customer loyalty, passenger type, airline type, airline class, aircraft type, productivity changes in quality levels over time, total transportation service offering, assessment group and attribute dependency [5].
For this paper our variables are service quality, service value, sacrifice, customer sarisfaction and customer loyalty.
Service Quality
Service quality can be defined as a consumer’s overall impression of the relative efficiency of the organization and its services. Customer satisfaction can be defined as a judgement made on the basis of a specific service encounter. The importance of the relationships between airline service quality, passenger satisfaction, and behavioural intentions have been examined. Although the direction of airline service quality and passenger satisfaction has been studied empirically, the causal order between airline service quality and passenger satisfaction, and the exact relationship between airline service quality, passenger satisfaction and behavioural intentions, is still a matter of debate because the direction may vary depending on context [4].
Service Value
Value can be defined as a customer’s overall assessment of the utility of a product based on perceptions of what is received and what is given. Service value has been identified as an important variable of customer satisfaction and behavioural intentions. Even though studies have looked at service quality and value, the relationship between them still remains unclear. In spite of the importance of perceived service value as a form of assessment of services, there has also been only limited analysis of the exact nature of service value and its influence on customer behaviour. Previous airline service studies have often ignored service value and few have investigated the effect of service value on passenger behaviour [4].
Sacrifice
Customer perceived sacrifice, which helps to integrate extant research and provides a more comprehensive picture about how customer value can be influenced. Sacrifice refers to what is given up or sacrificed to acquire a product or service. In fact, many customers count time rather than monetary cost as their most precious asset. Therefore, generally speaking, it is clear that there are two broad kinds of sacrifice:
monetary costs and non-monetary costs. The former can be assessed by a direct measure of monetary cost of
the service or product and the latter can be defined as the time, effort, energy, distance and conflict invested by customers to obtain products or services [6].
Customer Satisfaction
Customers have service expectations of an organization. Organizations are obliged to serve their customers. In the eyes of the service-profit chain theorists and champions of organizational quality, the closer the organization behaves in terms of what is expected of it by its customers, the more effective the organization. Similarly, and directly related to this research effort, the effectiveness of internal organizational service units can be measured by the degree of satisfaction of its performance by its internal customers (role set members). When members of internal organizational units satisfy the needs of their unit's internal customers, they also are enabling their internal customers to perform their tasks. By doing so, the network of organizational units are more apt to work effectively together to accomplish the overall customer service aims of the organization [7].
Customer Loyalty
Early literature on loyalty involved a dual perspective with the views held by the researcher influencing the perspective taken. For example, researchers holding a deterministic view of loyalty advocated the need to consider loyalty from an attitudinal perspective while researchers holding a stochastic view considered loyalty from a behavioural perspective [8].
Traditionally, customer loyalty has been defined as a behavioral measure. These measures include proportion of purchase, probability of purchase, probability of product repurchase, purchase frequency, repeat purchase behavior, purchase sequence, and multiple aspects of purchase behavior. In the retailing context, following measures of customer behavior are commonly applied by practitioners – share of purchase (SOP) that measure the relative share of a customer’s purchase as compared to the total number of purchases and share of visits (SOV) that measure the number of visits to the store as compared to the total number of visits.
Other commonly used measures in the industry include Share of Wallet (SOW) – that is expenditure at a specific store as a fraction of total category expenditures which is analogous to share of purchase (SOP); Past Customer Value (PCV) – based on the past profit contribution of the customer; Recency, Frequency and Monetary Value (RFM) – measure of how recently, how frequently and the amount of spending exhibited by a customer [9].
THE RESEARCH MODEL AND HYPOTHESIS DEVELOPMENT
Service quality can be regarded as a composite of various attributes. It not only consists of tangible attributes, but also intangible/subjective attributes such as safety, comfort, which are difficult to measure accurately.
