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Idea Transcript


Baby boomers and beyond: Consumer evaluation of health and well-being services

A dissertation submitted by Wendy Spinks (nee Rutledge)

M.Bus (Marketing) by Research, BBus, Grad Dip. in Further Ed. & Training

This thesis is submitted in total fulfilment of the requirements for the degree of Doctor of Philosophy

Faculty of Business University of the Sunshine Coast

December 2009

Abstract When the youngest Baby boomer turns 65 in 2031, the projected proportion of the Australian population, aged 65 and older, is expected to be between 21 and 22 percent. Over the next 40 years, the Australian population aged 65 and over is expected to increase from 2.9 million to 7.9 million, with a corresponding increased need for effective health and well-being services for the mature consumer. Due to the increased demand from the ageing population, health care and social assistance services are now the largest employer, when it surpassed the retail sector in August 2009. Seventy five percent (7.7 million people), of all employment in Australia is in the service industry, with health and well-being services showing the second highest growth in employment. Because the health and well-being service industry is such an important part of the fabric of life and the economy, it is important to understand how mature age customers (Baby boomers and those older) evaluate health and well-being services so that providers can best match and market their services to the mature market. Therefore the research question for this thesis is:

How do mature age consumers evaluate their experience with health and well-being services?’

After a review of the literature, the following four research objectives (RO) were developed to address the research question. RO1: To determine factors influencing mature aged customers’ satisfaction and post-purchase behavioural intent with a high involvement service and specifically, health and well-being services. RO2: To develop measures to operationalise the factors so developed. RO3: To develop and test a model of mature age customers’ evaluation of health and well-being services. RO4: To test for effects that age might have on the mature consumer’s evaluation of health and well-being services.

In order to properly investigate and collect data to achieve the research objectives, this research comprised two stages. The first stage followed a traditional inductive scale development approach, with a literature search and qualitative research using a combination of interviews and focus groups with consumers and service providers from the health and well-being industry. This was followed by an online panel survey asking 630 Australians, aged forty three and older, to evaluate a health or community service using multi- item measures of Situational variables, i

Service performance, Satisfaction, and Post-purchase intentions. The results were analyzed using SPSS for factor analysis and AMOS for structural equation modeling. Analysis of the data found that consumers’ perception of service performance (CSP) of health and community organisations was better measured through the seven elements of the services marketing mix, than through the well known SERVQUAL (service quality) instrument. Results were consistent with CSP exerting a strong direct influence on Post-purchase intent, and with Satisfaction mediating the influence of CSP on Post-purchase intent. In the context of Australian health and well-being services, the CSP model developed in this thesis was found to provide a better measure of service performance than did the SERVQUAL model. All elements of the marketing mix/CPP model influenced the Baby Boomer and older customers’ evaluation of the service and hence their satisfaction levels and proposed postpurchase behaviour. The new instrument served to provide empirical evidence that the theoretical services marketing mix has the potential to provide a description of the nexus between customer and provider and, therefore, is potentially an excellent tool for entrepreneurial marketers. Further research is required to test reliability and generalizability of these findings. The CSP instrument developed in this thesis potentially provides the entrepreneur with a holistic understanding of mature customer’s post-purchase evaluation of health and community services. As a consequence, it has the potential to be a useful instrument for the marketing entrepreneur, as it could be used as a benchmark for performance by the organisation and stakeholders, and also used to inform the service organization’s marketing strategy. Keywords Customer satisfaction, Service performance, Customer loyalty, Services marketing

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Declaration of Originality

I certify that the ideas, interviews, survey work, results, analyses and conclusions reported in this dissertation are entirely my own effort, except where otherwise acknowledged. I also certify that the work is original and has not been previously submitted for any other award.

________________________

_______________

Signature of candidate

Date

Wendy Spinks

ENDORSEMENT

________________________

_______________

Signature of supervisor

Date

Associate Professor Meredith Lawley

________________________

_______________

Signature of supervisor

Date

Dr. Mark Manning

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Acknowledgements

A thesis is never completed in a vacuum. This is a small token of my gratitude to those who have helped me achieve my dream. Most of all, from the bottom of my heart, I thank those close to my heart who supported me on my journey. To my husband, even though in desperation he took up with a mistress, the sea and a boat named Eyecatcher, thank you. To our children, Jeremy (who shovelled away my PhD gravel mound!) and Jemma, who will be shocked to see their mother “get” a social life; thank you. To my mother, Ann; and parents-in-law, Marge and Kelly, thank you. To all my wonderful friends Siggy and Gywn, Bink, Mauze and Laurie (who never could understand why anyone would spend so much time on a PhD!), Mitzi and Bill, Pushba and Averil, who kept me in touch with the human race outside academia and everyday heroism; thank you. Courage and persistence is such an important part of a doctoral study, as it is in our lives. To my dear colleagues and friends; Jo and Cheryl, I look forward to many more coffees (working – of course!) together. To all my other academic friends, Rania, the Davids, Anna, Ian, Vikki and the many other wonderful colleagues, thank you.

To the wise and experienced academics who were kind enough to provide suggestions and encouragement to a PhD student (ordered chronologically according to when I met them); Professor Chad Perry, Professor Janet McColl-Kennedy; Professor Lorelle Fraser, Professor Parsu Parasuraman, Professor Chris Styles; Professor Peter Danaher, and Professor Kerry O’Donohue, and the many more generous academics, I thank you. And finally, now that my acknowledgements are nearly as long as the entire thesis, a very special thank you to my supervisors, Associate Professor Meredith Lawley and Dr. Mark Manning for your patience, support and mentoring and the very many coffees shared. I look forward to many more.

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Related papers and Grants

Journal Articles Spinks, W., Lawley, M, & Richins, H. 2005, ‘Satisfaction with Sunshine Coast Tourist Attractions: The influence of individual visitor characteristics’, Journal of Tourism Studies, vol. 16, no. 1, pp. 12-23.

Conference Papers – Refereed Spinks, W. 2009, ‘Marketing to Baby Boomers and mature customers: Customer perception of performance’ Ankara University International Conference: AUMEC 2009 Marketing and Entrepreneurship, Belek, Turkey, 6 -9th April. (161 abstracts accepted from 236, which lead to the acceptance of 107 full papers.) Spinks, W & Lawley, M. 2005, 'Baby Boomers and Beyond: Consumer Satisfaction with high involvement services', Proceedings of the ANZMAC 2005 Conference: Services Marketing, Fremantle, Australia, 5-7 December, pp. 240-247. Spinks, W & Prasser, S, 2005, 'The aged and baby boomers as consumers: Impacts for regions', Proceedings of The Sustainable Economic Growth for Regional Australia (SEGRA) Ninth National Conference: The Best Practice Ecotourism National Conference, Yeppoon, Australia, 5-7 September.

Competitive Grants Competitive funding from Growing the Smart State PhD Funding Program, Queensland Government, $6,000 over 2 years.

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Table of Contents ABSTRACT................................................................................................................................................ i DECLARATION OF ORIGINALITY................................................................................................... iii ACKNOWLEDGEMENTS..................................................................................................................... iv 1

INTRODUCTION................................................................................................................... 1 1.1 1.2 1.3 1.4 1.5 1.6 1.7 1.8 1.9

2

BACKGROUND TO THE RESEARCH ................................................................................................ 1 SERVICES FOR MATURE CONSUMERS ........................................................................................... 2 JUSTIFICATION FOR THIS RESEARCH............................................................................................. 4 RESEARCH QUESTION AND OBJECTIVES ....................................................................................... 5 DEFINITIONS ................................................................................................................................ 6 DELIMITATIONS OF SCOPE ........................................................................................................... 8 METHODOLOGY ........................................................................................................................... 8 THESIS OUTLINE .......................................................................................................................... 9 CONCLUSION ............................................................................................................................. 10 LITERATURE REVIEW..................................................................................................... 11

2.1 INTRODUCTION .......................................................................................................................... 11 2.2 CONSUMER BEHAVIOUR ............................................................................................................ 12 2.3 CUSTOMER CHARACTERISTICS................................................................................................... 15 2.3.1 Customer demographics....................................................................................................... 15 2.3.2 Psychographics .................................................................................................................... 21 2.3.3 Culture and social class ....................................................................................................... 24 2.3.4 Purchasing behaviour .......................................................................................................... 25 2.4 SITUATIONAL FACTORS ............................................................................................................. 26 2.4.1 Physical surroundings.......................................................................................................... 28 2.4.2 Social surroundings.............................................................................................................. 28 2.4.3 Temporal influences ............................................................................................................. 29 2.4.4 Task definition...................................................................................................................... 29 2.4.5 Antecedent states .................................................................................................................. 33 2.5 CUSTOMER’S PERCEIVED SERVICE PERFORMANCE (CSP) AND SERVICE QUALITY .................... 36 2.5.1 Dimensions and attributes of services.................................................................................. 40 2.5.2 Conceptualising service performance .................................................................................. 42 2.5.3 Dimensions of service performance ..................................................................................... 45 2.5.4 Operationalising service performance ................................................................................. 47 2.5.5 Price, Cost and Value........................................................................................................... 59 2.5.6 Differentiating service performance and satisfaction .......................................................... 65 2.6 CUSTOMER SATISFACTION ......................................................................................................... 66 2.6.1 Measuring customer satisfaction.......................................................................................... 68 2.7 POST-PURCHASE INTENTIONS AND BEHAVIOURS ....................................................................... 73 2.8 MODELLING FACTORS THAT INFLUENCE SATISFACTION AND POST-PURCHASE INTENTION ....... 77 2.8.1 Gaps and issues found in the literature ................................................................................ 77 2.8.2 Conceptual Model ................................................................................................................ 78 2.9 CONCLUSION ............................................................................................................................. 82 3

STAGE I METHOD AND RESULTS................................................................................. 83 3.1 INTRODUCTION .......................................................................................................................... 83 3.2 PARADIGM JUSTIFICATION ......................................................................................................... 83 3.3 RESEARCH DESIGN AND JUSTIFICATION ..................................................................................... 85 3.4 STAGE I METHOD ...................................................................................................................... 87 3.5 INTERVIEWS .............................................................................................................................. 88 3.5.1 Sampling design for depth interviews................................................................................... 89 3.5.2 Depth interview results......................................................................................................... 89 3.6 FOCUS GROUPS .......................................................................................................................... 92

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Table of Contents continued 3.6.1 FOCUS GROUP SAMPLING DESIGN ........................................................................................... 94 3.6.2 FOCUS GROUP RESULTS .......................................................................................................... 94 3.6.3 TRIANGULATION OF FOCUS GROUP RESPONSES ...................................................................... 104 3.7 CONCLUSION ........................................................................................................................... 106 4

MODEL DEVELOPMENT............................................................................................... 107 4.1 INTRODUCTION ........................................................................................................................ 107 4.2 OPERATIONALISING THE CONSTRUCTS .................................................................................... 108 4.3 DEVELOPING MEASUREMENT SCALES ...................................................................................... 110 4.3.1 Individual customer characteristics ................................................................................... 111 4.3.2 Situational variables........................................................................................................... 112 4.3.3 Service performance........................................................................................................... 113 4.4 THEORETICAL MODELS ........................................................................................................... 116 4.5 CONCLUSION ........................................................................................................................... 122

5

STAGE II METHOD .......................................................................................................... 123 5.1 INTRODUCTION ........................................................................................................................ 123 5.2 STEP 1: SPECIFY THE INFORMATION NEEDED ........................................................................... 124 5.3 STEP 2: SAMPLING DESIGN ...................................................................................................... 125 5.3.1 Determine the population................................................................................................... 125 5.3.2 Determine the sampling frame ........................................................................................... 125 5.3.3 Determine the sampling procedure and method of administration .................................... 126 5.3.4 Determine the sample size.................................................................................................. 127 5.4 STEP 3: QUESTIONNAIRE DESIGN ............................................................................................. 128 5.4.1 Develop measurement scales.............................................................................................. 128 5.4.2 Question content and wording............................................................................................ 131 5.4.3 Determine length and layout .............................................................................................. 133 5.5 STEP 4: PRE-TEST, REVISE AND PREPARE FINAL DRAFT ............................................................ 135 5.6 CONCLUSION ........................................................................................................................... 141

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DESCRIPTIVE DATA ANALYSIS .................................................................................. 142 6.1 INTRODUCTION ........................................................................................................................ 142 6.2 PROFILE OF RESPONDENTS ....................................................................................................... 142 6.2.1 Descriptive Statistics ....................................................................................................... 143 6.2.2 Representativeness of the sample .................................................................................... 145 6.3 DATA PREPARATION ................................................................................................................ 148 6.3.1 Missing data and Outliers ............................................................................................... 148 6.3.2 Normality......................................................................................................................... 149

6.4

Conclusion ..................................................................................................................155

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RO1: DEVELOPING THE MEASUREMENT MODELS ............................................ 156 7.1 INTRODUCTION ........................................................................................................................ 156 7.2 FORMATIVE VERSUS REFLECTIVE MEASURES .......................................................................... 156 7.3 ANALYSIS ISSUES FOR FACTOR ANALYSIS ................................................................................ 158 7.4 POST-PURCHASE BEHAVIOURAL INTENT.................................................................................. 161 7.5 SATISFACTION ......................................................................................................................... 162 7.6 SITUATIONAL VARIABLES ....................................................................................................... 163 7.7 CONSUMER CHARACTERISTICS ................................................................................................ 167 7.7.1 Consumer Knowledge....................................................................................................... 167 7.7.2 Cognitive age.................................................................................................................... 168

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SERVICE PERFORMANCE............................................................................................. 170 8.1 INTRODUCTION ........................................................................................................................ 170 8.2 MEASUREMENT MODELS FOR CUSTOMERS’ PERCEPTIONS OF SERVICE PERFORMANCE (CSP) 170 8.2.1 Exploratory Factor Analysis and Scale Reliability for CSP............................................. 170 8.2.2 Congeneric measure of CSP............................................................................................. 176

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Table of Contents continued 8.3 DEVELOPING MEASUREMENT MODELS FOR SERVQUAL........................................................ 179 8.3.1 Exploratory Factor Analysis and Scale Reliability for SERVQUAL ................................ 179 8.3.2 Congeneric measure of SERVQUAL ................................................................................ 181 8.4 COMPARISON OF SERVQUAL AND CSP MODELS OF SERVICE PERFORMANCE ....................... 184 8.4.1 SERVQUAL model of service performance ...................................................................... 184 8.4.2 CSP model of service performance .................................................................................. 185 8.5 CONSTRUCT RELIABILITY AND VALIDITY ................................................................................ 186 8.5.1 Reliability ......................................................................................................................... 186 8.5.2 Validity ............................................................................................................................. 187 9

R03: TESTING THE STRUCTURAL MODEL AND RO4: GROUP DIFFERENCES188 9.1 9.2 9.3 9.4

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INTRODUCTION ........................................................................................................................ 188 R03: TESTING THE FULL STRUCTURAL MODEL ........................................................................ 188 RO4: MODERATION OF AGE ON CUSTOMER EVALUATION ...................................................... 191 CONCLUSIONS ......................................................................................................................... 194 CONCLUSIONS AND IMPLICATIONS ......................................................................... 195

10.1 INTRODUCTION ........................................................................................................................ 195 10.2 CONCLUSIONS REGARDING RO1 ............................................................................................. 198 10.3 CONCLUSIONS REGARDING RO2 ............................................................................................. 199 10.3.1 RO2: Service performance ............................................................................................. 199 10.3.2 RO2: Situational variables............................................................................................. 208 10.3.3 RO2: Individual characteristics ..................................................................................... 209 10.3.4 RO2: Satisfaction ........................................................................................................... 209 10.3.5 RO2: Post-purchase behavioural intent (PI) ................................................................. 210 10.4 CONCLUSIONS REGARDING RO3: ............................................................................................ 210 10.5 CONCLUSIONS REGARDING RO4: ............................................................................................ 212 10.6 CONCLUSIONS REGARDING THE RESEARCH PROBLEM .............................................................. 213 10.7 IMPLICATIONS FOR THEORY ..................................................................................................... 215 10.8 IMPLICATIONS FOR PRACTICE .................................................................................................. 217 10.9 LIMITATIONS ........................................................................................................................... 218 10.10 CONCLUSION AND IMPLICATIONS FOR FUTURE RESEARCH ...................................................... 219

REFERENCE LIST .............................................................................................................221 APPENDICES ......................................................................................................................249 APPENDIX A: Australian Research Agenda................................................................................................ 249 APPENDIX B: Market Segmentation By Generations ................................................................................. 252 APPENDIX C: Service Taxonomy used by the Australian Bureau of Statistics .......................................... 254 APPENDIX D: Issues in measuring customer expectations of service performance .................................... 256 APPENDIX E: Moderator’s guide for the depth interviews and focus groups ............................................. 260 APPENDIX F: Form for Expert Panel member ............................................................................................ 267 APPENDIX G: Results for Expert Panel review .......................................................................................... 273 APPENDIX H: Comparison of alternative survey methods .......................................................................... 278 APPENDIX I: Principles of wording used in questionnaire design .............................................................. 280 APPENDIX J: Questionnaire ........................................................................................................................ 283 APPENDIX K: Research Now Panel Quality Statement ............................................................................... 288 APPENDIX L: Comparison of Sample with Population................................................................................ 290

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LIST of TABLES Table 1.1 Comparison of terms used for different age groups in different studies ........................................6 Table 1.2 Characteristics of health and well-being services ..........................................................................8 Table 2.1 Projected Australian population of 40 and over from 2008 to 2020 ............................................ 17 Table 2.2 Weekly income across gender and age range .............................................................................. 19 Table 2.3 Percentage of people with financial stress by age, Queensland, 2002 ......................................... 21 Table 2.4 Cognitive age measures ............................................................................................................... 23 Table 2.5 Purchase-decision/ Task definition situations. ............................................................................. 31 Table 2.6 Items used to measure situational variables ................................................................................. 32 Table 2.7 Measures of trust ......................................................................................................................... 35 Table 2.8 Similarities between different taxonomies of service attributes .................................................. 41 Table 2.9 Perspectives of quality ................................................................................................................. 43 Table 2.10 Items used to measure service performance ................................................................................ 49 Table 2.11 Operationalisation of value and price. ......................................................................................... 60 Table 2.12 Conceptual differences between service performance/quality and satisfaction ........................... 66 Table 2.13 Definitions of customer satisfaction ............................................................................................ 67 Table 2.14 Items that measure satisfaction .................................................................................................... 72 Table 2.15 Items used to measure post-purchase behaviour and intentions .................................................. 75 Table 2.16 Impact of the choice of measurement perspective ....................................................................... 80 Table 3.1 Basic beliefs (metaphysics) of alternative inquiry paradigms ................................................... 84 Table 3.2 Classification of research by purpose .......................................................................................... 86 Table 3.3 Qualitative versus quantitative research ...................................................................................... 86 Table 3.4 Exploratory research objectives and associated questions ........................................................... 88 Table 3.5 Interviewees ................................................................................................................................. 89 Table 3.6 Advantages and limitations of focus groups versus personal interviews ..................................... 93 Table 3.7 Profile of focus group participants (ordered by age) ................................................................... 94 Table 3.8 Break up across the three focus groups........................................................................................ 95 Table 3.9 High involvement health and well-being services discussed by focus groups and interviewees .96 Table 3.10 Focus group results: Service product items that influence perception of service performance ... 97 Table 3.11 Focus group results: Price items that influence perception of service performance .................... 97 Table 3.12 Focus group results: Marketing communication items that influence perception of service performance . ............................................................................................................................... 98 Table 3.13 Focus group results: Place items that influence perception of service performance .................. 99 Table 3.14 Focus group results: Process items that influence perception of service performance ................ 99 Table 3.15 Focus group results: People items that influence perception of service performance .............100 Table 3.16 Focus group results: Physical evidence items that influence perception of service performance ..............................................................................................................................101 Table 3.17 Focus group results: Situational factors that influence perception of service. ...........................101 Table 3.18 Focus group results: Consumer characteristics that influence perception of service .................102 Table 4.1 Construct definitions ..................................................................................................................109 Table 4.2 Combined results for Individual customer characteristics from literature and focus groups .....111 Table 4.3 Combined results of Situation variables from literature and focus groups ................................112 Table 4.4 Combined results for Product from literature and focus groups ................................................113 Table 4.5 Combined results for Price/Value from literature and focus groups ..........................................114 Table 4.6 Combined results for Marketing Communication from literature and focus groups .................114 Table 4.7 Combined results for Place from literature and focus groups ....................................................115 Table 4.8 Combined results for Process from literature and focus groups ................................................115 Table 4.9 Combined results for People from literature and focus groups..................................................116 Table 4.10 Combined results for Physical Evidence from literature and focus groups ...............................116 Table 4.11 RO2: Hypotheses developed for this thesis ...............................................................................117 Table 4.12 Summary of hypotheses proposed for RO3 ...............................................................................121 Table 5.1 Sampling frame choices .............................................................................................................126 Table 5.2 The seven step process in determining a measuring scale .........................................................129 Table 5.3 Advantages and disadvantages of attitude rating scales ............................................................129 Table 5.4 Constructs and definitions used in this study .............................................................................137 Table 6.1 Profile of respondents ................................................................................................................143 Table 6.2 Use of public versus private health and well-being services .....................................................144 Table 6.3 Range in service cost across income and age ............................................................................144 Table 6.4 Percentages of Australians with Internet access compared to sample responses .......................145

