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Evaluating the Perceived Value of Service Evaluating the Perceived Value of Service Delivered by Taiwanese Airlines in the Delivered by Taiwanese Airlines in the
Domestic MarketDomestic Market
Jin-Ru Yen Dawna L. Rhoades Ger-Yuan Hsu
The 12th International Conference on ISO 9000 & TQM
April 9-11, 2007
12-ICIT:12-ICIT: 06-0406-04
2
contentscontents
Motivation, research scope, and objectives Methodology Empirical study Conclusion
3
Evolution in Marketing ConceptsEvolution in Marketing Concepts
Phases Focus
Product qualityProvide products with predefined qualities (defined by manufactures)
Sales techniqueApply sales promotion to increase revenues in short run
Customer satisfactionProvide products and services with high customer satisfaction
Perceived quality and customer value
Provide products with higher customer values than competitors
Customer value management Relate CVM to profits
MotivationMotivation
4
PZB (Parasuramsan, Zeithaml, Beery) model has been applied in a lot of research relating to service quality.
Little research includes the concept of ‘value.’ Little research measures customers’ perceptions
toward both the organization of interest and its competitors.
Works in the LiteratureWorks in the LiteratureMotivationMotivation
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Taiwan Domestic Air Taiwan Domestic Air Market & Research Market & Research
ScopeScope
Routes within the main island (business traveler)
Taipei-Kaohsiung
Routes between the main islands and offshore islands (tourist and local resident)
Taipei-Kinmen
Taipei-Makung
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To apply the concept of value and measure customers’ perceptions of values delivered by different airlines that compete each other
To apply the structural equation model to investigate factors that affect customer values
To develop customer value map from the point of each airline
Research ObjectivesResearch Objectives
7
Conceptual FrameworkConceptual FrameworkMethodologyMethodology
Service quality
Brand image
Perceived cost
Customer value Willingness to buy
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Structural Equation ModelStructural Equation Modelη1=γ11ξ1+ζ1
η2=β21η1+γ22ξ2+ζ2
ξ1
ξ2
η 1
η 2
x1
x2
x3
x4
x5
y1
y2
y3
y4
y5
δ1
δ2
δ3
δ4
δ5
ε1
ε2
ε3
ε4
ε5
ζ1
ζ2
β21
γ11
γ22
λy11
λy21
λy31
λy42
λy52
λx11
λx21
λx32
λx42
λx52
y1=λy11η1+ε1
y2=λy21η1+ε2
y3=λy31η1+ε3
y4=λy42η2+ε4
y5=λy52η2+ε5
x1=λx11ξ1+δ1
x2=λx21ξ1+δ2
x3=λx32ξ2+δ3
x4=λx42ξ2+δ4
x5=λx52ξ2+δ5
MethodologyMethodology
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Questionnaire DesignQuestionnaire DesignMethodologyMethodology
Characteristics of passengers
Characteristics of trips
Perceptional questions
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Perceptional Perceptional
QuestionsQuestions
number
categorycontents
1
Service quality
Seats are comfortable.
2 Food is delicious.
3 Aircraft are new.
4 Schedule is on time.
5 Flight attendants provide needed services.
6 Ground staffs provide needed services.
7 The airline has a good record of flight safety.
8 The check-in service is efficient.
9 Flight attendants quickly respond to requested services.
10 Ground staffs quickly respond to requested services.
11 Flight attendants are courtesy and professional.
12 Ground staffs are courtesy and professional.
13 Have confidences in the flight attendants.
14 Have confidences in the ground staffs.
15 Flight schedules are convenient for your itinerary.
16 It is convenient to purchase flight tickets.
17 It is easy to change or return flight tickets.
18 The frequent flight program is attractive.
19 It is easy to obtain fare information.
20 It is easy to obtain flight schedules.
11
Perceptional Perceptional
QuestionsQuestions
21
Brand image
The airline is innovative.