FIGURE 1
The Hypotheses of Relationships between Model Variables Customer Loyalty
Sacrifice Customer Satisfaction
H6 H7
H2 H4
H5
H1
H3 Service Value
Service Quality
Different individual usually has wide range of perceptions toward quality service, depending on their preference structures and roles in process (service providers/receivers). In Figure 1 the research model and the relationships between model variables are represented with hypothesis. To measure service quality, conventional measurement tools are devised on cardinal or ordinal scales. Most of the criticism about scale based on measurement is that scores do not necessarily represent user preference. This is because respondents have to internally convert preference to scores and the conversion may introduce distortion of the preference being captured [10].
For this conceptual model we can develop seven different hypotheses.
x H1 Sacrifice has a direct effect on service value.
x H2 Service quality has a direct effect on service value.
x H3 Service quality has a direct effect on customer satisfaction.
x H4 Service value has a direct effect on customer satisfaction.
x H5 Service value has a direct effect on customer loyalty.
x H6 Service quality has a direct effect on customer loyalty.
x H7 Customer satisfaction has a direct effect on customer loyalty.
TABLE 1
Demographic Information of the Respondents (1)
Alternatives Amount Percentage (%)
Gender Female - Male 147 - 97 % 60.2 - % 39.8
Age 20 – 30 / 31 – 40 178 - 66 % 73.0 - % 27.0
Education
High School 10 % 4.1
Before University 10 % 4.1
University 157 % 64.3
Master 67 % 27.5
Monthly income
Under 1000 YTL 5 % 2.0
1000 – 3000 YTL 143 % 58.8
3001 – 5000 YTL 76 % 31.1
5001 – 7000 YTL 10 % 4.1
7001 – 11000 YTL 10 % 4.0
TABLE 2
Demographic Information of the Respondents (2)
Alternatives Amount Percentage (%) Which airway firm did
you fly with in the last time?
Turkish Airlines 164 % 67.2
Onur Air 20 % 8.2
AtlasJet Air 35 % 14.4
SKY Air 25 % 10.2
How many times have you flied with the same airway firm?
1 71 % 29.1
2 – 5 123 % 50.4
6 – 10 15 % 6.1
11 - Above 11 35 % 14.4
What was the reason of your travel?
Work 96 % 39.4
Personal 53 % 21.7
Holiday 95 % 38.9
Who chose the airway firm?
Yourself 199 % 81.6
Secretary 10 % 4.1
Travel agent 20 % 8.2
Family 5 % 2.0
Other 10 % 4.1
What was the reason of your choice?
Service quality 25 % 10.2
Low price 50 % 20.5
Timing 79 % 32.4
Casual choice 10 % 4.1
Trust 60 % 24.6
Other 20 % 8.2
How many times did you fly in last year?
1 40 % 16.4
2 – 5 91 % 37.3
6 – 10 68 % 27.9
11 - Above 11 45 % 18.4
METHODOLOGY
This research proposes an integrative model based on established relationships among service quality, sacrifice, service value, customer satisfaction and customer loyalty, and tests it in the context of airways firms in Turkey. The questionnaires were used for research. Subjects were asked to assess items of different constructs such as factors viewed as antecedents of customer loyalty such as service quality, sacrifice, customer value, and customer satisfaction in terms of their perceptions, based on a seven-point scale. A seven- point Likert-type response format ranging from “strongly disagree” to “strongly agree” was used for all items.
Sample and Procedures
The sample was chosen from 6 different airways firms from Turkey. There were 217 passengers’
questionnaires. Before the main research there was a pilot application to 60 respondents from different 3 airways firms. Respondents answered the questions with face to face pollster. The questionnaire contained six parts. Those parts were: perceived service quality, sacrifice, service value, customer satisfaction, and customer loyalty; there was an additional section for customer’s demographic information. Table 1 and Table 2 represent demographic information of the respondents.
Results of Structural Equation Modeling and Hypothesis Testing
Structural equation modeling was performed to investigate the relationships between the criterion variable of behavioral intention and the respective predictor variables of service quality, sacrifice, service value, and customer satisfaction. Figure 2 displays the structural model parameters and summarizes the degree to which the data fit the model.