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Table 6.5 Comparison of sample demographics with the Australian population.......................................146 Table 6.6 Items measuring Service performance (CSP and SERVQUAL) ...............................................150 Table 6.7 Items measuring Situational Variables ......................................................................................152 Table 6.8 Items measuring Satisfaction .....................................................................................................153 Table 6.9 Items measuring Post-purchase behavioural intent ....................................................................153 Table 7.1 Heuristics for deciding on reflective or formative models.........................................................157 Table 7.2 Summary of model fit statistics .................................................................................................161 Table 7.3 Factor loadings and Scale reliability for Behavioural Intent .....................................................161 Table 7.4 Congeneric measurement model for Post purchase behavioural intent .....................................162 Table 7.5 Factor loadings and Scale reliability for Satisfaction. ...............................................................163 Table 7.6 Satisfaction congeneric model ...................................................................................................163 Table 7.7 EFA for Situational Variables....................................................................................................164 Table 7.8 Factor loading and scale reliability for Situational variables .....................................................165 Table 7.9 Congeneric measurement model for Situational variables.........................................................165 Table 7.10 Factor loadings and scale reliability for Consumer knowledge. ................................................167 Table 7.11 Congeneric measurement model for Consumer knowledge ......................................................167 Table 7.12 Factor loadings and scale reliability for Cognitive age ..............................................................168 Table 7.13 Congeneric measurement model for Cognitive age. ..................................................................168 Table 8.1 Exploratory factor analysis for CSP. .........................................................................................172 Table 8.2 Rejected CSP items....................................................................................................................173 Table 8.3 Scale reliability for CSP ............................................................................................................174 Table 8.4 Single-factor congeneric models within the CSP construct .......................................................176 Table 8.5 Comparison of CFA and second order factor analysis...............................................................178 Table 8.6 Exploratory factor analysis using SERVQUAL items ...............................................................180 Table 8.7 Scale reliability for SERVQUAL. .............................................................................................180 Table 8.8 Single-factor congeneric models within the SERVQUAL construct .........................................182 Table 8.9 CFA and second order factor analysis for SERVQUAL ...........................................................183 Table 8.10 Model fits for confirmatory and second order factor analysis for SERVQUAL. ......................184 Table 8.11 Model fits for confirmatory and second order factor analysis for CSP models .........................185 Table 8.12 Reliability estimates for all multi item sub-constructs and constructs .......................................187 Table 9.1 Standardized Regression Weights and fit indices for tested models ..........................................189 Table 9.2 Comparison of means for Satisfaction across age groups .........................................................191 Table 9.3 SRW's across the three age groups. ...........................................................................................192 Table 10.1 Items and factors measuring Service performance (CSP) .........................................................200 Table 10.2 Rejected items ...........................................................................................................................204 Table 10.3 Items measuring SERVQUAL in the health and well-being services .......................................206 Table 10.4 Items measuring Situational variables in the health and well-being services ............................208 Table 10.5 Items measuring Satisfaction .....................................................................................................209 Table 10.6 Items measuring Post-purchase behavioural intent....................................................................210 Table 10.7 RO3: Standardized Regression Weights (β) of the full structural model. ..................................211

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LIST of FIGURES Figure 2.1 Structure of the literature review in Chapter 2 ....................................................................... 11 Figure 2.2 A decision-process framework for consumer behaviour ........................................................ 12 Figure 2.3 Customer information-processing framework ........................................................................ 13 Figure 2.4 The five key concepts and relevant sections within Chapter 2 ............................................... 14 Figure 2.5 Conceptualising customer characteristics............................................................................... 15 Figure 2.6 Situational factors ................................................................................................................... 28 Figure 2.7 Service performance ............................................................................................................... 37 Figure 2.8 Conceptual model of service quality ..................................................................................... 44 Figure 2.9 Hierarchical model ................................................................................................................. 46 Figure 2.10 Elements of satisfaction developed from the literature ......................................................... 73 Figure 2.11 C.S.P. conceptual model of consumer post-purchase evaluation process .............................. 81 Figure 2.12 SERVQUAL conceptual model of consumer post-purchase evaluation process ................... 82 Figure 3.1 Outline of Chapter 3 ............................................................................................................... 83 Figure 3.2 Leximancer concept map...................................................................................................... 105 Figure 4.1 Structure for Chapter 4 ......................................................................................................... 107 Figure 4.2 The relationship between theory, construct models and structural equation models............ 108 Figure 4.3 Consumer evaluation of services-Customers perception of Service Performance (CSP) .......... model.................................................................................................................................. 120 Figure 4.4 Consumer evaluation of services-SERVQUAL model ........................................................ 120 Figure 5.1 Outline of Chapter ................................................................................................................ 123 Figure 6.1 Outline for the four chapters providing results for Stage II.................................................. 142 Figure 6.2 Responses for different priced services across age groups ................................................... 145 Figure 6.3 Comparison of sample and population data across age and income..................................... 147 Figure 7.1 Outline for Chapter 7............................................................................................................ 156 Figure 7.2 Reflective and formative measurement model ..................................................................... 157 Figure 7.3 Two factor congeneric model for Situational variables ........................................................ 166 Figure 8.1 Outline for Chapter 8............................................................................................................ 170 Figure 9.1 Final structural model with CSP .......................................................................................... 188 Figure 9.2 Final structural model with SERVQUAL ............................................................................ 189 Figure 10.1 Outline of chapter 10. ........................................................................................................... 195

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1

1.1

Introduction

Background to the research

The impact of the ageing population, particulary the Baby boomers, has economic, social and environmental implications at a local, national and global level, and cannot be overstated, as this ‘senior boom’ will shape the 2010’s through to the 2030’s (Moschis, Lee & Mathur 1997; Novelli 2004). The year 2011 looms as a momentous year, as all over the world the oldest Baby boomers turn 65, the beginning of traditional retirement. Baby boomers, those born between 1946 and 1964 (Australian Bureau of Statistics 2004) are expected to be the most influential consumer segment from the birth of the youngest baby boomer in 1964 until 2025 (Hodge, 2004; Business Council of Australia 2004). In addition, changes in lifestyles and disease patterns have resulted in Western populations living longer, but suffering from higher levels of chronic diseases and therefore health and well-being services are under increasing demand. Over the next 40 years, the Australian population aged 65, and over, is expected to increase from 2.9 million to 7.9 million (Swan in Toohey 2009), and therefore there is an increasing need for effective health and well-being services. Seventy five percent (7.7 million people) of all employment in Australia is in the service industry, with health and well-being services showing the second highest growth in employment (Australian Bureau of Statistics 2007). The increased demand from the ageing population has now resulted in the health care and social assistance services becoming the largest employment sector, surpassing the retail sector in August 2009 (Megalogenis 2009). Due to the need to research consumer behaviour within the service industry, this study has two parent disciplines, consumer behaviour and services marketing. A brief background to the first parent discipline, consumer behaviour, is discussed next, with a brief background on services marketing presented in Section 1.2. Understanding consumer behaviour enables a marketer to understand the target market and their purchase process. This includes the focus of this study, the post-purchase stage, where service performance is evaluated and the consumer experiences a degree of satisfaction and forms postpurchase behavioural intentions. The most popular segmentation bases for target markets are geographics and demographics (and in particular, age). Age based segmentation is commonly used, as age segments are readily identifiable, measurable, and able to be targeted through specific market mixes (Widing et al. 2003). The key age segment targeted by marketers, however, is typically the younger person, under the age of 50 (Moschis, Lee & Mathur 1997).

Chapter 1 Introduction

1

Although the mature market is now an increasingly important demographic market segment, mature consumers are a growing demographic segment that has been largely ignored by marketers (Leventhal 1997; Moschis, Lee & Mathur 1997). The bulk of advertising dollars is spent on the younger Generation X and Ys, in spite of the fact that they spend far less than their parents and grandparents (Morgan & Levy 2002; Solomon & Rabolt 2004). Indeed, in America more than half of the American assets and discretionary income is controlled by people over the age of 55 (Moschis, Lee & Mathur 1997; Nam et al. 2006). Organisations need to prepare to meet the challenge of a growing older population, that is mostly vital and active and possess great intellectual and financial wealth (Novelli 2004). These mature consumers demand goods and services suitable to their changing needs and lifestyles (Gibler, Lumpkin & Moschis 1997). Marketers cannot afford to ignore these demographic trends and need to understand the consumer behaviour of mature people (Moschis, Lee & Mathur 1997). In particular, they need to understand how this older market evaluates and responds to the many attributes that make up an organisation’s service offering to ultimately display post-purchase behaviours, including word-of-mouth and loyalty which is crucial to the continued viability of any service business (Zeithaml 2000).

Studies show there are many antecedent constructs for post-purchase behaviour, although they remain elusive and indistinct constructs (Parasuraman, Berry & Zeithaml 1991a, 1994; Parasuraman, Zeithaml & Berry 1988; Cronin & Taylor 1992). These include five main constructs, the most obvious of which is Post-purchase behavioural intent. The other four include; consumer satisfaction, service performance or service quality (Parasuraman, Zeithaml & Berry 1985, 1988; Cronin & Taylor 1992; Zeithaml & Bitner, 2000; Voss, Parasuraman & Grewal 1998), individual determinants (age, gender, origin and cultural influences, learning and interpretation from past experiences) (Patterson, Johnson & Spreng 1997; Söderlund 2002), and situational influences (such as the impact of behaviour of other consumers, and mood) (Belk 1975; Patterson, Johnson & Spreng 1997). These constructs will be discussed in more detail in Chapter 2.

1.2

Services for mature consumers

The second parent discipline for this thesis is services marketing. The Australian Services Roundtable (2009) believe that the academic definition of services helps to focus attention directly on services activities in their own right, and thus enables progress in identifying the drivers of competition and innovation specifically in services activities (Australian Services Chapter 1 Introduction

2

Roundtable Limited 2009). One definition, which has the support of the Australian Services Roundtable, is that services deliver help, utility or care; an experience, information or other intellectual content – and the majority of the value of that activity is intangible rather than residing in any physical product. Similarly, the distinction between services marketing and traditional goods marketing is highlighted in Brown, Fisk and Bitner’s (1994) definition, where a service is essentially an intangible act or performance that one party can offer to another, and which does not result in the ownership of anything, thus influencing the way in which consumers evaluate services. Indeed, service logic fits the context of most businesses selling goods better than the goods based logic (Grönroos 2006; Vargo & Lusch 2004), and thus, measures to improve service performance are important for traditional services as well as for goods based providers. The service industry is a major and growing contributor to the Australian economy, accounting for 77.9 percent of Australia’s Gross Domestic Product ($554 billion) in 2005-06, a 14.6 percent increase on the 2001-02 period (Australian Bureau of Statistics 2007). Austrade (2009) estimates that as many as 577,158 or 82 percent of Australian firms are services firms. Service firms account for 67 percent of the total population of 25,000 Australian firms that export. In the 2006-07 period, 75 percent of all employment (7,724,600 people) in Australia was in the service industry (Australian Bureau of Statistics 2008a). This represented a ten percent increase over the 2002-03 period. The second largest increase in employment occurred in the area of focus for this study, health and community well-being services, with the largest increase in Property and business services. Health and well-being services showed an average annual growth in employment of 3.5 percent per year over the four year period to 2007, attesting to the increasing demand in this area (Australian Bureau of Statistics 2008a). Twenty five percent of the Australian population visit complementary healthcare practitioners each year and this is increasing by a growth rate of seven percent per year (Austrade 2009). Additionally, the Baby boomers are the “first sedentary generation” and already appear to be suffering poorer health than their elders did at the same age (Moodie, University of Melbourne, in Drayton, 2009, p.14). Because the service industry is such an important part of the fabric of life, it is important to understand how best to market services, and in particular, those services that are important to the mature market. Compared with other age groups, there seems to be a plethora of services specifically for mature age people, especially those who are 50 and over, and even more for those who are sixty and older. Governments are increasingly interested in measuring service performance of government funded health and well-being services as the need for efficient and effective service

Chapter 1 Introduction

3

performance increases (Australian Government 2006). These services are provided at all levels of government, including non-government organisations (NGO's) that are funded by government, as well as private organisations and businesses. Governments are recognising the impact the ageing population has on our economy, society and environment and will continue to influence the provision of services and goods, through regulations, policy and research (Australian Government 2006; Eastman & Iyer 2005). Many of these services are health and well-being services, indicating the importance of this service area for mature consumers. Health and well-being services include preventative and alternative health service providers. Baby boomers (Australia’s largest population group) are increasingly adopting a preventative healthcare approach to maintaining healthier lives and are thus demanding more choice to use preventative and alternative heath services (Austrade 2009). Australian government and nongovernment bodies have further identified areas that require research in order to improve conditions for the mature Australian. This list is set out in Appendix A, and as logic dictates, the major focus of the research agenda is to improve and maintain health and well-being.

1.3

Justification for this research

It is vital that service providers understand how their customers evaluate their perception of the service experience, resultant satisfaction, and post-purchase behaviour, so that the providers can efficiently and effectively provide the promised outcomes and process (Grönroos 2006). Given the extra importance of health and well-being services to the client and society, it is even more important to understand the factors underlying consumer evaluations of these high involvement services in order to improve consumer satisfaction and post-purchase behavior.

Mature consumers are defined in this study (See Section 1.5) as Baby boomers and those older. There is a perception that Baby boomers differ from preceding generations and have been, for example, labelled as Inner fixated idealists from an indulged childhood and me-oriented youth (Morton 1998; 2008). (See Appendix B for further details). There needs to be more research to establish what, if any, differences exist between the way in which Baby boomers and older consumers evaluate services. There has been little, if any, research comparing the differences between the Baby boomers and older consumers’ evaluation of high involvement services. Given the ‘self centred’ label with which the general media has tagged Baby boomers, the Baby boomers’ behaviour as mature age consumers may differ to that of current retirees. The development of a consumer behaviour model that provides a holistic approach by accounting for all major influences (service performance, individual consumer characteristics, Chapter 1 Introduction

4

including age, and situational variables), when evaluating consumer satisfaction would provide a better model, which could be used by both Government and private enterprises to improve their services to the mature age group.

1.4

Research question and objectives

In order to maximise consumer satisfaction and post-purchase behaviours, health and well-being service organisations need to understand the factors which influence their consumers’ perceptions and evaluations, so that they can strategically market to maximise the positives and minimise the negatives. All organisations, whether business, not-for-profit or governments, have a need to understand the factors that influence mature age consumer perception of health and well-being services and the relationship between these factors. This leads to the research question for this thesis: How do mature age consumers evaluate their experience with health and well-being services?

It is generally agreed that key constructs influencing consumer’s post-purchase behaviour include; individual consumer characteristics, situational characteristics or variables, service performance, satisfaction, and post-purchase behaviour and intent (Lawson et al. 1999; Oliver 1997; Walker 1995; Zeithaml & Bitner 2000). However, although some form of consumer satisfaction research is practised by nearly all businesses, and research into customer perception of service performance, satisfaction and post-purchase evaluation has been extensive, there currently exists no consensus regarding the constructs which influence satisfaction and postpurchase behaviour for health and well-being services - or any services (Danaher & Gallagher 1997; Singh & Sirdeshmukh 2000), and, perhaps consequently, there also exists no consensus regarding how such constructs might be operationalised. It is, therefore, important to identify such constructs and to develop appropriate methods to operationalise them (Voss, Parasuraman & Grewal 1998; Oliver 1994; Yi 1990). In order to answer the research question presented above, the following four research objectives (RO) will be pursued in this project. RO1: To determine factors influencing mature aged customers’ satisfaction and post-purchase behavioural intent with a high involvement service and specifically, health and well-being services. RO2: To develop measures to operationalise the factors so developed. RO3: To develop and test a model of mature age customers’ evaluation of health and well-being services. Chapter 1 Introduction

5

RO4: To test for differences that age might have on the mature consumer’s evaluation of health and well-being services. Hypotheses are developed in Chapter 4 to address these research objectives.

1.5

Definitions

Two key terms, Baby boomer and mature age consumer, used to describe the customer age range focus of the study are defined here for clarity. This is followed by a definition and explanation of service types and characteristics.

Baby boomer. The “Baby boom” years are those which showed the distinct surge or boom in birth rates (Australian Bureau of Statistics 2003). Although definitions of Baby boomers varies slightly between countries and media sources, this thesis uses the definition used by the Australian Government’s Bureau of Statistics (2003), as shown in the first row of Table 1.1. Thus, Australian Baby boomers are those born in the 20 year period from January 1946 to December 1965. Since 1966, the total fertility rate has gradually declined until recently. The last two columns in Table1.1 set out the actual age ranges for the Baby boomers in 2007 (when Stage I data was collected), and in 2008 (when Stage II data as collected). Table 1.1 Comparison of terms used for different age groups in different studies Age range In 2007 Stage I 42-61 42+ 42-51 52-61 62 and older

Age range In 2008 Stage II 43-62 43+ 43-52 53-62 63 and older

42-61 62 + 45-64 50-59 60-69 70-74 80+

43-62 63 + 45-64 50-59 60-69 70-74 80+

Seniors and 50 plus

50+

50+

Aging consumer/ Mature consumer/ Older people Mature market Elderly or senior consumer

50+ 55+ 65+

50+ 55+ 65+

Elderly consumers

65+

65+

Older/elderly consumers Mature age

65+ 65 +

65+ 65 +

Author

Terminology

ABS 2003

Baby boomers (1946-1965)

AUS

This research study 2008

Mature age consumer: • Younger Baby boomer (1965-1955) • Older Baby boomers (1954-1946) • Older age (Born before 1946)

USA

Morton 1998

AUS

Earle, L. 2003

Country AUS

AUS USA USA USA USA UK AUS

National Seniors Foundation 2008 Leventhal 1997 Moschis & Mathur 1997 Eastman & Iyer 2005 Johnson-Hillary, Kang & Tuan 1997 Hare et al. 1999 ABS 2005e

Chapter 1 Introduction

Baby boomers (Inner Fixated Idealists) (1946 – 1965) Mature (Adaptive) Mature age workers Emerging aged Young aged Mature aged Older aged

6

Mature age consumer. There are many differing methods of defining the physically older consumers, as can be seen in Table 1.1. There is no single adequate label for the age range studied in this thesis. Many younger Baby boomers do not like being labelled a “Baby boomer”. Similar reluctance is displayed to terms such as elderly, mature and seniors. Given the difficulty in arriving at an acceptable label and the disparity about the age range of the Baby boomer, this study uses the term “mature consumers” to denote those Australians who were born before 1965. This thesis tests differences between three age ranges within the Mature age consumer group, as set in the second row in Table 1.1. Younger Baby boomers are those born 1964 to 1955; Older Baby boomers are those born 1946 to 1954; and the Older age group are those persons born before 1946, and who are therefore older than the Baby boomers.

