Research on the Service Quality, Customer Satisfaction and Customer Loyalty-Taking Corporate Image as a
Moderating Variable
Kai-Fu Yang
Chaoyang University of Technology 168, Jifeng E. Rd., Wufeng District, Taichung, 41349 Taiwan
0958-939-246, 886
[email protected]
Hao-Wei Yang
(Corresponding Author) Chaoyang University of
Technology 168, Jifeng E. Rd., Wufeng District, Taichung, 41349 Taiwan
0987-276-858, 886
[email protected]
Chao-Hung Huang
National Chin-Yi University of Technology
57, Zhongshan Rd., Taiping Dist., Taichung, 41170,Taiwan
0928-131-906, 886
[email protected] Jui-Yi Yang
Chaoyang University of Technology 168, Jifeng E. Rd., Wufeng District,
Taichung, 41349 Taiwan 0956-666-972, 886
[email protected]
Wen-Yu Chang
Chaoyang University of Technology 168, Jifeng E. Rd., Wufeng District,
Taichung, 41349 Taiwan 0933-050-474, 886
[email protected]
ABSTRACT
The development of the aviation industry has been more highly regarded than before. Airline companies should improve service quality to increase consumer satisfaction and consumer motivation to attract more potential consumers. This study aims to explore the correlation among service quality, customer satisfaction and customer loyalty, using corporate image as a moderator between service quality and customer satisfaction. This study developed the framework and a questionnaire through the literature review. Questionnaire data was analyzed by SPSS. The analysis methods were narrative statistics, factor analysis, reliability analysis and regression analysis to test the research hypotheses. This study offers some contributions to the aviation industry with regards to service quality and corporate image, and provides suggestions for further based on the research limitations.
CCS Concepts
• Applied computing ➝Electronic commerce➝E-commerce infrastructure
Keywords
Aviation, Service Quality, Customer Satisfaction, Customer Loyalty, Corporate Image
1. INTRODUCTION
Because of the prevalence of tourism in Taiwan in recent years, people pay more and more attention to leisure activities and entertainments. According to the statistics of Tourism Bureau, M.O.T.C. Republic of China (Taiwan) (2016), the number of outbound travelers exceeded 13 million in 2015 (see Figure 1).
The development of the aviation industry has become more highly regarded than before.
Global marketing and multinational trading industry in Taiwan has become increasingly prosperous. Businessmen have to go aboard to investigate international markets and gather more information from other countries. According to the International Civil Aviation Organization (ICAO, 2017), the percentage of businessmen carried by air transport has reached more than 90 percent. Both tourism and business represent the swift progress of the aviation industry in Taiwan.
Figure 1. Number of Visitor Arrivals and Trips Taken by Citizens
Source: Tourism Bureau, M.O.T.C. Republic of China (Taiwan) (2016).
Because of the rise of the conscious consumer and pursuit of high service quality, this causes the competition to increase in traditional airlines. According to Curry & Gao (2012), both Permission to make digital or hard copies of all or part of this work for
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service quality and customer satisfaction have positive influence on repurchase intentions through the questionnaire collection from two European airports. Arif et al. (2013) concluded that for all service industries, customer satisfaction is the priority. The aviation industry is included. In addition, they argued that customer service is a critical aspect of any business. Additionally, a successful business not only tries to provide innovative products, but also to maintain a good relationship and interaction with customers. It will be a vigorous means to make better loyalty plans for airlines to improve the satisfaction level of their passengers and enable them to reuse the future flights of the airline company (Calisir et al., 2016). Because of the importance of service quality, customer satisfaction and customer loyalty in the aviation industry, as well as the lack of research about aviation in Taiwan, this study has the motivation to investigate the relationship among these three variables.
This study focuses on the correlation among service quality, customer satisfaction and customer loyalty in the aviation industry.
There is a positive impact on the correlation among service quality, customer satisfaction and customer loyalty from the literature review. However, there are few studies that apply this the aviation industry. In addition, the research takes corporate image as the confounding variable. This study takes China Airlines as an example, and the main objectives of this research are:
1. To investigate the relationship between service quality and customer satisfaction of China Airlines.
2. To explore the relationship between service quality and customer loyalty of China Airlines.
3. To investigate the relationship between customer satisfaction and customer loyalty of China Airlines.
4. To understand interference effect of the corporate image for customer satisfaction and customer loyalty.
5. To realize the development trend in the aviation industry of China Airlines.
6. To provide Taiwan’s airlines some suggestions about the marketing and management strategies through the results of analysis.