FIGURE 2
The Path Analysis Results
TABLE 3
Fit Indices for Measurement and Structural Models
Index Value
x2/df 13.244
Goodness-of-fit (GFI) 0.35
Adjusted goodness-of-fit (AGFI) 0.29
Root mean squared residual (RMR) 0.24
Root mean squared error of approximation (RMSEA) 0.19
Normed fit index (NFI) 0.63
Relative fit index (RFI) 0.61
Comparative fit index (CFI) 0.65
The GFI estimates the amount of variance explained by the model, and the AGFI adjusts this estimate by taking into account the degrees of freedom. Both of these estimates can vary from 0 to 1 [11]. The simplest fit index provided by LISREL is RMR. This is the square root of the mean of the squared discrepancies between the implied and observed covariance matrices. RMR has a lower bound of 0 and an upper bound of 1.
Similarly to the RMR, the RMSEA is based on the analysis of residuals.
On the other hand, the NFI ranges from 0 to 1. An NFI of 0.95 means that the model is %95 better fitting than the null model. The RFI ranges between 0 and 1, with values approaching unity indicating a good fit to the data. CFI is based on the noncentral x2distribution. The CFI also ranges between 0 and 1 [11].
The evaluation of this conceptual path model indicated a moderate goodness of fit (x2/degree of freedom=
13.244, GFI= 0.35, AGFI= 0.29, RMR= 0.24, RMSEA= 0.19, NFI= 0.63, RFI= 0.61, CFI= 0.65). The goodness of fit index (GFI) value was lower than 0.8 and also the adjusted goodness of fit index (AGFI) value was 0.29. The AGFI value appeared lower. The RMSEA value was higher (>0.05). This may indicate a level of discrepancy between the sample observed and the hypothesized correlations in the theoretical model.
Although the normed fit index (NFI) value was lower than the commonly accepted value of above 0.90.
Researchers have recommended comparative fit index (CFI) as a better fit index than NFI. Similarly, the CFI value for the current model was clearly a lower than the commonly accepted value of above 0.90 [11]. Since those indices all had values close to or below the level for superior fit, the proposed theory model was believed to have achieved a good model fit but not an excellent model fit.
The path coefficients are shown on the arrows in Figure 2. The results obtained from our analyses indicate that sacrifice has a direct negative effect on service value (-0.14) therefore the data does not support H1. This value is not significant. Because of its t value is equal -2.69. The t value must be above 1.96 [12]. Service quality has a direct and significant effect on service value (0.62) and thus H2 is confirmed. As confirmed in Figure 2, service quality has a direct effect on customer satisfaction (0.94), thus H3 is confirmed. Service quality has a significant effect on customer loyalty (0.18) and therefore H6 is supported. Service value has a direct negative effect on customer satisfaction (-0.011) therefore the data does not support H4. This value is not significant. Because of its t value is equal -0.37. Service value has a direct effect on customer loyalty (0.039) and thus we confirm H5. Figure 2 shows that customer satisfaction has a direct effect on customer loyalty (0.18), thus H7 is confirmed.
Thus, on one hand service quality has a direct significant effect on customer satisfaction; on the other hand it has direct and positive effects on service value and customer satisfaction. Similarly, on one hand service value has a direct and positive effect on customer loyalty.
CONCLUSIONS
This paper has presented a model includes service quality, sacrifice, service value, customer satisfaction, and customer loyalty. By analyzing a set of 244 airways passengers, the study uses the structural equation model with LISREL 8.80 software to show that the sacrifice has a direct effect on service value, and has indirect effects on customer satisfaction and customer loyalty. Depending on this service value has direct effects on customer satisfaction and customer loyalty. Finally, the service quality has direct effects on service value, customer satisfaction and customer loyalty.
Overall, this research highlights the important role of three dimensions on customers’ loyalty. Our findings indicate that service quality, service value and customer satisfaction lead to customers’ loyalty. In
airway services managers should place special emphasis on the fact that of customers’ perception of servcie quality, sacrifice, service value and customer satisfaction.
In airways services, in all airways firms service quality and service value is effective on customer loyalty.
In airways transportation, the level of perceived service quality and service value are the major components of customer loyalty, besides in the assessment of the airways passengers may consider other factors such as price or reputation.
In future research, value scales of demographic features could be viewed as a variable in a new model.
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