Service classification. Classifying services assists the service provider to manage the marketing of the service to best meet consumer needs by emphasising the services unifying commonalities in order to improve management (Blois 1974; Lovelock 1983). The most complete service taxonomy in Australia and New Zealand by service type is provided by the Australian Bureau of Statistics, as seen in Appendix C. This study focuses on services within the important Category O. Health and Community well-being services. This study, however, adapted the category name to health and well-being services, as this is simpler and easier to understand. Services have also been categorised by a variety of continua, such as the degree of durability or time over which they are used, the degree of customer commitment, and degree of tangibility (Blois 1974). The degree of these characteristics will influence the consumer interaction and thus perception of the service. For example, the longer the duration of the service encounter, the more important are the service provider’s personal skills as there is more interaction between customer and provider. Duration will vary widely in health and well-being services, depending on the purpose and seriousness of the consumer need. The outcome of high involvement services, such as health and well-being services, which affect one’s person are traditionally of high importance to the customer and thus would be expected to have higher consumer involvement and commitment (Dagger & Sweeney 2006). In addition to those suggested by Blois (1974), affective content, and spatial proximity affect a service encounter, and thus the consumer’s evaluation of the service (Price, Arnould & Tierney 1995). The affective content or degree of emotional involvement that a consumer has in the consumption of the service will also affect the impact a service provider has upon the service experience and resultant satisfaction. In personal services, such as health and well-being,

Chapter 1 Introduction

7

consumers have high affective involvement. Finally, the spatial proximity between provider and customer will also affect the importance played by the service provider’s interpersonal skills. Perhaps due to the complexity and speed of evolution of service types, there is no one universally accepted taxonomy of service types and attributes. Table 1.2, however, provides an overview of the general characteristics of health and well-being services in the second column to assist in the definition of this service type. The highlighted words in the second column show the characteristics which belong most to health and well-being services.

Table 1.2 Characteristics of health and well-being services (Shown in bold in second column) General characteristic of services Tangibility Degree of repeat purchase Degree of interpersonal contact with provider

Range for service characteristics Tangible - Intangible Can be both Continuous - Discrete High - Low

Spatial proximity Near - Far Recipient of service The individual person Degree of involvement/ emotional involvement High - Low Customization of service Usually more Customised - Standard Degree of judgement exercised by provider High - Low Durability of benefits Hopefully more Enduring - Ephemeral Duration of service Short – Long (All durations can apply) Provider type Both Government – Non government Source: Adapted from Lovelock 1983; Price, Arnould & Tierney 1995

1.6

Delimitations of scope

This research is limited to mature Australian consumers of health and well-being services.

1.7

Methodology

As there are no standard instruments to measure Situational variables, Consumer characteristics and Customer perceptions of service performance with health and well-being services (Cronin & Taylor 1992; Oliver 1993a), Stage I of this project is inductive and consists of traditional scale development through exploratory research (Churchill 1979). This consists of interviews with industry experts and three focus groups selected using purposeful sampling from the population of mature customers to generate and develop scales. The results of the Stage I exploratory research will be combined with the literature review findings from Chapter 2, and further refined using expert panels (reported in Chapter 4 and 5) before being incorporated in the survey in Stage II. The full methodology and results for Stage 1 are detailed in Chapter 3.

Chapter 1 Introduction

8

Stage II is the major study of this thesis and used the factors identified in Stage I to develop a survey instrument to collect data from Australians aged 44 and over, who had used a health and well-being service within the last year. This combination of methodologies provides triangulation and a wider perspective on the phenomena being studied (Perry 1998) and lays the foundations for the major second stage. This second stage, an Australia wide survey, places an equal quota for each of the three age groups; the youngest half of the Baby boomers; the older half of the boomers; and those older, as set out in the second data row of Table 1.1. The quantitative data will be analysed using SPSS and AMOS. The methodology for the second stage is explained and justified in Chapter 5.

1.8

Thesis outline

This thesis is set out in ten chapters. Chapter 1 provides a background to the research and introduces the research question and objectives, with a justification for the research and methodology and delimitations of the research. Chapter 2 provides a literature review of the operationalisation of the key constructs, with a focus on mature age consumer evaluation of high involvement services and highlights consistencies, inconsistencies and gaps within the literature. This leads to the development of a conceptual model to guide the first stage of the primary research for this study, the exploratory research, which is explained and justified in Chapter 3. The results of the literature review are combined with the exploratory research results to develop a theoretical model and hypotheses in Chapter 4. Chapter 5 provides the details and justification for the second research stage, a survey of mature consumers. Chapter 6 then provides detail about data preparation and descriptive analysis of cleaned data. This is followed in Chapter 7 by the use of exploratory factor analysis and structural equation modelling to refine the congeneric models required to address the research aims and then Chapters 8 and 9 follow with results for the final structural models. Chapter 10 presents the conclusions for each research objective and outlines the contributions of this research and implications for theory and practice, before stating the limitations and suggesting future research direction.

Chapter 1 Introduction

9

1.9

Conclusion

This introductory chapter has laid the foundation for this research in the factors that influence mature Australian consumers evaluation of health and well-being services. The background for this study has been discussed through the two parent disciplines of consumer behaviour and services marketing. This led to the justification for this research, followed by the research question and objectives for this study. Definitions and delimitations of scope were established, before a brief overview of the methodolgy was followed with an overview of the structure of this thesis. The next chapter builds on this foundation, with an analysis of the current literature to identify relevant research findings and gaps within the literature.

Chapter 1 Introduction

10

2 Literature review

2.1

Introduction

In order to address the research question for this thesis; ‘How do mature age consumers evaluate their experience with health and well-being services?’ consumer behaviour research within the services industry was examined to identify possible domains of the pertinent constructs. This chapter presents an analysis of the research concerning consumer behaviour constructs that potentially interact to influence a customer’s perception of high involvement service performance, satisfaction and post-purchase intention and behaviour. Particular attention was paid to the research of mature age consumers of health and well-beings services. Thus, as shown in Figure 2.1, Section 2.2 provides a review of the consumer decision process with a focus on the post-purchase stage. Each of the five sections from 2.3 through to 2.7 then provide a definition, analysis and clarification of the theory and empirical research for the major constructs of individual customer characteristics; situational factors; customers’ perceived service performance; satisfaction and post-purchase behaviour and intent. This review provides a clear understanding of the current literature and research gaps that are addressed in this study. Section 2.8 discusses the rationale behind the development of a preliminary conceptual model, followed by a conclusion in 2.9.

2.1. Introduction

2.2. Consumer behaviour

Review of key concepts 2.3. Individual customer characteristics 2.4. Situational factors 2.5. Perceived service performance 2.6. Satisfaction 2.7. Post purchase behaviour and intentions

2.8. Conceptual modelling

2.9. Conclusion

Figure 2.1 Structure of the literature review in Chapter2

Chapter 2 Literature Review

11

2.2

Consumer Behaviour

The consumer decision-making process typically refers to a sequence of events and activities which begin with the consumer’s recognition of an unfulfilled need, want or arousal, and proceed through information search and evaluation to the purchase and subsequent use of the product and resultant post-purchase reaction (Fisk 1981). The five traditional consumer decision making steps have been amalgamated into three steps for service consumption (Fisk 1981), as shown in Figure 2.2. Within the wider macro and micro environmental influences on both consumers and providers, the consumer’s information processing and behaviour are more directly influenced by; consumer characteristics (such as the consumer’s demographics), the consumer’s perception of the service provider’s marketing stimuli (Neal, Quester & Hawkins 2004; Widing et al. 2003), and situational influences (Belk 1975; Lawson et al. 1999; Neal, Quester & Hawkins 2004), as shown in Figure 2.2. Macro & Micro Environmental Forces E.g. Economy, Technology, Political/ Legal, Natural environment, Competitors, etc. Characteristics

Demographics o Age (Baby boomers +) o Gender o Family life stage o Occupation o Income Psychographics o Values/attitudes o Personality/self concept o Cognitive age o Memory/learning o Motivation Socio-cultural influences o Personal influence o Reference groups o Family o Social class o Culture o Sub-culture

Service provider stimuli Product; Place; Price, Place, Process, Physical evidence, People

Consumer Decision Process 1. Pre purchase

Consumer

Problem Recognition Information Search Alternative evaluation

Stage 2. Service experience

Stage 3. Post-purchase stage

Research focus

Situational influences o Purchase task o Social surroundings o Physical surroundings o Temporal surrounding o Antecedent states

Figure 2.2 A decision process framework for consumer behaviour. Source: adapted from Belk 1975; Fisk 1981; Neal, Quester & Hawkins 2004; Widing et al. 2003.

This thesis focuses on the third and post-purchase stage; where the consumer evaluates the service experience from stage 2. This post-purchase evaluation results in an evaluation of the service experience or performance (often called service quality; Parasuraman, Zeithaml & Berry 1988), the degree of satisfaction with the service, and a post-purchase behavioural intention, as

Chapter 2 Literature Review

12

shown in Figure 2.3. While existing theoretical models provide a useful framework from which to examine a consumer’s post-purchase evaluation and behaviour, there is still a need for a more comprehensive empirical or measurement model of the factors that influence consumer satisfaction with high involvement services.

Feed-back loop

from Service experience

Consumer perception of service performance Satisfaction  Post purchase behavioural intent

Figure 2.3 Customer information-processing framework Source: adapted from Lawson et al. (1999 p.350); Lye et al. 2005; Oliver (1997); Walker (1995); Zeithaml & Bitner (2000)

Customer perception results from the interpretation or decoding of sensation of stimuli from what the customer sees, hears, tastes, touches and smells, plus four other senses; pain, temperature, kinaesthesia (sense of movement and position in space) and vestibular (body balance, position and movement). These perceptions are subject to the individual’s physiological, psychological makeup, relationships with others, past experience, history and memory and situation or context (Lawson et al. 1999; Schiffman 1996; Seaton & Bennett 1996). The customer’s perceptual encoding, as shown in Figure 2.3, is a selective reaction to external and internal stimuli and is the process by which the individual selects, organises, and interprets information inputs to create meaning to their environment or experience (Avery & Baker 1990). Perception and attitude are both evaluative responses to products or services and are often regarded as being similar (Bitner & Hubbert 1994; La Tour & Peat 1979). Cognitive consistency is maintained by selectively interpreting or perceiving the stimuli in such a way so as to reinforce existing attitudes and beliefs and screen out those which don’t reinforce existing beliefs, especially when there is a high degree of involvement in the purchase process (Schiffman 1996).

There are several stages of evaluation and re-evaluation (Bitgood, Shettel & Williams 1991; Cadotte, Woodruff & Jenkins 1987) during the service consumption. The first information process occurs prior to a consumption experience and results in outcomes which enable Chapter 2 Literature Review

13

customers to formulate expectations relating to their anticipated consumption of the service, including health and well-being services. Additional internal processing occurs during and after the consumption process to interpret and process the perception of the service provider and consumption experience and this may involve multiple decisions or decision waves within a single decision process to eliminate unsuitable alternatives prior to gathering information or comparing options (Lye et al. 2005) to produce the outcome of perception of the service performance. These naturalistic decision models "depict decision-making as a sequence of activities" (Lipshitz, 1993 in Lye et al. 2005, p.221). While factors that may affect the

purchase choice do not necessarily affect the post-purchase evaluation of satisfaction, many of the influences and decisions made in the preceding stages will ultimately impact on post-purchase evaluation and behaviour (Oliver 1997). This concept of reevaluation is further supported by the post-purchase model of satisfaction proposed by Oliver (1997), which includes consumer’s perception of the service performance as an input. This feedback loop is also represented in Figure 2.3, where post-purchase processing of the consumer’s perception of service performance would result in a satisfaction evaluation of the service experience and subsequent behavioural intent (Droge, Halstead & Mackoy 1997; Oliver 1977). In summary, as shown in Figure 2.4 below, the key concepts that ultimately influence a consumer’s post-purchase behaviour include; consumer characteristics, situational influences, the consumer’s perception of the service performance; satisfaction; and post-purchase behavioural intent.

Section 2.3

Individual Characteristics

Section 2.5

Section 2.4

Service Performance

Satisfaction

Behavioural Intentions

Situational Variables

Section 2.6

Section 2.7

Figure 2.4 The five key concepts and relevant sections within Chapter 2

Please note, the actual relationship (such as moderating, mediating, etc.) between these concepts will further addressed in Section 2.9. The next five sections address and analyse the extant literature on the five key concepts.

Chapter 2 Literature Review

14

2.3

Customer characteristics

It has long been known that individual customer characteristics and situational factors influence customer behaviours, including the focus of this study, post-consumption evaluation and behaviour (Belk 1974; Hornik 1982, in Quester & Smart 1998). Despite this, very few studies have considered the combined effects of individual characteristics and situational variables on the consumption and post-consumption process (Chow, Celsi & Abel 1990; Wakefield & Inman 2003). Individual characteristics that may influence consumer perception of service performance may be categorised under the four major areas of consumer demographics, psychographics, social and cultural class or background, and the customer’s purchasing behaviour, as depicted in figure 2.5 and are now discussed further in terms of mature age or ‘Baby boomers and older’ consumers.

Customer demographic s Psychographics

Individual Characteristics

Service Performance

Situational Variables

Culture and social class Satisfaction Purchasing behaviour Discussed in Section 2.3

Behavioural Intentions

Figure 2.5 Conceptualising customer characteristics

2.3.1

Customer demographics

All consumers demand goods and services suitable to their needs and lifestyles and changes in these needs are particularly influenced by major demographic changes. The influence of demographics on customers’ perceptions of service performance and satisfaction varies between studies with results ranging from no significant variation of satisfaction with a service product across age, nationality and income (Ilbrahim & Gill 2005) to studies that show an increase in customer satisfaction with age (Pickle & Bruce 1972, in Yi 1990); personal competence (Westbrooke & Newman 1978, in Yi 1990), and a decrease with education (Pickle & Bruce 1972, in Yi 1990) and total family income (Mason & Himes 1973, in Yi 1990). There is also evidence that gender and marital status influence satisfaction (Mason & Himes 1973, in Yi 1990; Moutinho & Goode 1995). Age and expertise or experience with Canadian banks did not have a significant influence on customer satisfaction, while the level of education and household Chapter 2 Literature Review

15

income did (Cooil et al. 2007). Of the myriad of demographics, those most likely to influence satisfaction have been suggested to be: gender, age, and residential or geographical location (Chadee & Mattsson 1996; Pearce & Moscardo 1998; Sparkes 2000; Yi 1990). Further research is required (Moutinho & Goode 1995), as it appears that certain demographic factors do influence satisfaction. A discussion of the major mature age consumer demographics of gender, age, geographical location and housing, and economic resources adds to the understanding of how these demographics might be instrumental in influencing consumer behaviour. These demographic characteristics are now discussed in more detail. Gender. Gender can be related to satisfaction (Yi 1990). Females tend to express marginally higher levels of satisfaction with tourism services than males (Spinks, Lawley & Richins 2005). There appear to be significant gender differences in the way in which male and female customers view self-image and the need to impress others and this may influence overall satisfaction (Moutinho & Goode 1995). Therefore it is expected that males and females would also have differing satisfaction evaluations with health and well-being services.

Age. Demographic data are relatively easy to obtain and perhaps, consequently provide the traditional base to segment consumer markets (Catterall & Maclaran 2001). Although many marketers maintain this simplistic view when marketing to the mature consumer, it has been found that neither the simplistic age based segmentation or mass marketing approach work well with the highly diverse and relatively poorly understood mature market (Morgan & Levy 2002; Moschis, Lee & Mathur 1997). In spite of the increasing evidence that age may not be the best segmentation base, the mature market is increasingly divided into specific age segments (Caterall & Maclaren 2001). The impact of the ageing population on economic growth and increased demands for services (including health and well-being services, transport, financial, tourism and housing) is about to accelerate as the baby boomer generation reaches mature age (Australian Bureau of Statistics 2005). While Baby boomers represent a well used age segment (although little rigorous empirical research has been conducted to justify this segmentation), other mature age segments vary between authors, with Sawchuk (1995) for example, using prime lifers (those who are 50-65 years of age and include the majority of the Baby boomers), the recently retired (66-75 years), and the over 75’s market. The largest and most attractive segment in the early part of the twenty first century is the 50-65 year old (30% of the population Australian Bureau of Statistics 2007), but this will change as the Baby boomers age (Caterall & Maclaren 2001). It is predicted that the numbers of those over 64 will increase to largest proportion of the population from 30 percent of the population in 2008 to 36 percent in 2020, as shown in Table 2.1 (Australian Bureau of Statistics 2007).