This study takes China Airlines as the case study. The main research object is the passengers in Taiwan who have experience of riding in China Airlines’ planes. In order to explore the relationship among service quality, customer satisfaction and customer loyalty of China Airlines, the research method is a questionnaire survey via the Internet by convenience sampling.
The expected number of returned questionnaire is 250 which is over five times the number of items on the questionnaire.
2. LITERATURE REVIEW
2.1 Introduction of the Aviation Industry
According to International Air Transport Association (IATA, 2016), over the past 20 years, the air passenger traffic has been growing. It only fell slightly by 0.4% in 2009 because of the global economic crisis of 2008. The percentage growth is shown in Figure 2.
Figure 2. IATA Forecast
Source: International Air Transport Association & International Civil Aviation Organization, Federal Aviation Administration (2016).
The development of Taiwan's aviation industry began from the military airline early on. China Airlines was formally established in 1959. China Airlines was the first international airline in Taiwan. The government announced an “open skies policy”, and lifted the regulations for international and domestic transport markets. From then on, the business model of the aviation industry in Taiwan began to change. According to CAA (2016), it should be noted that the total number of passengers passing through airports in Taiwan increased from over 30 million in 2011 to over 50 million in 2016. Although there was no significant increase in domestic routes, the number still kept at about 10 million people. The total number of passengers also rose to more than 20 million within six years.
Aviation industry of Taiwan has two major airlines, which always have always had high market share in Taiwan. One is China Airlines and the other is EVA Airways. According to the statistics of CAA (2016), of the percentage of the passenger transport of international and cross-strait in December 2016, China Airlines accounted for 47.3 percent (about 12.2 million passengers), while EVA Airways represented 39.7 percent (about 10.2 million passengers). The remaining 13% include Mandarin Airlines, UNI Air, Far Eastern Air Transport and Tigerair Taiwan (about 3.3 million passengers in total).
2.2 Service Quality
Many scholars studied service quality and proposed different opinions. According to Sasser et al. (1978), the way of service and the experience received from the service process and the sensitivity of the procurement process are included in service quality. Parasuraman et al. (1988) developed the five dimensions on banking, credit cards, repairs and maintenance and telephone companies and some service industries, called “SERVQUAL”.
Service quality is a significant assessment of enterprise or a critical factor to judge a brand by customers (Sayareh et al., 2016;
Jiang & Zhang, 2016). Therefore, any industry should maximize consumer motivation and attract more potential consumers by improving service quality to win the advantage. In addition, service quality has links between customer satisfaction and customer loyalty and a great influence on repurchase intentions as well (Shahverdiani, 2010; Wu et al., 2014; Ismail et al., 2016;
Namin, 2017).
2.3 Customer Satisfaction
Grönroos (2007) stated that customer satisfaction can be defined as the result of comparing expected quality and experienced
quality. Zeithaml & Bitner (1996) regarded that satisfaction is determined by service quality, product quality, price factors, situation factors, and personal factors. Customer satisfaction has a direct influence on an enterprise’s performance and is an important factor to form repurchase intentions and word of mouth.
Omar et al. (2016) regarded that customer satisfaction not only has an obvious impact on repurchase intentions by customers, but also benefits on generating profits and incomes. Consequently, enterprises have to emphasize the needs of customers to create high customer satisfaction.
2.4 Customer Loyalty
For enterprises, customer loyalty helps to reduce the cost of service and marketing, and it also helps add new customers.
Customer loyalty is a kind of recognition for an enterprise or brand. Zeithaml et al. (1996) stated that loyalty is the behavior that consumers are willing to purchase again and to recommend or give positive comments to others. Moreover, various researchers have indicated that customer loyalty can be divided into two dimensions of attitudinal loyalty and behavioral loyalty (Oliver, 1999; Baloglu, 2002; Meleddu et al., 2015). Kasiri et al. (2017) suggested that the link between satisfaction and loyalty has been addressed through investing in hotels, hospitals and universities.
2.5 Corporate Image
An unsuccessful corporate image will result in unsuccessful product marketing. corporate image is the first intuition of the customer towards an enterprise (Foroudi et al., 2014). Walters (1978) indicated that corporate image includes many elements, and it can be separated into three dimensions for customers:
institution image, functional image and commodity image.
Corporate image or brand image has become the most valuable asset of an enterprise. Furthermore, Setyono (2015) mentioned that enterprise needs to preserve a good corporate image by improving its performance, such as service quality, media, achievement and social environment, because corporate image influences customer satisfaction and customer loyalty.