22The airline has good reputation.
23The airline is the brand leader in domestic air market.
24
Perceived costs
The fare of the flight ticket is inexpensive.
25The waiting time in the check-in counter is short.
26
Perceived value
The airline is more valuable than others.
27The service is more valuable than the cost for it.
12
Exploratory analysis
Structural equation model
Customer value analysis (Bradley T. Gale, 1994)
MethodologyMethodology
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Sample Distribution by RouteSample Distribution by Route(survey conducted in April and May, 2005)(survey conducted in April and May, 2005)
Empirical studyEmpirical study
Taipei-Kaohsiung Taipei-Kinmen Taipei-Makung
airlinesnumber of
respondents (%)
airlinesnumber of
respondents (%)
airlinesnumber of
respondents (%)
Far Eastern Air
Transport 158(36.3) Far Eastern Air Transport 47(37.9) Far Eastern Air
Transport 17(17.4)
TranAsia Airways 45(10.3) TranAsia Airwa
ys 29(23.4) TranAsia Airways 43(43.4)
Uni Airways 87(20.0) Uni Airways 29(23.4) Uni Airways 38(38.9)
Mandarin Airlines 145(33.3) Mandarin
Airlines 19(15.3)
total 435(100) total 124(100) total 98(100)
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Estimation Results : Taipei-KaohsiungEstimation Results : Taipei-Kaohsiung
GFI=0.90 CFI=0.98 ECVI=1.90 NFI=0.97
Measures of brand image
0. 76( 17. 15*)
- 0. 49( - 9. 38*)
0. 51(9. 87*)
Quality of service
Perceivedcost
Brand image
Perceivedvalue
Measures of perceived value
Measures of service quality
Measures of perceived cost
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Estimation Results : Taipei-OffshoreEstimation Results : Taipei-Offshore
GFI=0.91 CFI=0.99 ECVI=2.12 NFI=0.98
Measures of brand image
0. 79( 13. 72* )
- 0. 53( - 7. 25* )
0. 51( 7. 16* )
Quality of service
Perceivedcost
Brand image
Perceivedvalue
Measures of perceived value
Measures of service quality
Measures of perceived cost
16
Estimation Results (SEM): Offshore Routes Estimation Results (SEM): Offshore Routes
Path
Taipei-Kaohsiung route Taipei-offshore route
Standardized coefficient (t value)
Standardized coefficient (t value)
Brand image → perceived value(β21) 0.51 (9.87) 0.51 (7.16)
Perceived costs → perceived value(γ2
2)-0.49(-9.38) -0.53(-7.25)
Service quality → brand image(γ11) 0.76 (17.15) 0.79 (13.72)
17
Customer Value Analysis (Taipei-Kaohsiung) Customer Value Analysis (Taipei-Kaohsiung)
Items
Airlines
F T U M
Relative value of brand image
1.000 0.993 0.979 0.951
Relative value of perceived cost
1.000 0.954 1.019 0.898
Relative value of perceived customer
value1.000 1.040 0.961 1.060
18
Customer Value Analysis (Taipei-Kinmen)Customer Value Analysis (Taipei-Kinmen)
Items
Airlines
F T U M
Relative value of brand image
1.000 1.013 0.990 0.926
Relative value of perceived cost
1.000 1.053 1.038 1.086
Relative value of perceived customer
value1.000 0.963 0.954 0.853
19
Customer Value Analysis (Taipei-Makung)Customer Value Analysis (Taipei-Makung)
Items
Airlines
F T U
Relative value of brand image
1.000 0.984 1.016
Relative value of perceived cost
1.000 0.846 0.964
Relative value of perceived customer
value1.000 1.165 1.044
20
Brand image and perceived price
have equal influence on perceived customer value.
The key factor in customer value was low perceived costs.
Premium branding effects were not observed.
ConclusionsConclusions
Questions and CommentsQuestions and Comments