Chapter 2 Literature Review

16

Table 2.1 Projected Australian population of 40 and over from 2008 to 2020 Age Range From ABS ‘Series B’ or median projected population 40-44

45-49

65-69

70-74

2008 1,495,122 1546376 1,394,626 1,295,020 1,132,279

841,074

676,500 559,872 432,882 246,892

94,216

25,129

5,327

2009 1,497,086 1555965 1,426,365 1,306,946 1,180,607

876,120

702,047 559,535 444,343 260,282

96,601

27,045

5,726

2010 1,511,404 1553241 1,454,981 1,321,677 1,224,536

916,911

728,523 562,689 450,390 272,313 102,513

29,213

6,186

2015 1,606,277 1526114 1,546,968 1,441,203 1,302,803 1,192,459

872,372 661,938 467,632 314,894 142,106

37,434

9,392

Year

50-54

55-59

60-64

75-79

80-84

85-89

90-94

2020 1,538,879 1620922 1,521,267 1,533,889 1,423,094 1,272,826 1,139,876 800,403 558,868 333,169 167,531

95-99

>99

53,313 12,834

Source: Australian Bureau of Statistics 2005b* Note that the last two rows show five year intervals. There is inconclusive evidence of the effect of age as a factor in the formation of customer satisfaction (Moutinho & Goode 1995). Studies in some services, such as a study of users of ATM machines show no significant differences in satisfaction between older and younger users (Goode & Moutinho 1996). Indeed, many mature consumers simply do not perceive themselves as old. Almost half of surveyed banking customers over the age of 65, perceived themselves as young (48.1%) and modern (46%) (Mattila, Karjaluoto & Pento 2003). This is known as cognitive age and is discussed further in the psychographic section (Section 2.3.2). It appears therefore, that physical age is not a reliable indication of mature age consumer attitude. However, other demographic changes, which are often a direct result of age for this age segment, such as employment and economic resources, as discussed next, also provide insight into the mature market. Geographic location and housing. Trends towards smaller households and relocation have had a major impact on the mature age consumers’ behaviour. Firstly, age and changes in the family life stage result in smaller households. The mature age group are traditionally thought of as empty nesters, and 48 percent of Australians aged 50 years and over were likely to live in a couple family without children (Australian Bureau of Statistics 2005e). Ninety four percent of people 60 years and over still live in private dwellings with only 5 percent living in aged care establishments (Australian Bureau of Statistics 2005e). Approximately 25 percent of people 60 and over live alone (Australian Bureau of Statistics 2005e), and it is predicted that single person households will increase to approximately 35 percent of households by 2026 (Australian Bureau of Statistics 2005d). However, in spite of around 25 percent living alone, approximately 90 percent of all Australians aged 55 years and over reported having contact, in the previous week, with family or friends who could provide them with support in a time of crisis and provide small favours or assistance, such as shopping (Australian Bureau of Statistics 2005e). Although most mature age people are empty nesters, they often still actively contribute to family and society. In 2002, people aged 45-54 years (32%) and 55-64 years (31%) were the most likely of all age groups to be providers of support to relatives who also lived outside their household. For

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example, 57 seven percent of children aged 0-11 years in informal care were cared for by grandparents. In Queensland for example, this equated to 55,200 children aged 0-4 years and 53,800 children aged 5-11 years. The second major change in housing is the trend to relocate due to two major reasons downsizing to more conveniently sized accommodation, and moving to a ‘better’ location. Moving residence is also associated with the ‘down-shifters’ and ‘sea-change’ trends. ‘Downshifters’ are those who have decided to leave higher incomes and a high achieving consumerism lifestyle in favour of a slower pace of life with more leisure and enjoyment (Hamilton & Mail 2002). Twenty three percent of 30 to 60 year old Australians were down-shifters (Hamilton & Mail 2002), compared with only 19 percent of Americans (Schor 1998, in Cairncross, Buultjens & Crowe 2005). Many down-shifters are also sea-changers, who move to lower incomes for lifestyle reasons (The Chairman of The National Sea Change Taskforce, Mayor Joe Natoli, 4th April 2006). Sea-changers also make a geographical shift away from large metropolitan areas in search of the ‘good life’ in a coastal area (Cairncross, Buultjens & Crowe 2005), whilst treechangers move to rural lifestyles. Baby boomers, like most of the population, cluster in metropolitan areas rather than rural, although sea and tree-changers are causing an increasing trend population move to non-metropolitan areas. The mature agers account for 29 percent of this movement (Planning Research Centre 2005). This demographic change is placing pressure on both high growth areas such as sea-change areas, which traditionally have insufficient infra-structure and services to cope with the increasing population, and also on negative growth areas such as remote rural areas, where services are declining due to lack of demand and thus inconveniencing those who still live there (Planning Research Centre 2005). Mature agers who move away from metropolitan areas can suffer from lack of some services such as access to health and well-being services and public transport. For this reason many people over 60, move to accommodation that suits their changing needs and provides better access to health care, transport and social support (Gibler, Lumpkin & Moschis 1997). This has resulted in a growth stage for the accommodation for the aged industry, which has been growing faster than the economy (Ibisworld 2004). In summary, a consumer’s household structure and location may affect their access to services, and this may influence a consumer’s perception of service performance. This is an area that requires further research.

Economic resources. Income sources include; wages and salaries from employment, Government benefits investments, unincorporated businesses, superannuation and annuities. As can be seen in Table 2.2, 12 percent of all men and 20 percent of all women received less than

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150 dollars per week, while 36 percent of men and 49 percent of women aged 50 and over, earned between 120 and 299 dollars per week (Australian Bureau of Statistics 2007). Table 2.2 Weekly income across gender and age range MALES Age range

55-64

65-74

75-84

3.30% 0.79% 0.58% 0.47% 0.48% 0.55% 2.43% 0.66% 0.34% 0.33% 0.38% 0.50% 0.91% 1.04% 1.07% 1.14% 1.32% 2.08% 0.98% 1.13% 1.00% 1.11% 1.22% 1.53% 0.65% 2.01% 2.31% 2.13% 2.10% 2.06% 0.18% 1.50% 3.06% 2.73% 2.47% 1.98% 0.05% 0.83% 2.69% 2.53% 2.26% 1.53% 0.03% 0.46% 2.72% 3.00% 2.67% 1.57% 0.01% 0.14% 1.43% 1.97% 1.81% 0.92% 0.00% 0.07% 0.86% 1.31% 1.20% 0.59% 0.01% 0.05% 0.86% 1.97% 1.90% 1.06% 8.56% 8.66% 16.94% 18.68% 17.79% 14.37% Totals (602,781) (609,817) 1,192,807 1,315,962 1,253,146 1,011,941

15-19

20-24

25-34

35-44

0.22% 0.41% 2.92% 2.00% 1.33% 0.64% 0.38% 0.30% 0.15% 0.10% 0.21% 8.67% 610,376

0.11% 0.21% 1.93% 1.40% 0.75% 0.30% 0.16% 0.11% 0.06% 0.04% 0.07% 5.14% 362,116

Neg/Nil income $1-$149 $150-$249 $250-$399 $400-$599 $600-$799 $800-$999 $1,000-$1,299 $1,300-$1,599 $1,600-$1,999 $2,000 plus

45-54

85 +

Total

0.03% 6.52% 0.05% 5.29% 0.38% 12.79% 0.37% 10.74% 0.17% 13.52% 0.07% 12.92% 0.04% 10.48% 0.03% 10.89% 0.02% 6.51% 0.01% 4.18% 0.02% 6.16% 1.20% 100.00% 84,389 7,043,335

FEMALES Age range Neg/Nil income $1-$149 $150-$249 $250-$399 $400-$599 $600-$799 $800-$999 $1,000-$1,299 $1,300-$1,599 $1,600-$1,999 $2,000 plus

15-19 20-24 25-34 35-44 45-54 55-64 65-74 75-84 85 + Total 2.72% 0.74% 1.19% 1.27% 1.33% 1.34% 0.31% 0.16% 0.07% 9.14% 2.81% 0.79% 1.43% 1.71% 1.08% 1.01% 0.54% 0.32% 0.10% 9.80% 0.99% 1.21% 1.69% 2.08% 2.05% 3.24% 3.45% 2.25% 0.74% 17.68% 0.79% 1.41% 2.13% 2.75% 2.40% 2.33% 2.48% 2.29% 0.94% 17.53% 0.42% 1.94% 2.94% 3.62% 3.37% 2.11% 1.03% 0.68% 0.23% 16.34% 0.09% 1.26% 2.44% 2.41% 2.39% 1.29% 0.34% 0.20% 0.07% 10.48% 0.02% 0.60% 1.93% 1.63% 1.65% 0.83% 0.18% 0.10% 0.03% 6.97% 0.01% 0.20% 1.76% 1.57% 1.66% 0.77% 0.14% 0.08% 0.03% 6.21% 0.00% 0.04% 0.71% 0.81% 0.87% 0.36% 0.06% 0.04% 0.01% 2.91% 0.00% 0.01% 0.33% 0.40% 0.37% 0.17% 0.04% 0.03% 0.01% 1.35% 0.00% 0.01% 0.28% 0.50% 0.42% 0.22% 0.07% 0.05% 0.02% 1.58% 7.86% 8.22% 16.83% 18.75% 17.59% 13.66% 8.64% 6.20% 2.24% 100.00% Totals (586,052) (613,018) (1,255,490) (1,398,489) (1,311,906) )(1,019,084 (644,086) (462,310) (167,397) (7,457,832)

8.43% 16.88% 18.72% 17.69% 14.01% 8.65% All male + 8.20% female 1,188,833 1,222,835 2,448,297 2,714,451 2,565,052 2,031,025 1,254,462

5.69% 824,426

1.74%

100.00%

251,786 14,501,167

Source: Australian Bureau of Statistics 2007

While income does, on average, decline sharply with reduced employment for those in their fifties to sixties, the wealthier quarter of the fifty-plus population receive a weekly income ranging from 300 dollars (16%) to 1,500 or more dollars (8%). The household equivalised disposable weekly income (Equivalised household income has been adjusted on the basis of the household size and composition to improve comparison.) decreases from 500 dollars for those in the 50 to 54 age group, to 450 dollars for those in the 55 to 59 year age group down to 325 dollars for those sixty and over (Australian Bureau of Statistics 2005). The total of those whose principal source of income was from Government cash benefits increased to 66 percent for those aged 65-69, and to 83 percent for those aged 80 and over (Australian Bureau of Statistics 2007).

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The type and degree of employment can affect income, self esteem, lifestyle, leisure time, and consequently, consumer behaviour. The proportion of employed mature age people declines rapidly after 55 years of age. At 55 years of age, 27 percent of men and 49 percent of women were not in the paid work-force. This number increased to 52 percent of men and 70 percent of women in the 60 to 64 year old age range, and 75 percent of men and 95 percent of women in the 65 to 69 age range (Australian Bureau of Statistics 2005c). The Australian census data shows that females still tend to have a lower income than males particularly in the peak earning ages from 25 to 64, and the first ten years after retirement (Australian Bureau of Statistics 2007).While compulsory retirement in many industries is set at ages 60 to 65, approximately 6 percent of the population aged 65 and over are employed in both full and part-time work (Australian Bureau of Statistics 2005c). More men (10 to 20%) tend to have some employment than do women. On the positive side, mature age people have fewer dependants, reduced costs associated with going to work, lower income tax (Australian Bureau of Statistics 2005e) and many age discounts from both government and private organisations (Queensland State Government 2006). For example, in spite of reduced employment, single people 65 and over have 73 percent as much income as those under 65 (Australian Bureau of Statistics 2007). In addition, more mature age people own their home outright and thus are not subject to mortgage and rental costs. In 2002, only 24 percent of people aged 15 to 59 owned their own home outright, compared to 77 percent of people 60 and over (Australian Bureau of Statistics 2005d) This allows mature age consumers to use reverse mortgages, a relatively new product that frees up capital, and thus provides more cash for expenditure by the mature age consumer. Change in life-cycle stage as a consequence of children leaving the family home, may result in households become smaller and retaining more money to spend per person. Indeed households where occupants are fifty-plus spend 30 percent more per head than the under-fifty household (Johnson 2005). Perhaps because of these events, mature age consumers, as shown in Table 2.3, experience significantly less financial stress (characterised by being able to access emergency funds and few cash flow problems) than younger people. Table 2.3 Percentage of people with financial stress by age, Queensland, 2002 Age group

% unable to raise $2,000 within a week for something important

18–24 years 25–34 years 35–44 years 45–54 years 55–64 years >= 65 years All persons

25.5 16.1 18.0 14.3 9.4 7.1 15.2

% who had at least one cash flow problem in last 12 months 40.6 35.2 27.4 19.1 9.8 4.0 23.5

Average % 33.0 25.7 22.7 16.7 9.6 5.6 19.4

Source: Australian Bureau of Statistics 2004)

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Although income and education have been explored in several studies and generally have been found not to influence satisfaction (Sparks 2000), there may be potential for a lack of income to influence the mature customer’s evaluation of health and well-being services. Wealthier consumers should be able to go to the leading health and well-being service providers when they need to, whilst those with less income may get poorer service. This is an area for primary research. Having looked briefly at some of the mature age demographics, the next section looks at customer psychographics.

2.3.2

Psychographics

Psychographics are an operational measure of lifestyle (Edris & Meidan 1999). There is a general assumption in the popular press that Baby boomers are a generation with unique characteristics, attitudes and behaviour, as they were the first generation to grow up with the mass media and commodity culture and they have retained their lucrative buying habits as they are aging into the over 50’s market (Catterall & Maclaren 2001; Mathur, Sherman & Schiffman 1998). Additionally, a substantial portion of mature consumers have different values, attitudes and behaviour to the ‘traditional elderly’. They perceive themselves as younger, with more control in their lives and are more self confident, skilful and knowledgeable consumers (Mathur, Sherman & Schiffman 1998). The mature age consumer seeks new experiences and is more willing to accept change and thus purchase new services and goods. For example, it is estimated that one-third of the people participating in white water rafting and other such active tourism were fifty and over (Mathur, Sherman & Schiffman 1998). The older segment of the mature age group is still physically mobile, with the majority (67%) of those aged 65 years and over driving a car. Of those 65 and older, 84 percent were able to get to the places they wanted to get to. This percentage only differs by 6 percent to 90 percent for those aged 45-64 (Australian Bureau of Statistics 2005d). Of a slightly less adventurous nature is the fact that over 70 percent of all Queenslanders aged 55 years had visited a cafe, restaurant or bar during a three month period in 2002 (Australian Bureau of Statistics 2005e). With increased discretionary income and, after retirement, increased leisure time, mature age consumers have increased needs for both domestic and international travel and tourism services (Mathur, Sherman & Schiffman 1998). The second national conference on Tourism Futures stated that that the Baby boomers and mature (or senior tourism) would increase revenue for the Australia tourism industry within (Tourism Queensland 2003), and indeed seniors (those 65 and older) are the fastest growing tourism segment (Bailey 2006). In the same year, approximately 40 percent of all Queenslanders aged 55 years and over had

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taken part in or attended sport or physical activities and/or attended a movie, theatre or concert. The mature age group has some computer literacy skills as well, with approximately 30 percent of those aged 55 years and over using a computer at home in the last 12 months (compared with 63% of those aged 45-54 years). Approximately 20 percent of those 55 years and over had accessed the internet at home compared to 46 percent from the 45 to 54 age group (Australian Bureau of Statistics 2005d). The mature age consumer is still very much involved in society. Almost a quarter of a million Queenslanders aged 50 years and over were volunteers in 2000 and 71% of them had been volunteers for more than 10 years. Volunteers aged 50-64 years (40%) and 65 years and over (51%) were more likely to volunteer for community or welfare organisations than other age groups in Australia (Australian Bureau of Statistics 2005e).

Belief in one’s safety will also influence consumer behaviour (Parasuraman, Zeithaml & Berry 1985). There has been an increasing focus on the safety of the mature age group (Australian Government 2006), as they have been subject to crimes ranging from physical violence to fraud. The degree of confidence in one’s safety appears inconsistent. Vulnerability and social isolation may increase with ageing. How safe one feels in one’s own residence is an indicator of a person’s perceptions of crime levels in their locality; previous experience as a victim of assault or household break-in; relationships with people living nearby; sense of their own strength and self control; and their trust in their local community. A large majority (82%) of mature age Australians felt safe or very safe at home alone after dark. In contrast, 8% felt unsafe or very unsafe. The rest either were never at home alone after dark (2%) or felt neither safe nor unsafe (8%). Men were more likely (91%) to feel safe/very safe than women (72%). While men 75 years of age or over were the least likely to feel safe/very safe (85%), among females, this age group was the most likely to feel safe/very safe (79%) However, interestingly the next least confident group are those who are 18 to 24 with only 79.5 percent feeling safe after dark (Australian Bureau of Statistics 2005e). While psychographics potentially have greater predictive power than demographics, it is more difficult to collect psychographic data. While there have been several psychographic segmentation studies of the mature consumer (Mitchell 1994; Morgan & Levy 2002), there is a sparsity of psychographic measures of Australian mature age consumers that are also available at little or no cost. Additionally, psychographics scales traditionally add substantially to a questionnaire length, so the researcher must determine the most important variables to measure to keep a questionnaire at a reasonable length and avoid respondent fatigue. Therefore, while the literature on mature age psychographics is explored here, it is not included in the main data collection (survey).

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Cognitive age. Psychograpics, personality, self-concept or self image (Moutinho & Goode 1995), have been all measured, but the measures tend to be long, reasonably invasive and time consuming. Cognitive age, on the hand, while considered to be an element of self-concept, which reflects the individual’s perceptions of themselves and is closely linked to the person’s overall attitudes (Caterall & Maclaran 2001; Edris & Meidan 1989; Lin 2002; Todd & Lawson 2001) can be measured in a very reliable and simple instrument. Research has found that older consumers often have cognitive ages which are 10 or more years below their chronological age and that this indeed influences their consumer behaviour (Caterall & Maclaran 2001; Schiffman & Sherman 1991). Indeed 30 to 40 year old people have also been found to feel cognitively younger than their chronological age (Gouling & Shankar 2004). Therefore there is some doubt whether physical age is a reliable indication of mature age customer behaviour and cognitive age may be a better indicator of behaviour. The cognitive age scale, and in particular, the four item scale developed by Barak and Schiffman (1981), has been well tested and is an excellent indicator of customer behaviour (Caterall & Maclaran 2001; Shermna, Schiffman & Mathur 2001), as shown in Table 2.4. A limitation of cognitive age as a measure is, that both cognitive age and desired age are influenced by culture and social attitudes (Caterall & Maclaran 2001), so researchers would expect to find measures of cognitive age to vary across cultures, and indeed this has been shown by researchers such as Barak, Mathur, Zhang, Lee and Erondu (2003) and Goulding and Shankur (2004). Table 2.4 Cognitive age measures Author(s)/ Date Barak & Schiffman 1981, 1990. Wilkes 1992

Clark et al. 1999

Products

Sample

Analysis

Self confidence, social involvement & work orientation. Fashion interest

Snowball type of 60-79 year old females in social groups, (n=363

SEM

Women

As above

SEM

Scale

Constructs and Items

Respondents specify which age decade 20s to 90s they think they belong to As above

Cognitive age (Composite reliability =0.85-0.89). 1. I feel as though I am in my…. (.79) 2. I look as though I am in my…..(.48) 3. I do things as though I am in my….(.72) 4. My interests are mostly those of a person in their …..(.65) As above but plus 2, to give 6 items (α = 0.91) 5. My health is as though I were (am?) in my …. 6 I think as though I am in my …

While the older four item scale above has been the most widely used cognitive age scale, there has been some concern that the “look age” item is not as reliable a measure as the other three items (Barak & Schiffman 1981; Shiffman and Sherman 1991; Wilkes 1992). Addition of an extra two items by Clark et al. (1999), as shown in Table 2.4, however, improved overall construct reliability to 0.9. The six item scale, therefore, is the more reliable measure of cognitive age or self concept.

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Knowledge. Customer’s knowledge, depicted as a feedback loop in the Howard-Sheth model (1973), to indicate that consumer behaviour is influenced by previous experiences, including perceptions, cognitions and personal communication from others about the product, and thus evaluation of the experience or performance can influence subsequent outcomes, including future behaviour including post-purchase evaluation of satisfaction (Chiou, Droge & Hanvanich 2002; Ryan 1995). The way in which customers store memories of previous experiences and perceptions and integrate these cognitive responses and inferences with new situations indicates that the customer’s cognition of previous experiences leads the customer to expect a certain standard of performance which, if not received, will result in a disconfirmation of learned expectations, an underlying assumption of a customer’s evaluation of service performance and satisfaction (Discussed further in Section 2.5 and 2.6) (Lawson et al. 1999). It is further suggested, that if there is no prior satisfaction judgement, the customer follows a two-stage process in memory-based judgements. The customer first retrieves the attribute-level representations from the memory and then integrates this information into an overall evaluation of the service provider (Mattila 2003), as depicted in an earlier section (Figure 2.3), as a reevaluation or feedback loop. A customer’s previous overall experience and evaluations (rather than the most recent experience), are very influential in the integrated overall satisfaction judgement of that service provider (Chiou, Droge & Hanvanich 2002; Mattila 2003). However, it is important to remember that a consumers’ product and provider knowledge is based on perceived knowledge, not objective knowledge and therefore, it is difficult to establish (Chang 2004). Consumers with good knowledge and experience can diagnose their consumer experience better than low-knowledge consumers' product experiences (Kempf and Smith 1998), although further research is required to identify more specific information on these influences (Lawson et al. 1999).). Skills and knowledge can be learned to streamline the consumer’s service experience (McKenzie 2008). For example, knowing where to park, how to use an electronic keypad to let oneself into a dementia ward to visit a loved one, and becoming familiar with the nursing staff will change the experience for subsequent visits. This reiteration may cause the same consumer to experience quite different expectations and perceptions of a service provider, when experiencing it for a second or subsequent time. Personalised service influence more experienced consumers’ perceptions and satisfaction with a service, while less experienced and knowledgeable consumers are more influenced by the tangible and overt attributes (Chiou, Droge & Hanvanich 2002; McKenzie 2008).