2.6 Service Quality and Customer Satisfaction
Jiang & Zhang (2016) studied service quality of four airlines in China and confirmed that service quality is an important element that will affect the level of customer satisfaction. Karadeniz (2015) regarded that service providers have to offer high service quality because service quality has become more and more important and will bring high customer satisfaction and increase competitive advantages.
Based on the findings of earlier research, this study considers that service quality is related to customer satisfaction, and the following hypothesis is proposed:
H1: Service quality has a significant effect on customer satisfaction.
2.7 Customer Satisfaction and Customer Loyalty
Kasiri et al. (2017) concluded that customer satisfaction has a positive influence on customer loyalty by studying two variables in three different service industries (hotels, hospitals and universities). Namin (2017) believed that customer satisfaction is a necessary strategy because customer satisfaction can lead to customer loyalty and repurchase intentions. Besides, customer loyalty could be expected to increase when companies have a higher customer satisfaction. Therefore, customer loyalty has an impact on customer satisfaction (Bayraktar et al., 2012).
Based on the findings of earlier research, this study suggests that customer satisfaction is related to customer loyalty, and the following hypothesis is proposed:
H2: Customer satisfaction has a significant effect on customer loyalty.
2.8 Service Quality and Customer Loyalty
Service quality is a key driver of developing better customer loyalty and creating a good relationship with customer (Goyal &
Chanda, 2017). Marakanon & Panjakajornsak (2017) stated that customer loyalty would increase when perceived quality improved by the reason of creating various strategies from enterprises.
Additionally,
Based on the findings of earlier research, this study suggests that service quality is related to customer loyalty, and the following hypothesis is proposed:
H3: Service quality has a significant effect on customer loyalty.
2.9 The Moderating Variable: Corporate Image
A good corporate image can not only give enterprises a good reputation, but also retain old customers and obtain new customers. In addition, many researchers showed that corporate image has a relationship with service quality, customer satisfaction and loyalty. Schulz & Omweri (2012) claimed that corporate image will be affected by both service quality and customer satisfaction and that they in turn affect customer loyalty.
Moreover, Setyono (2015) proposed that Bank Muamalat needed to preserve a good corporate image to influence customer satisfaction and loyalty by improving the performance, such as service quality.
Based on the findings of earlier research, this study suggests that corporate image has a moderating effect on service quality and customer loyalty. Thus, the following hypothesis is proposed:
H4: Corporate image has a moderating effect between service quality and customer satisfaction.
3. RESEARCH METHOD 3.1 Research Framework
This study aims at realizing the relationship between service quality, customer satisfaction and customer loyalty in the aviation industry. In addition, this study adds corporate image as a moderating variable between service quality and customer satisfaction. Therefore, through the relevant literature and empirical research, this study proposes the research framework, displayed in Figure 3.
Figure 3. Research Framework H4
H1 H2
H3 Service
Quality
Customer Satisfaction
Customer Loyalty Corporate Image
3.2 Questionnaire Design
The study adopted a seven‐point Likert scale for measuring the items, with the scale ranging from “strongly disagree” (1) to
“strongly agree” (7). About service quality, based on a study by Parasuraman et al. (1985), this study applied five dimensions to design 22 questions for measuring, including tangibles, reliability, responsiveness, assurance and empathy. Customer Satisfaction was applied five dimensions from Zeithaml & Bitner (1996) to design nine questions, including service quality, product quality, price factors, situation factors and personal factors. About customer quality, based on the research of Oliver (1999), this study applied attitudinal loyalty and behavioral loyalty to design six questions for measuring. Corporate Image was applied three dimensions from Walters (1978) to design seven questions for measuring, which are institution image, functional image and commodity image.
3.3 Research Instrument
This study used the statistics SPSS 22.0 software tools for data analysis. It used the data collection and used different statistical analyses to transform the data into useful information. Therefore, the study includes reliability and validity analysis, factor analysis, regression analysis and descriptive statistical analysis.
4. RESULTS
There is a total number of 320 questionnaires, but 31 questionnaires were regarded as invalid. Therefore, this study used 289 questionnaires to conduct the analysis by using SPSS 22.0.
4.1 Descriptive Statistics
The majority of respondents were female with 172, and there were 117 male respondents. Nearly 49% of respondents were between 21 to 30 years old, (a total of 141). It could be suggested that adults below the age of 30 not only love to travel, but also have many opportunities to go aboard for business. Most respondents possessed a bachelor degree (65%), and 14.5 percent of respondents had higher education experience, including a master degree and doctoral degree. Concerning occupation, the majority of respondents were students (34.3%). The second majority was service quality (17.6%). This means that China Airlines still attracts students even though the price of flights is higher than low-cost airlines.