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Other individual traits that influence an individual’s satisfaction include the degree of motivation and involvement a customer experiences in the consumption of the service experience. Although these do vary with the purchase situation, they are discussed more appropriately under situational variables in section 2.4.

2.3.3

Culture and social class

Culture is a broad concept, which encompasses material and non-material components that are socially learned and shared by members of a society (Lawson et al. 1999). A customer’s behaviour, beliefs and values are all influenced by their culture, including the purchase of goods (Duesenbury 1949, in Lawson et al. 1999) and consumer perception of services (Boylu, Tasci & Gartner 2009; Seaton & Bennett 1996). For example, Ueltschy and Krampf (2001) found both customer satisfaction and service quality measures to be culturally sensitive in a professional service setting (a dental practice). Culture has also been found to influence expectations for both fairness and performance in services (Nance & White 2009). Social class is a form of stratification, by which society is divided into somewhat homogeneous groups according to income, education, possessions and other aspects of social behaviour (Lawson et al. 1999). Although social classes are reasonably fluid and have no formal restrictions in Australia, income tends to be the most important dimension in determining social status in the Western world (Lawson et al. 1999; Mackay 1986), resulting in a relationship between social class and the price and perceived value of the service (Seaton & Bennett 1996). In today’s increasingly globalised world, there are many communications, economic, social and cultural changes that have affected societies from all countries. For example, while most citizens could access needed health care in a United Kingdom study, those in a lower socio-economic class with incomes below the national median were more likely to be dissatisfied with the care than those with higher incomes (Blendon et al. 2002). However, it is too simplistic to suggest that social class might be the best predictor of customer behaviour (Seaton & Bennett 1996; Lawson et al. 1999). Therefore, in spite of strong empirical evidence that culture and social class can influence consumer perceptions of service performance and satisfaction, these concepts are difficult to measure simply and remain outside the scope of this thesis.

2.3.4

Purchasing behaviour

Customer purchasing behaviour for services can be categorised by three measures (Bolton, Lemon & Verhoef 2004). First, the length or duration of the customer’s purchasing experience with the service provider is an indication of customer retention and loyalty (as well as the type Chapter 2 Literature Review

25

of service and customer requirements for that service). Second, the depth of the customer’s relationship is measured by the frequency of service usage over time. Third, the breadth of the relationship is indicated by the range of services that the customer purchases from the provider. This, of course, is dependent on the range of services presented by the provider as well as the degree to which they might suit the customer’s needs. These factors are not only an indication of the customer’s lifetime value (CLV) to the service provider, but also of the provider’s ability to provide good performance and value to the customer (Bolton & Tarasi 2006) and thus would be useful to measure to potentially provide reliable insight into the customer’s evaluation of a service. These purchasing measures are influenced by past experience, perceptions of price fairness, customer satisfaction, marketing communication (including promotions and economic and social reward programs), distribution channels, perceived risk, alternative services and the cost of switching to an alternative service (Bolton, Lemon & Verhoef 2004). Although related to knowledge and memory, there is sufficient empirical evidence that the customer’s knowledge or familiarity with the service type and the particular service provider can both influence expectations and, consequently, perceptions of the service performance (Mattila & Wirtz 2002; Söderlund 2002); with higher levels of familiarity often leading to higher satisfaction (Söderlund 2002). Experience with the service and/or length of the relationship with a service provider have been shown to influence expectations of the actual service provided, the staff, the image and the delivery process itself, but not the expectations of price (Clow & Vohries 1993). It could be expected that, due to customer knowledge and previous experience, there may be some relationship between the number of visits or frequency of use and the knowledge and experience with similar services (or indeed the actual service provider). Care would need to be taken in measuring these concepts to ensure content validity.

Therefore, while many of the older and thus retired mature age consumers tend to have less income, they also tend to have fewer expenses and in spite of the physical ageing process, are strongly motivated to live their life with both purpose and enjoyment. The impact of customer characteristics on their post-purchase evaluations is inconclusive. It appears that age and gender may have some influence, but this may also vary across the service product being evaluated. Cognitive age and learning and memory are also likely to influence a customer’s evaluation of the service performance and their satisfaction with the service experience. Having reviewed the literature on individual customer characteristics, situational factors are the next variables, theorised to influence the customer’s evaluative process, as discussed next.

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2.4

Situational factors

One of the most important factors influencing the purchasing or consumption process is the situation within which the customer progresses through their purchase (Lawson et al. 1999; Quester & Smart 1998) and indeed some research suggests that situational variables account for more variance in customer behavior than do individual customer characteristics (Belk 1974; Spinks, Lawley & Richins 2004). Situational factors are those factors which are particular to a time and place which are not a result of an individual’s personal characteristics, such as any traits or response patterns that the person normally possesses and has possessed for “a reasonable period of time” (Belk 1974, p.157). Situational factors exclude broad environmental factors that are not specific to a time or place, such as economic factors and culture (Belk 1974, 1976). While some situational influences, such as pleasure, arousal and dominance (Russell & Meharabian 1976, in Belk 1976), could be mediated by psychological processes, there is more benefit in measuring the more objective and unprocessed situational variables, which are not internally mediated, such as social surroundings (Belk 1976). Objective situations are more easily measured and remove the idiosyncrasies of perception that are measured in mediated psychological measurements (Belk 1975), such as pleasure, arousal and dominance (Russell & Mehrabian 1976, in Belk 1976). These are: physical surroundings; social surroundings; temporal surroundings; task definition and antecedent states as shown in Figure 2.6. The majority of the five situational dimensions situational variables have used just one or two of the situational dimensions. These include: social influence (Bohlmann et al. 2006; Butcher 2005); antecedents (Sherman, Mathur & Belk-Smith 1997; Jiang & Lu Wang 2006); task definition (particularly involvement) and temporal issues, with many set in the retail industry (Kempf and Smith 1998). However a few studies have used all dimensions and found them a good representation of situational characteristics, with all dimensions influencing consumer behaviour (Kempf and Smith 1998; Zuang et al. 2006). Situational factors also exclude service provider attributes, such as the level of promotional activity (including word-of-mouth), as well as a customer’s internal response to the provider’s service offering (Belk 1974, 1976). These factors include many of the tangible service attributes (physical evidence), which constitutes the vast majority of a service’s physical surroundings, particularly for health and well-being services, as they are usually conducted indoors in an area that is managed by the service provider. Poor service outcomes due to true situational factors and customer co-production are often not attributed to the service provider and thus should not influence perceived service performance (Van Raaij & Pruyn 1998). Service providers can have some degree of control over true situational variables (such as providing umbrellas if customers

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are getting wet). In order to understand the influence of these variables on consumers’ postpurchase evaluation and behavior, the five situational factors are examined in more detail.

Physical surroundings Social surroundings

Individual Characteristics

Service Performance

Situational

Situational Factors Variables

Temporal

Task definition

Satisfaction

Antecedents

Behavioural Intentions

Discussed in Section 2.4

Figure 2.6. Situational factors (Source: Adapted from Belk 1974, 1976)

2.4.1

Physical surroundings

Physical surroundings represent the most readily apparent features of a situation and can include geographic and organizational location, factors that contribute to the five senses, weather and even visual merchandising (Belk 1975). This research attempts to differentiate between factors over which the service provider has a reasonable degree of control and can be influenced by marketing strategy, and those over which the operator has minimum control. Much of the physical surroundings can be categorized into two areas over which the service provider has control; physical evidence or servicescape, and the place/location or delivery of the service. For the purposes of this study, therefore, these items are not regarded as situational variables. The remaining physical surroundings are not directly in the provider's control, such as weather, sounds, sights, aromas, et cetera, and are caused by influences other than the service provider. The physical surroundings of the situational variable construct, therefore, will be limited to those that are outside the service providers' control, and as most health and well-being services are conducted indoors in conditions controlled by the service provider, it is not expected that there will be many physical surroundings measures for this area of situational variables. This will be further explored in the focus groups in Stage I research and reported in Chapter 3.

2.4.2

Social surroundings

Social surroundings include factors such as the other people present, their characteristics, apparent roles and interpersonal interaction with the customer while the customer is

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experiencing the service (Belk 1975). Although not always acknowledged as a situational variable, the impact of social surroundings is well researched and it has been empirically shown that the behavior or even appearance of other unknown customers can add to or detract from the evaluation of a service experience (Grove & Fisk 1997; Butcher 2005). A social group consists of people, such as a group of friends involved in the same activity, who have a sense of relatedness from interaction with each other (Dressler & Cams 1973) and thus influence members’ customer behaviour, including the overall satisfaction with the experience (Grove & Fisk 1997). Groups have resultant group dynamics, leaders and influences and may be the only source of a familiar face and contact for some people and thus become a primary and influential group. Personal influence is the effect or change in a person’s attitudes or behaviour as a result of communication with others especially important “others” (such as family and friends), that may influence all stages of the purchase process (Lawson et al. 1999; Roest, Pieters & Koelemeijer 1997). A more recent empirical study by Bohlmann et al. (2006) further supports the influence of social and group interaction on satisfaction judgement and escalation. It is therefore expected that social surroundings would be an important influence on consumer evaluation of health and well-being services.

2.4.3

Temporal influences

Temporal influences account for dimensions of situational variables that can be specified in units of time (from the time of day to the year), and thus account for the timing of the experience with the service provider (Belk 1975). For example, winter, with the influenza virus, may be busy months for medical practitioners and this may influence the customer's perception of service performance and thus satisfaction and behavior. Even the time of the day or season may influence satisfaction if the service providers vary in their performance at these times. There is anecdotal evidence that for some services, such as blood tests where no appointments can be made, a number of customers prefer to arrive at the service provider even before the provider opens, to avoid queues and be served quickly and be able to get back to their normal routine. High involvement purchases can involve different customer purchase behaviour according to a temporal purchase classification as either enduring (such as a dental crown) or ephemeral (such as a massage) (Widing et al. 2003). Waiting time in health professionals’ rooms is a traditional measure in the health and well-being service area that impacts on client evaluations, and would therefore be expected to be mentioned in further exploratory research. 2.4.4

Task definition

The task definition situational variable includes the intent or reason for the purchase (Belk 1975; Quester & Smart 1998; Lawson et al. 1999). The task, even if hedonistic, has been shown to Chapter 2 Literature Review

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impact on the customer’s perception of service attributes (product or plays, people or actors, facilities or physical evidence, and location or place) as well as the overall satisfaction with the service (Gabarino & Johnson 2001). Although not previously investigated, some of the task definition may be correlated to individual characteristics, such as education, cultural upbringing and personality. The customer’s behavior will vary between individuals and according to their motivation and involvement with the task, and thus task definition and motivation may possibly represent the same concept. Motivators are the needs and desires that impel customers to action (Seaton & Bennett 1996). Motivation is individual and varies from person to person and may include multiple and/or contradictory motives for behaving in a particular way (Lawson et al. 1999; Seaton & Bennett 1996). As such, customer motivation can be regarded as a situational state due to the customer’s specificity to each particular consumption experience (Ryan 1995) and is regarded as a situational variable in this thesis. Customers don’t necessarily know their own motivating forces for using a service, such as cosmetic surgery, or they may wish to conceal their true motives. Motives may vary with the different type of service providers and situations, such as the time and occasion and thus are difficult to measure accurately, and are closely related to involvement, as both are related to the customer’s arousal, values and self concept influencing the personal importance ascribed to a product or situation (Lawson et al. 1999; Ryan 1995). For example, if a customer's friend paid for their service experience as a gift, the customer or user may have a wider zone of tolerance for service performance than if they had paid for the experience themselves. The operationalisation of the construct of involvement has received considerable attention by researchers from the late seventies onwards (McColl-Kennedy & Fetter Jr. 1999). There are two types of customer involvement; purchase involvement and brand or product involvement and commitment (Quester & Lim 2003). Purchase involvement is the relevance or importance of the purchase to the purchaser (Homburg & Giering 2001; Quester & Lim 2003), while brand and product involvement is the customer’s ongoing commitment and degree of personal relevance towards a particular brand or product category (Chow, Celsi & Abel 1990). While product involvement is closely linked to behavioural intentions, it is relatively independent of situational influences (Miller & Marks 1996, in Quester & Lin 2003). Therefore, this research defines involvement, as purchase involvement, rather than brand or product involvement. Involvement is said to be a multi-dimensional function which includes the attributes of importance (the perceived importance and consequences of receiving the product - goods and services - that fulfils the customer’s requirements) and perceived risk (the perceived probability that the product will not meet the customer’s needs) (Patterson 1993; Ryan 1995). Because of

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the increased importance and risk of higher involvement services to the customer, the intensity of the customer's post-purchase evaluation is also increased (Patterson 1993; Lovelock Patterson & Walker 2004). This increased importance to the service provider of providing a satisfying experience (Patterson 1993), together with the fact that many high involvement services are a more expensive and profitable sale for the provider, suggests the importance of concentrating research in high involvement services, as set out in Table 2.5, so that the provider can use the most effective marketing mix to fulfil customer needs and ensure customer satisfaction (Millán & Esteban 2004). Table 2.5 Purchase-decision/ Task definition situations High Involvement Planned

Extensive Problem Solving (EPS) Brand Loyalty

Impulse

High Involvement Impulse

Low Involvement Routine or Limited Problem Solving (RPS/LPS) Low motivation to consummate purchase Low Involvement Impulse/ Variety Seeking

Source: Belk 1975; Lawson et al.1999, p.524

It appears logical that purchase involvement has a significant influence on behaviour and evaluations at every stage of the purchase process, including the consumption and post-purchase stages, although this will vary with other situational factors and individual characteristics (Lawson et al. 1999; Söderlund 1998; Oliva, Oliver & Bearden 1995; Athiyaman 1996). Empirical measures of involvement have been varied, with new measures developed over time rather than any standardisation or consistency, as seen in Table 2.6. Quester and Smart (1998) measured involvement for wine purchase, based on social situations, such as needing to impress one’s boss. A 20 item personal involvement inventory (PII) scale developed by Zaichkowsky (1985) was modified and revised by McColl-Kennedy and Fetter Jr. (2001) to create a two dimensional measure of involvement (importance and interest), that is reliable to use across four experiential and credence service types, as set out in Table 2.6. Involvement was found to provide a significant influence on the external search stage of the purchasing process (McCollKennedy & Fetter Jr. 2001). Quester and Lim (2003) and Jiang and Wang (2006) operationalised involvement as including an affect component, while Padula and Busacca (2005) used the Importance items of McCollKennedy and Fetter Jr. (1999), but called the factor, Involvement. Quester and Lim (2003)’s measure of Involvement also measured Risk. Therefore, as can be seen in Table 2.6, there is currently no universally accepted measure of involvement, however, the importance of the service to the consumer should be included in future research on service evaluation. Table 2.6 Items used to measure situational variables Author(s) Products / Date Quester & Wine Smart 1998

Sample 303

Chapter 2 Literature Review

Analysis

Scale

Constructs and Items

7pt Likert type

Involvement 3 items Based on 3 social situations

31

Author(s) Products / Date McColl Kennedy & Fetter, Jr. 1999;2001 USA Life insurance Furnace overhaul Exercise club Vacation in Caribbean

Sample

Analysis

Convenienc e sampling using selfadministered mail survey of 331 residents from major USA town. (Aged 19-81 yrs)

Factor analysis Regression model

Quester & Lim 2003 Adelaide, Australia

Sports shoes/sneakers & ballpoint pens

Padula & Busacca 2005

Mobile tele598 commnuications university students aged 18-25

Bohlmann et al. 2006

Educational software

Jiang & Banking Wang 2006 (utilitarian) + Karaoke (hedonic)

253 third year TAFE students

152 Uni students in 39 groups 152 + 151

Scale

Constructs and Items

Semantic Revised Personal involvement inventory (RPII) differential Importance (α=0.85-0.93 depending on service) scales Important/unimportant Irrelevant/Relevant Means a lot/Means nothing Matters/ Doesn’t matter Interest (α=0.73-0.90 depending on service) Dull/neat Boring/Interesting Exciting/Unexciting Appealing/Unappealing Std. beta shown strong impact of both involvement dimensions on external search PCA 5pt.Likert Customer Involvement Profile (CIP)/ Product type from involvement Kapferer 16 items into 4 dimensions 1. Interest & Pleasure: & Laurent 2.Sign value (expression of self): 3.Risk importance; 4. 1985;199 Risk probability 3 (Sign merged into the first factor for ballpoint pens) Factor 7pt Likert Both moderated Price construct analysis type Involvement: (α = 0.89) Regressio 1=Comple - This service is important to me n models tely - This service is interesting to me disagree– - This service matters to me 7=Comple Expertise(α = 0.85) tely agree -I am familiar with this service type -I have a clear idea which service characteristics are important in satisfying me - I know a lot about this service type -I am use dot reading information brochures about my service provider -I am used to reading information brochures about this service industry -I make much use of this service -I have been using this service type for a long time SEM CSII scale Group Interactions/ social influences influence (Bearden satisfaction et al.1989) Hierarchic- 7pt scale Mood al 1=not at Arousal (α = 0.85) regression all – 7= Pleasure (α = 0.73) very much

High involvement purchases are those with a high degree of personal relevance to the customer (Widing et al. 2003) and thus usually involve higher perceived risk in making the purchase (Patterson 1993). Perceived risk is defined as the customer’s combined subjective evaluation of any potential inherent risk of any negative purchase outcomes, weighted by the importance of the potential impact to the customer (Conchar et al. 2004) and is theorised to consist of six well known dimensions measuring the expectation or probability and importance of; physical, financial, performance, psychological and social (Jacoby & Kaplan 1972, in Mitra, Reiss & Capella 1999), and time or convenience risk (Roselius 1971, in Conchar et al. 2004). Social risk has been found to be less influential on customer behaviour, than performance/financial risk (Sweeny, Soutar & Johnson 1999). Additional stressors in service experiences can include;

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intensity or the customer’s self-efficacy to complete a task, such as choosing the right financial advice (which may seem daunting to the customer); social interaction; and novelty or the experience of new and familiar activities and environment (Ryan 1995). As expected, customers of services who could more easily evaluate their services because of more tangible attributes (search qualities) experienced lower levels of all six types of perceived risk than those who were using services higher in credence qualities, such as health and well-being services (Mitra, Reiss & Capella 1999). In this study, all respondents will be evaluating a high involvement health and well-being service, so to some extent, the variable of involvement is controlled for. It would be expected, however, that customers have differing levels of emotional involvement in the service experience due to differences in such areas as personality, type of service, their relationship with the service provider and perhaps the degree of work required to access the service. Risk is related to the trust that a customer places in the service product and/or provider, especially for a high-involvement service purchase which requires higher customer dependency on a trusting relationship with the provider (Lovelock, Patterson & Walker 2004). Trust is discussed further under antecedent states.

2.4.5

Antecedent states

Situational factors, which are immediately antecedent or present at the purchase and consumption stage, can influence the consumption process (Lawson et al. 1999). This final situational influence includes temporal moods and emotions, including excitement, depression, fatigue, illness, happiness, arousal, delight, perceived risk, and motivation (Rust & Oliver 2000; Lawson et al. 1999; Gnoth 1997). Additionally, expectations are regarded as a temporal condition (Rust & Oliver 2000; Belk 1997). Although expectations of a service experience or performance are assumed to be subsumed into the measure of perceptions of service performance (See Section 2.5), it would be interesting to test the measure of expectation as a situational variable. Mood. Although there has been some lack of differentiation in marketing between emotion, affect and mood (Oliver 1997), mood is mostly defined as a short-term state of pleasant or unpleasant disposition (Oliver 1993a). As mood appears to be a more accurate term to describe the temporal nature of the customer’s antecedent state of emotion, affect or mood, mood will be used to denote all three terms from this point forward. As emotion, affect or mood is so strongly acknowledged as an influence on satisfaction (Oliver 1997; Duffy & Ketchland 1998), it requires further discussion. As temporal emotions, moods can be altered by individual reactions

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to personal and environmental changes. The Yerkes-Dodson “law” (1908 in Ryan 1995) uses a parabolic curve to show that too low an arousal level results in boredom and frustration, while too high a level of arousal becomes stress and results in panic. It is hypothesised that a certain level of arousal is required for optimum performance (Ryan 1995) or enjoyment of a situation. There is no universal measure of mood. It has been suggested that there are ten discrete moods ranging from the positive affectivity of interest-excitement; happiness-joy and surpriseastonishment; to the negative affectivity of sadness-grief; anger-rage; disgust-revulsion; fearterror; contempt-scorn; shame-shyness and guilt-remorse (Izard 1977, in Oliver 1997). In contrast to this discrete approach, mood has been found to include arousal, various forms of affect and cognitive interpretations of affect (Oliver 1993a). Mood has been mostly operationalised with two primary dimensions of arousal and pleasure from the Pleasure-Arousal Theory (PAT) (Oliver 1997; Sherman, Mathur & Belk-Smith 1997; Jiang & Lu Wang 2006). The two dimensions of mood both provided a positive influence on response variables, such as the money and time spent in a store (Sherman, Mathur & Belk-Smith 1997). Additionally, the customer’s mood was influenced by their evaluation of the service environment (Sherman, Mathur & Belk-Smith 1997).The two dimensions (pleasure and arousal) of affect or mood have also been found to have a positive influence on both service quality and satisfaction (Jiang & Wang 2006). Although mood is a situational factor that appears to have a definite influence on customer behaviour and satisfaction, further research is required to determine the operationalisation and relationship to other constructs, such as satisfaction. Trust. Trust in the provider heavily influences the customer’s evaluation of credence attributes (Zeithaml, Bitner & Gremler 2006), and trust has been operationalised as the combination of perceived benevolence (the perceived likelihood that the provider will put the customer’s interest above the provider’s interests) and perceived competence (the provider’s intention and ability to fulfil implicit and explicit performance promises) (Garbarino & Lee 2003; Halliday 2004; Singh & Sirdeshmukh 2000). Therefore, trust, expectation and reliance that the provider will recognize and protect the customer’s rights and interests forms part of a customer’s expectations (Halliday 2004; Singh & Sirdeshmukh 2000), and is based on word-of-mouth and recommendations from other’s experiences (Mittal 2004) and the customer’s own experience and knowledge. Trust is required to compensate for risk and customers hold a pre-conceived perception of how much they can trust a provider before they deal with that provider. Trust may be influenced by the customer’s previous experience and their evaluation of the trustworthiness of the service (known as response trust) (Halliday 2004) or post-encounter trust/distrust (Singh & Sirdeshmukh 2000). The evaluation of trust may also be influenced by price, as a retailer who

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uses dynamic pricing or individual-level price discrimination reduces the level of customer trust in that organisation (Garbarino & Lee 2003). Table 2.7 sets out some studies measuring trust, as discussed next. Table 2.7 Measures of trust Author(s)/ Date Garbarino & Lee 2003

Products

Sample

Internet retailer – 2 retailer scenarios

117 Regression 7 pt Likert undergrad.+ scales 48 post-grad. Students @ Mid-western university

Parasuraman Zeithaml & Computer Berry 1994 manufacturer Retail chain Auto Insurer Life insurer

3 formats n= 580;488;498 n= 180;154;188 n= 205;172;191 n= 170;111;132

Analysis

Scale

Items

Benevolence trust (α = 0.91 (pre-scenario) to 0.94 (post-individual price discrimination) XYZ has practices that indicate respect for the customer ___ has practices that favour the customer’s best interests ___ considers the customer’s welfare when making important decisions ___ considers how future decisions and actions will affect the customer ___ acts as if the customer is always right Competence trust (α = 0.85(pre-scenario) to 0.79 (post) XYZ has fast efficient checkout procedures Deliveries from XYZ are correct and arrive on time Overall trust (α = 0.86 to 0.92) Overall I trust XYZ XYZ can be trusted more than the average t retailer Traditional 9pt. Reliability (α = 0.95 to 0.87) SERVQUAL Anchored Providing services as promised EFA + with 1 = Dependability in handing customers’ service problems SEM Low and 9 Performing services right first time = High + Providing services at the promised time No Keeping customers informed about when services will opinion be performed Assurance (α = 0.94 to 0.81) Employees who instil confidence in customers Making customers feel safe in their transactions Employees who are consistently courteous Employees who have the knowledge to answer customers questions Empathy(α = 0.94 to 0.85) Giving customers individual attention Employees who deal with customers in a caring fashion Having the customer’s best interests at heart Employees who understand their customer needs

Trust has been variously conceptualized in terms of a separate independent variable in a quantitative (Garbarino & Lee 2003), qualitative (Halliday 2004), and theoretical (Singh & Sirdeshmukh 2000) sense and, also as an integral part of service performance (Butcher, Sparks & O’Callaghan 2003; Parasuraman, Zeithaml & Berry 1988; 1994). The operationalisation of both theories of trust are set out in Table 2.7, with trust as a situational variable (Gabarino & Lee 2003) in the first row, followed by trust as a service attribute under the dimensions of reliability, assurance and empathy (Parasuraman, Zeithaml & Berry 1994). Trust was also operationised as social regard and competency of employees (Houston, Bettencourt &Wenger 1998, in Butcher, Sparks & O’Callaghan 2003).

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Both viewpoints allow for service provider control over the customer’s perceived trust, while there may also be some situational influence as well (Singh & Surdeshmukh 2000). As shown in Table 2.7, the five categories of service attributes measured by the SERVQUAL instrument (Parasuraman, Zeithaml & Berry 1988) include measures that test customer trust in a service. There is further suggestion of implied trust in the other two SERVQUAL service dimensions, well known for influencing credibility: responsiveness and tangibles (Bitner 1992; Parasuraman, Zeithaml & Berry 1994). As SERVQUAL items will be used in this thesis, it is assumed that trust is being measured through the customer’s perception of the service performance, and thus do not need to be included as situational variables. In conclusion, a review of situational variables has shown that there is strong theoretical and empirical evidence to suggest that situational variables can influence customers’ evaluation of a service experience and satisfaction, and should therefore be included as measures in the final theoretical model. When the study also measures service performance and customer characteristics, there is, however, an overlap between some situational variables and some factors that are better measured under service performance as they are mostly controlled by the provider (such as the physical surroundings in the service experience). Additionally, variables that have been operationalised as antecedent states, such as trust have previously been measured as service performance in SERQUAL. Therefore, there is an important task to ensure content validity and to exclude conceptual overlap for situational variables. Operationalisation is discussed further in Chapter 4. The next construct to be examined is the customer’s perception of service performance. 2.5

Customer’s Perceived Service performance (CSP) and Service Quality

In order to understand the concept of service performance and how a consumer perceives it, within the context set out in Figure 2.7, the distinct service characteristics need to be briefly discussed. The service characteristics of intangibility, inseparability, heterogeneity (or variability or non-standardisation) and perishability must be considered to understand the marketing of services to suit the target consumer and their consumption, evaluation of the service performance, satisfaction and behavioural intentions (Cronin, Brady & Hult 2000; Cronin, & Taylor 1993; Dagger & Sweeney 2006). Thus, this section, as shown in Figure 2.7 provides a review of research in service performance, commencing with a brief overview of the four characteristics of a service (intangibility, perishability, inseparability and heterogeneity) which often distinguishes it from a pure goods product.

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Section 2.3

Individual Characteristics

Section 2.5

Section 2.4

Situational Variables

Service Performance

Satisfaction

Behavioural Intentions

Section 2.6

Section 2.7

Figure 2.7 Service performance

Intangibility of service product. Customers’ buying behaviour involves evaluations of how well that product will meet the customer’s requirements and this evaluation depends on the nature of the product’s inherent attributes and the consumer’s knowledge and ability to evaluate these attributes (Mittal 2004). Consumers use objective and subjective attributes (also called evaluative criteria such as standards and specifications) to compare and evaluate product performance (Engel, Warshaw & Kinear 1994). Product performance for both goods and services may be evaluated on one or more evaluative aspects, including search qualities, experience qualities and credence qualities (Nelson 1970, in Zeithaml 1981). Services tend to be higher in the more intangible experience and credence qualities and lower in the tangible search qualities, so, consequently, consumers tend to employ different evaluation processes to those that they might use for goods (Roest, Pieters & Koelemeijer 1997; Zeithaml 1981). Search qualities include objective attributes that include both linguistic/cognitive information that can be coded in language (such as physical dimensions, product features, etcetera) and sensory information (such as sight, smell and even sometimes taste, if these can be evaluated before purchase through samples or trials) (Mittal 2004). Search qualities would include tangibles such as the price and the appearance of the buildings, equipment and staff. Attributes such as the professionalism and friendliness of employees are some of the experience qualities. Customers can discern and evaluate search attributes at all stages, from pre-purchase, using prior knowledge, direct product or provider inspections and information channels (Ford, Swasy & Smith 1988, in Mittal 2004), such as the Internet and provider brochures. The second evaluative aspect, experience qualities, includes attributes that can only be discerned by experience, during or after consumption. Experience attributes would include any search attributes that are not available for evaluation before purchase (Mittal 2004). Of the original ten determinants of service quality or performance, proposed by Parasuraman, Zeithaml and Berry (1985), the majority (access, courtesy, reliability, responsiveness, understanding/knowing the consumer and communications) are experience attributes. Chapter 2 Literature Review

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The third category, credence quality attributes, include attributes such as a provider’s professional competence that a consumer finds difficult to evaluate, even after purchase and consumption (Zeithaml 1981) due to lack of comparative evidence as to how well the service has been performed. Credence qualities involve even more intangible attributes, such as the provider’s competence and credibility, and create a greater reliance on personal sources (wordof-mouth or personal influence) for customer information, rather than non-personal sources, such as advertising when selecting services (Zeithaml 1998). If, for example, a surgeon performs an operation, the patient often has no way of determining whether the operation could have been performed better than it was. Therefore trust in the provider heavily influences the consumer’s evaluation of credence attributes (Zeithaml 1981), and trust is based on word-ofmouth and recommendations from other’s experiences (Mittal 2004). Health and well-being services tend to be high involvement purchases and high in experiential and credence qualities (and low in search qualities) and thus require a high degree of consumer trust in the provider. A verbal communication of personal influence is “word-of-mouth”, which can play an important role in a customer’s purchasing decisions and attitudes, especially concerning services which are low in search qualities (Zeithaml 1981). In this situation, customers view word-of-mouth communication as reliable information that enables a customer to make a better buying decision, thus resulting in a positive correlation between positive word-of-mouth communication and the purchase of a service (Zeithaml 1981). Because of the importance of personal influence, it is important that customers are satisfied with their service experience, as customers pass on wordof-mouth recommendations to their friends and relatives. Perishability. Due to the intangibility of a service, it cannot be inventoried or stored for times when it is needed most, and thus is said to be perishable (Lovelock, Patterson & Walker 2004). Performance of the service, a factor influencing satisfaction, can be influenced by demand. For example, patients requiring a non- emergency visit to a popular medical centre sometimes have to wait for several days or weeks to see the doctor of their choice. It is possible that customer’s perception of that service is then lowered. Perishability increases the importance of controlling the flow of consumers to a service, perhaps through changes in the marketing strategy and mix to maximise consumer satisfaction and thus increase the likelihood of positive behaviour. Inseparability. Another unique characteristic of a service is the inseparability between provider and consumer. The consumer of a service takes part in some way in the production and process of the service delivery and, therefore, interaction with other consumers and the service provider contributes to the consumption experience. This may impact on the evaluation of the service

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experience (Zeithaml & Bitner 2000). The service performance takes place in a service encounter or a real time frame, during which consumers interact directly with service providers (whether in person or via technology), and consequently performance is difficult to control for quality (Wirtz & Bateson 1999a; Lovelock, Patterson & Walker 2004; Walker 1995; Shostack 1985). Although a distinction has been drawn between the process of service delivery (functional quality or how?) and the actual outcomes of a service (the technical quality or what?), the characteristic of inseparability implies that all elements of an encounter, such as the impact of the consumer on their own and other’s service experience, the servicescape (the physical facility), the time spent waiting and consuming the service and of course, service personnel, are involved in a service encounter and thus influence the quality and perceived performance (Grove & Fisk 1997; Bitner 1992, 1990; Grönroos 1987, 1984) and thus influence overall satisfaction. Consequently, individual consumer characteristics will influence perceived service performance and post-purchase evaluation and behaviour (Walker 1995; Grove & Fisk 1997). The high degree of human involvement in providing and consuming a service leads to the next distinguishing feature of a service – the heterogeneity of services.

Heterogeneity. Non-standardisation of a service makes it more difficult for a service provider to produce consistent performance and quality (Zeithaml 1981). Some performance factors, such as service processes and physical evidence or tangibles associated with the service, can be checked and controlled to maintain a high standard of quality (Walker 1995; Zeithaml & Bitner 2000). Intangible components, however, such as staff moods, are much more difficult to check and standardise. Heterogeneity results in the consumer relying more on the experiential qualities of the service (Zeithaml 1981). For example, a visit to a health professional on a day where the professional may have an allergy, or a situational variable, such as a traffic hold-up may influence the consumer's perception of the service. This variability of the perception of the service has a large impact on the consumer’s evaluation of the service performance and, therefore, the post-purchase experience of the degree of satisfaction with the experience (Cronin & Taylor 1992; Patterson 1993). One process that assists in quality control is standardising the service performance process by using a service blue-print to show all service events or critical incidents (Shostack 1985; Bitner, Booms & Tetreault 1990). Another system to organise and control the service experience is the use of an expanded services marketing mix. This mix was developed from the original four (McCarthy 1964, in Rafiq & Ahmed 1995) to better manage the marketing of the unique characteristics of services (Booms & Bitner 1981). The seven elements of expanded marketing mix; product, place, promotion or marketing communication, price, people, process and

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physical evidence, are largely controlled by the service providers. For instance, training people or service personnel can reduce heterogeneity and increase satisfaction with the experience (Bitner, Booms & Mohr 1994; Zeithaml & Bitner 2000). The consumer’s individuality and their reaction to other consumers and service personnel as well as the service provision itself may still vary with each encounter. Therefore, post-consumption evaluation of a service experience may vary with each repeat experience.

Although services share the four characteristics that differentiate them from goods and so demand that services be marketed differently to goods, both goods and services are bundles of attributes rendering satisfaction, or “promises of satisfaction” (Levitt 1983, in Walker 1995, p.96). These service attributes can be classified in a variety of ways, as explained in the following section.

2.5.1

Dimensions and attributes of services

The consumer’s perception of the performance and quality of the service, and ultimately their satisfaction, is a function of the consumer’s overall evaluation of that service’s dimensions and attributes (Parasuraman, Berry & Zeithaml 1991; Grönroos 2001; Judd 2003). While it is useful to measure a consumer’s satisfaction with a service as a whole, it is more useful for the service provider to understand how each element or attribute of the service influences consumer perception and satisfaction with that service (Brady & Cronin 2001; Oliver 1993b; Parasuraman, Zeithaml & Berry 1988). It is relatively easy to ensure product quality or performance for goods. However, it was only in the 1970’s that theoretical pioneers (shown in Table 2.8) began to conceptualise the differences between service attributes and goods (Levitt 1974; Shostack 1977).

Three decades on, there is still no single conceptualisation of the service attributes evaluated by customers. Indeed, the variety of taxonomies that have been developed is testament to the importance of this research gap (Rafiq & Ahmed 1995; Zeithaml 1981). Although there are obvious differences between the different schools, the most empirically tested measure is that of the North American school (best represented by Parasuraman, Zeithaml & Berry 1985, 1988), which also has the narrowest range of attribute measures. The dimensions and/or attributes of the taxonomies are set out in Table 2.8, so that, where possible, their attributes and/or dimensions match with others. As can be seen in the second column, the type of paper, whether theoretical or empirical, is also stated under each author. As the seven dimensions of the

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extended marketing mix are the most comprehensive of all taxonomies, these are used as headings for the table along with the author and year of publication. Table 2.8 Similarities between different taxonomies of service attributes Schools

Author (Date) Framework

Product

Price

Promotion

Place

Process

Physical evidence

People

Core or generic product Expected (Consumer’s minimal expectations, including Pricing, delivery, Levitt (1974) - basic skills & resources o appearance of facilities and personnel, et cetera) Conceptual provide the service Augmented & Potential product

Theoretical Pioneers

Eiglier & Langeard (1977) Conceptual Shostack (1977) Conceptual

Core product Peripheral (Supplementary) Core benefit addressing basic consumer need (Eg.entertainment) Other factors in total market entity include positioning

Lehtinen & Lehtinen (1982, 1991 in Ryan 1995) Conceptual Nordic School

Grönroos (1984) Conceptual Grönroos (1987; 1990) Empirical

--

Technical quality (The actual output of a service). Experiencing the offers of the service provider. Core product or Basic reason for being in business

Lewis & Klein (1987 in Ryan 1995) North Empirical American Parasuraman, School Zeithaml & Berry (1985; Not used 1988; 1990) Empirical Booms & Bitner Product The 7 P’s (1981) Extended Conceptual Services Marketing Gilmore & Product features (range, mix Carson (1993) availability) Empirical

--

--

Price

Marketing communication messages

Distribution

--

Corporate qualities (Similar to Grönroos’ Image creation)

--

--

--

--

Tangible & intangible service characteristics address the core benefit

Physical (technical features such as the front office or ticketing and displays -Interactive (Related to the functional aspects or interactive use of tangibles)

Image creation Functional quality (The process of service delivery). Perception of Includes interaction with employees, perception of the service created by physical environment, et cetera marketing communication

Supplementary products 1. Supporting/Auxiliary services differentiate one provider from another & 2. Facilitating services facilitate delivery & consumption of service. Courtesy, Promptness of Attention, & Empathy (Relates to Lehtinen & Lehtinen’s Interactive qualities)

Not used

Communication (Gap 1)*

Price

Value for money

Credibility, Security, Access, Understanding the consumer, Tangibles, reliability, Responsiveness, Competence & Courtesy

Process

Physical evidence

People Participants

Promotional activity Accessibility Ease of Maintaining Complaint booking contact with handling customer & staff

Physical facilities of outlet

Staff information/ advice

Promotion

Place and time

Source: developed for this thesis *Although

the North American (SERVQUAL) model by Parasuraman, Zeithaml & Berry (1988) also

included the need to measure marketing communication (Gap 1) between the customers and the organisation, this was measured by asking for the business manager’s opinion, rather than customers’ opinions (Parasuraman, Zeithaml & Berry 1990).

The extended marketing mix is a taxonomy of the controllable elements or attributes of marketing, which form the basis of consumer’s perceptions of an organisation’s offering (Judd 2003), and thus the extended marketing mix provides a useful and comprehensive theoretical

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taxonomy for both adapting service attributes to better market to a particular customer group. Do customers, however, also use these attributes to evaluate service performance? The similarities between attributes in the expanded services marketing mix and other taxonomies are summarised in Table 2.8. Besides price, which is only represented by Shostack (1977), Boom and Bitner (1981) and Gilmore and Carson (1993), most researchers use attributes that equate to the service product, promotion or marketing communication, place or delivery, process, physical evidence and people. It appears that SERVQUAL, although very useful, does not evaluate all aspects of a service, and specifically, the product, place, price and promotion (the original 4 P’s). It can be argued that these aspects of a service will also influence a consumer’s perception of the service. performance. Price (or cost to the customer) is the dimension that is least often included by the taxonomies, and yet many studies have included price or value for money as a factor which influences service evaluation and satisfaction (Caruana, Money & Berthon 2000; Haber & Lerner 1999; Pheng & Ming 1997). Thus a measure of a consumer‘s perception of service performance should include some evaluation of price and/ or value, as suggested by Shostack’s taxonomy (1977) and the services marketing mix. Factors that influence the perceived service performance and satisfaction will be explored further in Chapter 3 through the findings of Stage I of the research for this thesis, but first, a more thorough review of the literature is provided.