About 36.3% of respondents’ monthly income was 20 thousand (NTD), totaling 105. On average, participants took flights 1-3 times a year, totaling 212 (73.4%). This implies that respondents want to improve the quality of life. therefore, the frequency of the oversea tourism has been generally considered. 86 (29.8%) participants have taken flights on China Airlines about 2-4 times.
Furthermore, 72% of respondents have taken China Airlines’
flights at least two times. This implies that most of the participants have had a good experience and are satisfied with the service quality provided by China Airlines. Hence, they chose China Airlines again.
4.2 Factor Analysis
The study used 22 measure items of service quality to carry out factor analysis, extracting five factors. The total cumulative explained variance was 90.676%. The value of KMO was 0.817, which is higher than 0.5 and the P-value was 0.000 (<0.001). This means that the variable was suitable for factor analysis. All of the loading factors were over 0.8. Thus, all items were retained, and the eigenvalue exceeded 1.
This study used 9 measure items of customer satisfaction to carry on factor analysis, extracting four factors. The total cumulative explained variance was 94.372%. The value of KMO was 0.711, which is higher than 0.5, and the P-value was 0.000 (<0.001). This means that the variable was suitable for factor analysis. All of the loading factors were over 0.8. Thus, all items were retained, and the eigenvalue exceeded 1.
The study used 6 measure items of customer loyalty to carry on factor analysis, extracting two factors. The total cumulative explained variance was 98.335%. The value of KMO was 0.921, which was higher than 0.5 and the P-value was 0.000 (<0.001).
This means the variable was suitable for factor analysis. All of the loading factors were over 0.8. Thus, all items were retained, and the eigenvalue exceeded 1.
This study used 7 measure items of corporate image to carry on factor analysis, extracting three factors. The total cumulative explained variance was 85.987%. The value of KMO was 0.849, which is higher than 0.5, and the P-value was 0.000 (<0.001). This means the variable was suitable for factor analysis. All of the loading factors were over 0.8. Thus, all items were retained, and the eigenvalue exceeded 1.
4.3 Reliability and Validity Analysis
According to Guilford (1965), if Cronbach's α coefficient is higher than 0.9, the reliability of data is high. The alpha coefficients of dimensions were above 0.7. In addition, Cronbach's α coefficients of service quality was 0.98, customer satisfaction was 0.938, customer loyalty was 0.963 and corporate image was 0.95. The overall reliability value reached 0.986, which exceeded 0.9. Therefore, it can be considered that this questionnaire was consistent and had high level of reliability.
For the validity analysis, this research was based on the literature, referring to the work of previous scholars to design the questionnaire. The researcher also discussed with experts, and the draft of the questionnaire was modified after examined by professionals. Before formally sending out the questionnaire, it was revised after pretesting. This study used factor analysis to construct the validity as well. Therefore, the validity of the questionnaire was fairly representative as the results reached the level of the content validity, expert validity and construct validity.
Table 1 Reliability Analysis
Variables & Dimensions Number of items Cronbach’s α
Service Quality 22 0.980
Customer Satisfaction 9 0.938
Customer Loyalty 6 0.963
Corporate Image 7 0.950
Overall 44 0.986
4.1 Regression Analysis
According to the analysis of the result, all the β were positive values, and the P-values reached a level of significance (<0.001), which means that the independent variable has significant influence on the dependent variable. As shown in Table 2, the Adjust- R2 was 0.754, 0.53 and 0.538, which indicates that the independent variable of this model could explain 75.4%, 53% and 53.8% of the variance in the dependent variable. Therefore, the results supported H1, H2 and H3, the findings are in line with the past literature.
Table 2 Regression Analysis of H1, H2 and H3 Independen
t variable
Dependent variable
β AR2 F P-value
Service
Quality Customer Satisfactio n
0.86
9 0.75
4 733.86
1 0.000**
* Customer
Satisfaction
Customer Loyalty
0.72 9
0.53 0
279.57 7
0.000**
* Service
Quality
Customer Loyalty
0.73 5
0.53 8
270.63 5
0.000**
* Note: *P < 0.05, **P < 0.01, ***P <0.001
This study verified the influence through the hierarchical regression analysis. corporate image was adopted as the moderate variable. Hypothesis four (H4) in this study has established that corporate image mediates the effect of service quality on customer satisfaction. According to the analysis of the result, all the β values were positive values, and the P-values reached a level of significance (<0.000). As shown in Table 3, the Adjust- R2 was 0.781, which was higher than Model 1 (0.754) and 2 (0.778).