2.5.2

Conceptualising service performance

Perceived performance results from the consumer's evaluation of the stimuli or service attributes in each encounter with the service or “moments of truth” (Bitner & Hubbert 1994), including the quality of service (Haber & Lerner 1999; Parasuraman et al. 1985, 1988; Cronin & Taylor 1992). As service encounters comprise multiple critical incidents, so multiple service encounters form the customer’s perception of service performance and overall satisfaction. This thesis examines the customer’s post-purchase perception of the service as a whole, rather than during the consumption process, and does not measure expectations. Customer perceptions of the service provider have been mainly used to define the quality and/or performance of the service and associated attributes (Haber & Lerner 1999; Parasuraman et al. 1985, 1988; Cronin & Taylor 1992). Definitions of product (goods and services) quality vary according to the perspective of the definer, with five perspectives identified by Garvin (1983, in

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Lovelock, Patterson & Walker 1988; and also in Parasuraman, Zeithaml & Berry 1988) and shown in Table 2.9. Because the intangibility, inseparability and heterogeneity of services require a distinctive approach to defining quality (Zeithaml 1994; Grönroos 1982, 1987; Parasuraman, Zeithaml & Berry 1985), the first two manufacturing and goods based definitions cannot be applied to services, and thus a definition of quality must come from the remaining four definitions. Table 2.9 Perspectives of quality Perspective Manufacturing Based Goods Based Approach User Based Definition Value Based Definition Transcendent View Gap based definition (Parasuraman, Zeithaml & Berry 1988)

Description Supply based and operations driven. Quality is a precise and measurable variable of tangible attributes only, and doesn’t account for individual customer tastes, needs and preferences or the intangible attributes of services. Quality is similar to satisfaction. This subjective, demand-based perspective recognises customer have different wants & needs. Defines quality in terms of value and price Quality is synonymous with excellence. Supported by Total Quality Management. People learn to recognise quality through experience. Customers’ judgement about an entity’s overall excellence or superiority – Operationalised as the comparison of customer expectations with perceptions of performance

Source: Gavin in Lovelock, Patterson & Walker 1998; Parasuraman, Zeithaml & Berry 1988

The last definition is the most accepted in service marketing and was the basis for the first empirical study of service quality. It defines service quality as the comparison of customer expectations with their perceptions of performance (Parasuraman, Zeithaml & Berry 1988). This operational definition, however, suggests the construct would be more correctly labelled as: service performance (Grönroos 1982); perceived service performance or SERVPERF (SERVQUAL without the expectation measures Cronin & Taylor 1994a; Brady & Cronin in 2001); or the new instrument developed in this thesis, customer’s perceived service performance (CSP). Thus, there is still no standardised method for operationalising the construct of perceived service performance. One of the originators of the best known service quality instruments (SERVQUAL), describes their instrument as a measure of the customer’s perception of the quality of an organisation’s service or the “customers’ judgement about an entity’s overall excellence or superiority” (Zeithaml 1987, in Parasuraman, Zeithaml & Berry 1988, p.15). This customer evaluation of a service experience was operationalised in terms of “a comparison of customer expectations with perceptions of performance” (Gap 5 in the SERVQUAL model; Parasuraman, Zeithaml & Berry 1988, p.15). Briefly, the gap model of service quality, first published in 1985 (shown in Figure 2.8), identified five gaps that might cause unsuccessful service delivery. Only Gap 5 (the difference between the customer expectations and perceptions that determines the customer’s perception of service quality as shown in Figure 2.8), however, represented a measure of the customer or potential customer’s perception of the service (Zeithaml, Parasuraman & Berry Chapter 2 Literature Review

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1985, 1988). The concept of the customer’s perception of service quality explored in focus groups by Parasuraman, Zeithaml and Berry (1985) depended on how current or recent customers perceived the “actual service performance in the context of what they expected” (Parasuraman, Zeithaml & Berry 1985, p.72) and what characteristics the service and its provider should possess in order to project a high quality image (Parasuraman, Zeithaml & Berry 1988).

Figure 2.8 Conceptual model of service quality (including SERVQUAL as Gap 5) Source: Parasuraman, Zeithaml & Berry 1985

The first extensive operationalization of service quality or service performance using the SERVQUAL model to measure Gap 5 in the gaps model shown in Figure 2.8 was developed by Parasuraman, Zeithaml and Berry (1985, 1988, 1990, 1994a, 1994b, 1994c; Parasuraman, Berry & Zeithaml 1993; Zeithaml, Berry & Parasuraman 1988, 1993). The service gap was defined as the discrepancy between customer’s expectations or desires of the ideal service and their perceptions of the performance of an actual service provider, even if they had not personally experienced that service. Thus this original measure of service quality/performance, SERVQUAL, did not necessarily measure a customer’s post-purchase judgements, as does a satisfaction measurement (Merrilees 1995). In subsequent studies by a variety of authors, modifications of SERVQUAL have measured just the customers’ perceptions and thus

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evaluation of an actual service performance, such as in SERVPERF (Cronin & Taylor 1992 1994; Yiksel & Rimmington 1998; Barsky & Labagh 1992). Another characteristic of SERVQUAL is that it does not provide adequate recognition of the fact that service performance and customer satisfaction are separate constructs and that SERVQUAL measures performance not satisfaction (Walker 1996). As a result of considerable testing and refinement of the survey instrument to improve internal and external validity (Parasuraman et al. 1990), SERVQUAL is a good operational example of a standardised framework of service dimensions and has made a huge contribution to services marketing and management (Oliver 1997). Another major issue with the measurement of service performance is content validity. Nearly all SERVQUAL scales have been modified to varying degrees to suit the differing service types and country culture (Carrillat, Jaramillo & Mulki 2007). Content validity will be discussed further when discussing the items used to measure SEVQUAL in Table 2.10. As discussed, the items analyzed for service performance in this thesis will measure customers’ perceptions of service performance, rather than attempt to measure expectations and perceptions separately.

2.5.3

Dimensions of service performance

In order to develop a blueprint for service excellence, it is necessary to be able to identify and measure elements of the service (Shostack 2001) and to ensure the practical usefulness of service performance scales for service providers (Parasuraman, Zeithhaml & Berry 1994). Although it is useful to know what critical incidents or attributes have influenced a customer’s evaluations of a service, they may differ dramatically for each customer. It is, therefore, more useful for the service provider to know the dimensions or categories of critical incidents or attributes which are within the control of the provider (Gardial, Flint & Woodruff 1996). The conceptualisation and measurement of perceived service performance, and in particular, perceptions of service performance, are based on multiple dimensions. Although there is no general agreement as to the nature or content of the dimensions, the two main schools of thought are the “Nordic”, initiated by Grönroos (1984), and the “North American” championed by Parasuraman, Zeithaml and Berry (1985, 1988) with SERVQUAL. A mix of these two perspectives was developed by Brady and Cronin in 2001, and is known as the ‘Hierarchical model’, as shown in Figure 2.9. The ‘Hierarchical model’ conceptualized service performance or quality as a separate construct with three formative measures. Two were ‘Interaction quality’ and ‘Outcome quality” similar to two dimensions of functional (the process of the service delivery or the customers’ perceptions of the interaction which take place during service delivery) and technical (the customer’s evaluations of the outcomes of the service or service

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product) developed by Grönroos (Grönroos 1984; Brady & Cronin 2001). A third formative measure was the Physical environment developed from Rust and Oliver (1994), and empirically supported by Brady and Cronin (2001). These appear similar to some elements of the expanded services marketing mix.

Figure 2.9 Hierarchical model Source: Brady & Cronin 2001, p. 38

The SERVQUAL dimensions are presented as conceptually distinct facets of service quality (or performance). However, items and dimensions appear to vary between service types, and the scale needs to be modified to reflect the items that are important to each service situation (Carman 1990; Oliver 1995; Asubonteng, McLeary & Swan 1996), although the dimensions of tangibles, reliability and responsiveness remained fairly consistent (Carman 1990). Other dimensions used for SERVQUAL across a range of services (from a tyre shop to a dental clinic) included security (in lieu of assurance), courtesy, access, personal attention, convenience and cost (Asubonteng, McLeary & Swan 1996; Carman 1990), and thus these studies are not really using the SERVQUAL instrument. Other studies have further confused the operationalisation of service performance through inadequate face validity of constructs. For example, Chu (2002) used five different service performance dimensions consisting of twenty four service attributes to measure service performance of hotels (as set out in Table 2.10), yet the measure was called a customer satisfaction index. Moreover, a study designed by Sanghera, de Chernatony and Brown (2002), to test Grönroos’ 1990 model through depth interviews with financial services managers, found that managers initially used the core product or outcome to analyze the service performance.

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However, while they initially described the basic or core product, as the actual outcome (e.g. a fixed term loan), after further discussion, they broadened their description to include range and augmented products. The managers agreed that the core product was also supplemented by the service process, of accessibility and interaction between consumer and provider. Additionally they felt the service was augmented by marketing communication, all of which should be assessed fro performance. The importance of the core product or outcome was further supported when it was found to have the greatest impact on the overall customer satisfaction (Chu 2002), a result also shared by Danaher and Mattsson (1994) and Grönroos (2001). This provides support for the proposal that the customer’s perception of the service product or main outcome required from the service will have the strongest influence on overall customer satisfaction. It also emphasises the need for careful operationalisation of service performance or quality through a multi attribute and multi-dimensional measure, as there are no standardised dimensions or items, as discussed in more detail next. 2.5.4

Operationalising service performance

To aid in reviewing the items used by researchers, empirically significant measures of service performance published in peer reviewed journals, are set out in Table 2.10. The studies are listed in historical order from the well cited Churchill and Surprenant in 1981 in the first row to Yap and Sweeney in 2007. The columns provide the author’s names, the product being measured and the country where the study was completed, sample information and information on the scale and items. As seen in Table 2.10, operationalisation of service performance varies across study, product and country. Some studies provide limited generalisability of a perceived service perception instrument across differing country specific cultures and service types and required modification to the original service performance measure, SERVQUAL (Gounaris, Stathakopoulos & Athanassopoulos 2003; Raven & Welsh 2004). Other studies, however, report little difference between the countries and suggest that it is feasible that standardised measures of customer perception of service performance and satisfaction could be used across all cultures (Brady et al. 2005; Veloutsou et al. 2006). It is difficult to eliminate subjectivity, and therefore content or face validity is very important (Hair et al. 2006). As can be seen in Table 2.10, when the wording is scrutinized, there is a wide variety of attributes used to measure service performance. Some items used to measure the service performance and satisfaction constructs do not appear to be consistent with the construct definition. In particular, six studies (Nicholls, Gilbert & Roslow 1998; Chu 2002; Akinci &

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Sinay; 2003; Raven & Welsh; 2004; Kantsberger & Kunz 2005; Bielen & Demoulin 2007) (set out in the same date order as they are in Table 2.10 and shaded for easier recognition), have operationalised satisfaction as measures of the performance of service attributes. Bielen and Demoulin (2007), for a more recent example in the health services, have measured satisfaction with waiting time, information and with the physical environment using items that are very similar to SERVQUAL or service performance items.

Another example which appears to have construct face validity issues is the study by Ibrahim and Gill (2005), listed in table 2.10. This study does not appear to sufficiently distinguish between those items that measure service performance and those that purportedly measure satisfaction. Aditionally, nine out of ten items used by Cronin et al. (1997, 1999) to measure service quality (performance) were related to employee performance only. As shown in table 2.10, many of the items used to measure service performance or quality can be categorised as product, place, price or value, marketing communication, people, physical evidence and process. In particular, the last three which make up the extension to the services marketing mix are represented in every study in the table. Therefore, content validity of any new scale to measure service performance needs to be carefully constructed and tested before the scales are used.

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Table 2.10 Items used to measure service performance (Please note SA = Strongly agree and SD = Strongly Disagree) Author(s)/ Date Churchill & Surprenant 1982

Dodds, Monroe & Grewal 1991

Products

Sample

Plants & Video disk player

180 (19-65 yrs.) Respondents paid $3 each Convenience at shopping mall USA Calculator 585 Stereo headset undergrad player students USA

Parasuraman, Computer Zeithaml & Berry manufacturer 1994 Retail chain Auto Insurer Life insurer

Tested 3 formats n= 580;488;498 n= 180;154;188 n= 205;172;191 n= 170;111;132 USA

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Analysis

Scale

Constructs and Items used in research studies

Experiment and Lisrel

A variety of ordinal/interval scales (Most 7 pts.)

EFA Varimax ANOVA

7pt. from Very high – very low after Churchill (1979)

Performance (found to have a significant influence on satisfaction) Expectation Disconfirmation Satisfaction: Belief (10+11 seven pt. scales for belief in attributes) and Affect 10+11 seven pt. scales for affect for attributes) Plus 1 global satisfaction on 7 pt scale + 1 global with 6 faces scale) Intent to purchase (1 global ratio scale) Perceived quality (α = .95) Indicators used at 4 different prices (ranging low - too high) 1.The likelihood that the product would be reliable)…(very low - very high 2. The workmanship of the product would be… 3. The product should be …(v.g. quality – v. poor) 4. The likelihood that this product is dependable is … 5. This product would seem to be durable…(SA- SD) Overall service quality (Single item 9pt.with anchors 1=extremely poor and 9=extremely good) SERVQUAL(My perception of XYZ’s service performance is …(123456789) When it comes to… Reliability (α = 0.95 to 0.87) Providing services as promised Dependability in handing customers’ service problems Performing services right first time Providing services at the promised time Keeping customers informed about when services will be performed Responsiveness (α = 0.91 to 0.84) Prompt.service to customers Willingness to help customers Readiness to respond to customers’ requests Assurance (α = 0.94 to 0.81) Employees who instill confidence in customers Making customers feel safe in their transactions Employees who are consistently courteous Employees who have the knowledge to answer customers questions Empathy(α = 0.94 to 0.85) Giving customers individual attention Employees who deal with customers in a caring fashion Having the customer’s best interests at heart Employees who understand the needs of their customers

MANOVA

SEM

9pt. Anchored with 1 = Low and 9 = High + No opinion

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Author(s)/ Date

Chadee & Mattsson 1996 Cronin et al. 1997; 1999

Sherman, Mathur & BelkSmith 1997

Products

Sample

Analysis

Scale

Cartoon pictures of 4 scenerios Sports & entertainment (n=1247) Heath, transport & fast food (n=797)

125 x 4 sets University students, NZ Snowballing in 1 medium metropolitan area, USA

Multiple regression

5 pt.Likert type scales

SEM

9 pt. Likert type scale

Mall fashion stores

Intercept.of 1480 shoppers leaving mall. 909 self administered

SEM

8 point semanticdifferential

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Constructs and Items used in research studies Tangibles(α = 0.91 to 0.75) Convenient business hours Modern equipment Visually appealing facilities Employees who have a neat, professional appearance Visually appealing materials associated with the service Overall experience – discussed as satisfaction with 4 scenarios each for the 4 experiences of: Eating out, Accommodation, Sightseeing and Car rental. Attributes such as price, taste, choice, range, break-down service, etc. Overall Service Quality – …your perception of the overall quality of the facility’s services based on a series of adjectives. Please circle the number that best reflects your assessment… Poor 1 - 9 Excellent Inferior 1 - 9 Superior High Quality 1 - 9 Poor Quality Low standards 1 - 9 High standards One of the best 1 - 9 One of the worst Service quality (α >0.80) 10 Single item dimensions using item with highest inter-correlation with other scale measures.(CFI=0.923) 8/10 items about employees (People). Rate Very low 1- 9 Very high 1.Generally, the employees provide service reliability, consistency, and dependability 2.Generally, the employees are willing and able to provide service in a timely manner 3. Generally, the employees are competent(i.e. knowledgeable & skilful) 4.Generally, the employees approachable and easy to contact 5.Generally, the employees are courteous, polite and respectful 6.Generally, the employees listen to me and speak a language I can understand 7.Generally, the employees are trustworthy, believable & honest 8.Generally, this facility provides an environment that is free from danger 9.Generally, the employees make an effort to understand my needs 10.Generally, the physical facilities & employees are neat and clean 4 dimensions of store environment (from Baker 1986) Social/People (α =0.70) 4 items (Lively-Unlively; Cheerful-Depressing; Boring-Stimulating; Courteous-Discourteous) Design (α =0.79) 10 items (Large-Small; Roomy-Cramped; Colourful-Drab; Unattractive-Attractive; Dirty-Clean; Comfortable-Uncomfortable; Cluttered- Uncluttered; Crammed – Un-crammed; Impressive interior-

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Author(s)/ Date

Products

Sample

Analysis

Scale

Constructs and Items used in research studies

questionnaire

Unimpressive interior; Well organised layout- Unorganised layout) Ambience (α =0.64) 4 items (Pleasant-Unpleasant; Relaxed-Tense; Dull-Bright; Pleasant smelling-Unpleasant smelling) Overall image (α =0.67) No significant influence on other constructs 2 items (Good-Bad; Negative-Positive) *Nicholls, Gilbert Private sector N=2,2992 Factor 5pt.Likert type Satisfaction with personal service (α=0.89) & Roslow 1998 -Banks analysis & 1=SD to 5 SA -Competent employees -Bowling alley scale develop-Treatment received -Book stores ment. -Provider courtesy -Horse racing Correlation -Easy to get help -Cruise lines -Timely service Public Sector Satisfaction with service setting (α=0.74) -Transport -Security outside the organisation -Uni cafeteria -Security inside the organisation -Uni library -Neat & clean place USA -Convenient operating hours Shu 1998 Aransas 282 (1 person SEM 7 pt. Likert type (1 “very Quality of Performance/Service quality. quality of attributes listed as items in 5 dimensions. National in each group poor” - 7 “excellent”) (Dimensions = Education & conservation; staff/volunteers; comfort amenities; cleanliness; information) Wildlife Refuge Prize $500) 7 pt. Likert (1 = SD to 7 Quality of Experience/ Encounter satisfaction/ psychological benefits obtained from visit SD) (Recreation Experience Preference Scales (REPS) How strongly the customer felt they had obtained benefit from each item of the 6 retained dimensions. (Dimensions = Achievement; Single item 10 pt.Likert introspection/nostalgia; physical fitness; escape; meet new people; nature appreciation) scale rating Overall Service Quality overall quality of the service attributes from “Extremely low quality” to “Extremely high quality” Oh 1999 2 Luxury hotels 545 guests SEM 6 pt.Likert type Perceptions of performance Transaction The average value of 8 items (hotel room cleanliness; check-in speed, knowledgeable employees, specific USA. cleanliness of lobby areas, quietness, security & safety) (1=Much worse than expected – 6=much better than expected) Service quality 1 item scale (1=Much worse than expected – 6=much better than expected) Perceived price 1 item scale (1=Very low – 6=Very high) Lin 1999 Students in a 6 1,032 Regression 9 pt. from 1=SD to Modified SERQUAL week language students – 5=neutral to 9=SA Emotional (α=0.88) class surveyed at 4 -The counsellors pay very close attention to our requests stages -The teachers are very friendly -The counsellors are very knowledgeable in answering questions

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Author(s)/ Date

Mayer & Boyt 1999

Products

Theoretical

Caruana, Money Audit firms & Berthon 2000

McDougall & Levesque 2000

*Chu 2002

Dentist Auto service Restaurant Hairstylist Canada Hotels, Hong Kong

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Sample

Analysis

Scale

Constructs and Items used in research studies Co-customer (α=0.81) -I get along with the other participants wonderfully -Meeting & interacting with other students very exciting -Networking with other students Logical (α=0.84) -I am satisfied with the living quarters & environment -This camp is worth spending my summer vacation -This camp has excellent equipment & facilities Practical (α=0.79) -The staff are very professional -I am very clear on the rules & regulations of the camp -The teachers have superior expertise in their subjects -The classes and activities are very well organised Process (Note: elements from people, place & physical evidence were not included in the study) -Duration of process and service wait -How customer performs during the service -Choices of technology use in service delivery (place?) -Choices for allowing customers to “see” the process -Provision of divergence in service delivery (employers employee discretion & decision) Parasuraman, Zeithaml & Berry’s 1994 SERVQUAL minus the 5 Tangible items, as they were not applicable. (16 items) (α=0.95. Slight X loading between 1 assurance & 1 satisfaction item). Items did not load the same as PZB (1994) with a merge of responsiveness and empathy factors.