Therefore, corporate image moderates directly and positively between service quality and customer satisfaction, thereby supporting H4.
Table 3 Hierarchical Regression Analysis of H4 Model Independent
variable
β AR2 F P-value
1 Service Quality 0.869
0.754 733.861 0.000***
2 Service Quality Corporate Image
0.655
0.266 0.778 420.420 0.000***
0.000***
3 Service Quality Corporate Image
Service Quality X Corporate Image
0.673 0.255
0.138 0.781 281.198
0.000***
0.000***
0.042*
Note: *P < 0.05, **P < 0.01, ***P <0.001
5. CONCLUSIONS AND SUGGESTIONS 5.1 Conclusions
This study found that service quality is not only a significant standard for an enterprise, but also influences customer satisfaction positively and directly. Consequently, it is very serious for airlines to motivate staff and pay attention to staff training so as to improve customer satisfaction. This study suggests that if customers are satisfied with services or products, they will repurchase or reuse the same products or consume in the same store continually and even recommend those products and services to others. Therefore, the ground staff and flight attendants of the aviation industry need to realize the needs of customers and place emphasis on meeting the requirements of customers and individual needs. The results indicate that service quality has a direct impact on customer loyalty. Additionally, businesses should pay more attention and spend more time and money to develop new customers. The best approach is to provide the best services when communicating to customers initially so that it is able to create a good relationship with customers. Corporate image is a top priority for customers, including reputation, impression,
identification and word-of-mouth while the judgment of the corporate image is mainly according to the accumulated impression of experience from customers. Corporate image enables customers to improve the evaluations after enjoying refined services, including high-ranking facilities, efficient service, caring concern, entertaining media, and comfortable environment.
It can leave good memories for customers, and the satisfaction of the airlines will easily be relatively enhanced. Therefore, the corporate image of airline companies plays a decisive role in the customers’ minds.
Corresponding to the purpose, this research understood the development trends and future policies of China Airlines. Every airport with China Airlines have set up self-service baggage handling facilities at airports to save labor force of ground staff and increase service efficiency and to provide visitors with a new traveling experience and reduce waiting time during check-in. In addition, in order to make it easier for frequent flyers to purchase an online tickets and increase sales volume, China Airlines plans to build online sales system for its members. The system can transfer the sales channel to the website and promote to other branches at the same time. For improving service quality and efficiency of staff, China Airlines builds mobile service systems for new cabins based on enriching system resource integration and sharing.
5.2 Suggestions
Based on the contents of the previous chapters, this section provides suggestions for further research. This study suggests that future research can add qualitative research to collect more complete information through in-depth interviews with passengers and airline employees. In the research process, the sample of respondents was too concentrated. Therefore, follow-up research can expand the research sample to understand whether there are differences in different ages, occupations or different nationalities.
Moreover, the future research can investigate foreign airlines or low-cost airlines by using the same variables to review if the results will be different or not. Researchers are suggested to use different dimensions to represent these four variables and it is recommended that future studies research in different industries with the same moderate variable to understand whether the influential effect is the same or not.
5.3 Managerial Implications
This study gives China Airlines the following managerial implications and marketing strategies. In order to enhance consumer satisfaction, this study recommends that China Airlines cooperates with well-known brands to provide each passenger complete amenity kits, so passengers can keep their mind on using it. In addition, although on-board Internet service has been common, most passengers still choose not to use because of the high prices. China Airlines can emulate Qatar Airways to provide each passenger 15-minute Wi-Fi for free to experience. In regard to corporate image, China Airlines should check or assess through safety risk management to propose improvement measures regularly. In addition, the issue of environmental protection has been considered in recent years, but the recognition of people towards the air transport industry is the maker of environmental pollution. This study suggests that China Airlines makes efforts in green marketing to change customers’ perception of the air transport industry, and help them understand the benefits of environmental and society from green marketing of airlines’ to establish a good corporate image. Moreover, China Airlines can hold a photo contest, and use the winning works as a limited
monthly calendar or postcard to provide more purchase options for customers and aircraft fans. If part of the profits can be donated, this event not only advertise China Airlines, but also to carry out corporate social responsibility and its reputation for increasing corporate image. In terms of customer loyalty, 30% of the respondents will reject choosing China Airlines, again due to price hikes. This study suggests that China Airlines can increase preferential programs when repurchasing to build long-term loyal customers. For example, the launch of a point-collection campaign. This approach can establish customer loyalty and repurchase behaviors.
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