--------

-------

-------

n=80 (Every 5th customer on sorted data base) n=129 n=72 n=133 n=114 all from church 402 international travellers. Intercept.at airport

PCA +Regression

7 pt.Likert type 1=SD to7=SA

SEM

7 pt.Likert scales from 1=SD to 7=SA

If an ideal rating was 100 percent, how would you rate the service provider on: Technical ability_____ (Core service quality) Personal relationship ____ (Relational service quality)

PCA + regression analysis

5 pt.Likert scales from 1=S D to 7=SA to measure 5 dimensions of customer satisfaction.

Employees (α=0.92) - 7 items (Efficient check-in/check out; Hotel staff are helpful; Polite; Well groomed; Provide efficient service; Have multilingual skills; Understand guests) Room (α=0.76) - 4 items (Room is clean; Quiet; Temperature of high quality: Bed is comfortable) Basics (α=0.84) - 6 items (Food & beverage is of high quality; Is of high variety; Wake up call is reliable; Valet/laundry services are efficient; Room service is efficient; Info. desk is efficient) Value (α=0.79)

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Author(s)/ Date

Products

Sample

* Akinci & Sinay 2003

Health care in USA

Gounaris, Stathapoulos & Athanassopoulos 2003

Banks, Greece N=793

Chapter 2 Literature Review

Random sample n=378

Analysis

Logistic regression

EFA CFA Canonical correlation analysis

Scale

Constructs and Items used in research studies

- 4 items ( Room is value for money; Food & Beverage is value for money; Hotel provides comfortable ambience; Hotel is part of a reputable chain) Security (α=0.71) - 3 items (Security personnel are responsible; Loud fire alarms are reliable; Safe box is reliable) 1= High satisfaction Satisfaction with access to health care (1 item) (most or complete) Health care attributes 0 = Not at all or Had difficulty:somewhat satisfied - with the availability of a doctor - with lack of transportation - with hours of service - with the length of time waiting to get first scheduled visit - with a length of time waiting in the waiting room before been seen - with the length of time health care provider spends with you - obtaining referrals - because of the loss of income while taking time off from work 5 pt.Likert type scale Perceived service quality (1=SD to 5 = SA) Employee competence (α=0.79) The bank’s employees know very well the bank’s products You receive prompt.service from the bank’s employees Bank employees have the necessary knowledge to serve your promptly Bank employees do not hesitate to find the time to serve you better Bank employees know what your needs are and how the bank’s products can satisfy them Reliability (α=0.88) It informs me without errors for my transactions If there is a problem the bank is willing to discuss it with me You do not have to visit your bank many times to solve a particular problem It is a bank that is worth trusting Product (α=0.88) The bank offers a wide product variety The bank offers flexible products that meet my needs The new products that my bank offers meet my needs The bank offers telephone services Price (α=0.81) The loan interest rates of my bank are higher than those of other bank’s The deposit interest rates of my bank are lower than those of the bank’s I feel I pay a lot on commissions charged Physical evidence (α=0.81)

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Author(s)/ Date

Products

Sample

Analysis

Scale

Constructs and Items used in research studies There is a warm and friendly atmosphere inside the bank Employees of the bank are well dressed and appear neat The atmosphere inside the bank gives you a positive impression of the services it offers The interior design of the premises facilitates the transactions The climate among the bank employees contributes to receiving better services Employees of the bank have a friendly behavior Proximity Convenience/ Place (α=0.78) The bank’s branches is near my workplace The bank’s branches is near other state buildings and other banks The bank’s branches is near shopping centers I usually visit

Jones, Mothersbaugh & Beatty 2003 *Raven & Welsh 2004

Banks & Hairdressers USA Fast food, across 7 chains in Greece, USA, Jamaica, UK

Chapter 2 Literature Review

228 206 Randomly selected customers n= 439; 1175; 1952; 1156 Total=2992

Moderator regression analysis EFA

7 pt.Likert type 5 pt.Likert type scale (1=SD to 5= SA)

Personal antecedents Word-of-mouth (α=0.77) 3 items Recommended by my friends Get information from advertising campaign “Family” bank Comaparative shopping (α=0.78) Personal relationship with Bank managers (α=0.76) Location This hairdresser/bank has a very convenient location Satisfaction with Personal service(α=0.81 to 0.89) Provider courtesy Timely service Competent employees Easy to get help Treatment received Employees listen Prompt.help Service costs are reasonable Fair treatment Organization delivers what is promised Help for personal Organization backs up its promises Satisfaction with service setting (α=0.62 to 0.73) Convenience operating hours Neat and clean place

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Author(s)/ Date

Dabholkar & Overby 2005 Ibrahim & Gill 2005

Products

Real estate Selling houses USA 400 tourists visiting Barbados

Sample

32 In-depth interviews & 1 page survey Self completed

Analysis

Frequency & Content analysis Factor & Regression

*Kantsberger & Kunz 2005

Customer care n=2,010 centres Germany & Austria

Regression

Parasuraman, Zeithaml & Malhotra 2005

Service performance delivered by Web sites

EFA, CFA & SEM

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N=549 Quota sampling from respondents contacted by a research firm

Scale

Likert scale – no more info provided

Constructs and Items used in research studies Easy access to services (Item eliminated in the analysis stage) Security within the organization Security outside the organization Process 6 factors each with 3 items (Communication; Effort; Advertising; Guidance; Professionalism; Representation) Outcome 1 factor with 3 items (Results) 18 item (4 factor) Image/ perception measure Places of interest and culture (includes places of interest, range of cultural sites, nature trails, variety of architecture, range of special events, interesting caves) Resort atmosphere (Wide variety of cuisine, entertainment, weather) Outdoor activities (Plenty activities, great water sports, family activities) Scenery, adventure & beach (includes scenery, adventure & beaches) + 19 item (3 factors) Satisfaction (?). Reliability not clearly reported Service & atmosphere (includes overall service, quality, atmosphere, expectations, friendly locals and value for money) Safety and comfort (includes Safe place, cleanliness, transportation & clean environment) Cultural distance (includes similar lifestyle s& customers and standard of living)

5 pt. with anchors 1=completely dissatisfied to 5 = completely satisfied

Customer satisfaction How satisfied were you with the following aspects? -Telephone accessibility -Waiting time -Variety of interaction channels (e.g. phone, e-mail) -Offered services -Professional competence -Friendliness -Dedication 5-point Likert type scale E-S-QUAL 1 = SD to 5 = SA The items below, although grouped by dimension here, appeared in random order on the survey. 21 items Efficiency (α=0.94) EFF1 This site makes it easy to find what I need. EFF2 It makes it easy to get anywhere on the site. EFF3 It enables me to complete a transaction quickly. EFF4 Information at this site is well organized. EFF5 It loads its pages fast. EFF6 This site is simple to use. EFF7 This site enables me to get on to it quickly. EFF8 This site is well organized.

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Author(s)/ Date

Products

Sample

Analysis

Scale

System Availability (α=0.83) SYS1 This site is always available for business. SYS2 This site launches and runs right away. SYS3 This site does not crash. SYS4 Pages at this site do not freeze after I enter my order information. Fulfilment (α=0.86) FUL1 It delivers orders when promised. FUL2 This site makes items available for delivery within a suitable time frame. FUL3 It quickly delivers what I order. FUL4 It sends out the items ordered. FUL5 It has in stock the items the company claims to have. FUL6 It is truthful about its offerings. FUL7 It makes accurate promises about delivery of products. Privacy (α=0.83) PRI1 It protects information about my Web-shopping behavior. PRI2 It does not share my personal information with other sites. PRI3 This site protects information about my credit card. 7 pt. Likert type Service quality measured in two dimensions SA to SD Functional (Construct reliability=0.95) 2 measures each for 3 attributes The interaction I have with staff at the clinic is of high standard The interaction I have with staff at the clinic is excellent I believe the physical environment at the clinic is excellent I am impressed with the quality of the clinic’s physical environment The administration system at the clinic is excellent The administration at the clinic is of a high standard Technical (Construct reliability=0.93) 3 measures of care The quality of care I receive at the clinic is excellent The care provided by the clinic is of high standard I am impressed by the care provided at the clinic 5 pt.scales ranging from Waiting time satisfaction Highly unsatisfactory – Perceived waiting time (Less than 30 minutes / more than 30 minutes) Highly satisfactory – Satisfaction with information provided in case of delay (marketing communication) except for perceived Satisfaction with the waiting environment (physical evidence) (3 items) (α=0.87) waiting time -Comfort in the waiting room -Seating availability in the waiting room and -The appearance and décor of the premises

Dagger & Sweeney 2006

Oncology patients Australia

Study 1 n=778 Study 2 n=340

SEM

*Bielen & Demoulin 2007

Health care Belgium

946 adult patients at a radiological unit. Selfadministered surveys

Regression

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Constructs and Items used in research studies

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Author(s)/ Date Yap & Sweeney 2007

Products

Sample

Analysis

Retail banking Australia

203 from SEM adults with at least 1 bank account

Scale

Constructs and Items used in research studies

9 pt. Likert type scales SD to SA

Process service quality (α=0.96) -Providing the services as promised -Having the customer’s best interests at heart -Willingness to help -Providing service at promised time -Dependability -Performing service right the first time -Understand customer needs -Prompt service -Readiness to respond -Maintaining error free records -Keeping customers informed of delivery information -Instil confidence -Caring -Knowledge to answer questions - Making customers feel safe in service transaction -Individual attention -Consistently courteous Tangible service quality (α=0.80) -Employees have a neat, professional appearance -Modern equipment -Visually appealing facilities -Visually appealing materials assoc. with service (e.g. clear & concise forms/accounts, etc.)

* As discussed on page 47, asterisk and shading denotes the six studies where the authors operationalised satisfaction as perceived service performance, and so they are included in this table rather than under Satisfaction

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A review of the literature does not show any major development in the operationalisation of service performance over the years. There have been excellent studies, with a mix of analytical methods, including structural equation modelling. Apart from SERVQUAL, however, it seems that instruments developed for research are rarely re-used. In the health and well-being industry, there were four studies;, a Canadian study which included measures of the technical ability (outcome) and personal relationships provided by dentists (McDougal and Levesque 2000); a US study which was one of the six studies operationalising satisfaction as perceived service performance (Akinci and Sinay 2003), an Australian study (Dagger and Sweeney 2006); and a Belgian study by Bielen and Demoulin (2007) which also operationalised satisfaction as perceived service performance. Of these four studies, Dagger and Sweeney (2007) have the highest content validity of measuring service performance or quality via an adaptation of the Norwegian school. There is, however, similarity between some measures, and content analysis appears to support a proposal of this thesis that measures of service performance can be grouped into the seven areas of the seven P’s or extended marketing mix. For example, as can be seen in table 2.10, a methodologically sound study of Greek bank customers (Gounaris, Stathakopoulos & Athanassopoulos 2003), found eight dimensions of perceived service performance including Employee competence (People), Reliability, Product, Physical evidence, Place, Word-of-mouth (at least two items are Marketing communication or Promotion), and Price, through exploratory and confirmatory factor analysis. Following the guidelines set out by Churchill (1979), Perceived service performance attributes identified in this chapter will be evaluated with the exploratory research findings in Chapter 3, before being further refined in the model development in Chapter 4 and questionnaire development in Chapter 5. If, however, the Customer perception of Service Performance (CSP) model, depicted at the end of this chapter is developed into a theoretical model, the SERVQUAL measure of service performance must also be tested as a competing model in an attempt to identify the better model. This will be discussed further in Chapter 4. Additionally, the use of the CSP model with the inclusion of price (or Cost from the customer’s perspective) requires further discussion, as it is the construct that is least accepted or used in the literature as a measure of service performance, and further, appears to be the attribute with the least consistent operationalisation.

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2.5.5

Price, Cost and Value

There is limited consensus on an operational definition of value and the relationship between value and other constructs, including satisfaction, quality and price (Caruana, Money & Berthon 2000; Day & Crask 2000). Value is defined as the overall utility of a product based on the cognitive trade-off between the perceived quality or performance or benefit and the customer’s perceived sacrifice or cost (whether monetary and/or non-monetary) (Dodds, Munroe & Grewal 1991; Zeithaml 1988). A similar definition is, however, often used for price, where price should be considered as the bundle of costs in terms of money, time and effort that a customers pays in return for a bundle of benefits (Lovelock, Patterson & Walker 2007). Perceptions of price or cost to the customer may consist of money paid to the service provider as well as other potential factors such as the time and effort expended in the consumption of the service and so will vary on an individual and situational basis (Cronin et al. 1997; Zeithaml 1988). While Dodds, Munroe and Grewal (1991) argue that value is related to, but needs to be distinguished from, other constructs such as quality, benefits and price, their five item scale focuses on the monetary value to the customer. Perceived service value is a “richer, more comprehensive measure of customers’ overall evaluation of a service than service quality” (Bolton & Drew 1991, p.383). Although value was only measured by a single rating of overall value of services considering the amount paid for services received. Bolton and Drew (1991) found that variance in value was explained by quality, sacrifice and customer characteristics, but there was no guarantee that they measured ‘value’ with their single item question. Interestingly, customers’ individual characteristics affected perceived service value, but not perceived service quality or performance (Bolton & Drew 1991). A more comprehensive study in 1997 by Cronin et al. found service value was best modeled as an additive function (rather than multiplicative) of service quality (operationalised as performance perceptions by refining SERVQUAL and SERVPERF dimensions) and sacrifice. Sacrifice or cost included items measuring the price, personal effort and risks as set out in Table 2.11. Perceived service quality (R2 = 0.51) was found to explain more of the variance in customer value than did perceived price (R2 = -0.25) A three dimension scale of affect, social cost, and function, developed by Sweeney, Soutar and Johnston (1997) was also validated by Vitartas, Herington and Hay (1999). Sweeney and Soutar (2001) further refined their three dimension measure of value to include four dimensions; affect or emotional value; social cost; quality/performance and price (The last two were formerly included under functional value). Value has also been operationalised as two sub-constructs; utilitarian value and experiential value (as shown in Table 2.11), both of which had significant influence on the satisfaction construct, although the utilitarian value was higher/more important than the experiential value (Lee & Overby 2004). Perceived value for money (single item

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measure) influenced satisfaction (McDougall & Levesque 2000) and was found to be enhanced by improved perceptions of tangible and process service performance items in a separate study (Yap & Sweeney 2007). Research has also acknowledged the link between the employees involvement in providing customer value and customer satisfaction through three underlying variables; individualized value, economic value and social-psychological interaction (Chen & Quester 2006). In an order similar to Table 2.10, Table 2.11 sets out operationalisations of value (in the first part of the table) and price (in the second part of the table). Table 2.11 Operationalisation of Value and Price (Please note SD = Strongly Disagree and SA = Strongly agree) VALUE Author(s)/ Products Date Bolton & Drew Telephone 1991 service USA

Dodds, Monroe & Grewal 1991

Sample

Analysis

Probability sample of 1,408 nation residential telephone subscribers

Calculator Stereo headset player USA

585 undergrad students

EFA Varimax ANOVA

Cronin et al. 1997

Sports & entertainment (n=1247) Heath, transport & fast food (n=797)

Snowballing SEM in 1 medium metropolitan area, USA

Oh 1999

2 Luxury hotels USA Transaction specific.

545 guests

MANOVA

Chapter 2 Literature Review

Scale

Constructs and Items

5 pt.

SEM

Value =f(Overall Quality, Sacrifice, Char, Performance, Expectations, Disconfirmation; Individual characteristics). Overall value of services provided by the local telephone company, considering the amount paid for services received ...(1=very poor value- 5=very good value) Sacrifice = Income 7pt. from Perceived value (α = .93) Very high – 1. This product is a (very good/poor value for the very low money) after 2. At the price shown, the product is (very economical/ Churchill uneconomical) (1979) 3. The product is considered to be a good buy (Strongly agree/disagree) 4. The price shown for the product is (very acceptable/ unacceptable) 5. This product appears to be a bargain (Strongly agree/disagree) 9 pt. Value = Service quality + sacrifice Overall, the value of this facility’s services to me are…(1.very low- 9. very high) (See Table 2.10 for 10 service quality items + 5 overall service quality items Sacrifice (dollar cost, effort, time & risk (financial; physical; performance; social; psychological & overall (CFI=0.939) 1. The price charged to use this facility is (1-9) 2. The effort I must make to receive the services offered is…(1-9) 3. The time required to use this facility is …(1-9) 4. The financial risk associated with using this facility is …(1-9) 5. The personal (physical) risk associated with using this facility is …(1-9) 6. The risk of receiving poor service performance at this facility is ...(1-9) 7. The risk that I will be embarrassed socially due to my use of this facility is …(1-9) 8. The risk that I will feel uncomfortable psychologically due to my use of this facility is …(1-9) 9. Overall the risk I associate with the use of this facility is…(1-9) 6 pt. Likert 1 item measures of all constructs (actual price, type perceived price, service quality, satisfaction, value, Repurchase intention & WOM), except. for perceptions of service performance Value = -Please describe the overall value you received for the price you paid. (1=Much worse than expected – 6 much better than expected)

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VALUE continued Author(s)/ Products Date Caruana, Audit firm Money & Berthon 2000 Cronin, Brady Study 1: & Hult Sports + 2000 Entertainmen t Study 2: Health care + Couriers + fast food

McDougall & Levesque 2000 Brady & Cronin 2001

Dentist Auto service Restaurant Hairstylist Canada Fast food Photograph developing Amusement parks Dry cleaning

Sample

Analysis

Scale

80 personal interviews

Factor 7pt. Likert analysis & type scale regression SD – SA 401+396+ 9 pt.Likert 450+167+ type 221+309 1 =very Quota low – selection of 9=very customers of high selected service providers n=129, n=72 n=133, n=114 Church n =1149

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SEM

7 pt.Likert scales from 1=SD – 7=SA

SEM

7 pt.Likert scales from 1=SD – 7=SA 27 items to measure 9 sub-dimensions of service quality

Constructs and Items Value (single item) For what you get from XYZ, the services provided are expensive SQ, Satisfaction & BI also measured (See other tables) Value (α = .88) 2 item scale -Overall the value of this facility’s services to me is… -Compared to what I had to give up, the overall ability of this facility to satisfy my wants and needs is… Sacrifice (α = .69 – Reduced from 9 items 1997) -The price charge to use this service is… -The time required to use this service is .. -The effort that I must make to receive this service is… Perceived Value Single item The service provider offered good value for money

Interaction quality (2 items on interaction with employees(Construct Reliability = .87)) 3 subdimensions : - Attitude (Construct Reliability = .80) You can count on the employees at ___ being friendly (reliable) The attitude of ___ employees demonstrates their willingness to help me (responsiveness) The attitude of ___ employees shows me that they understand my needs (empathy) - Behavior (Construct Reliability = .92) I can count on ___ employees taking actions to address my needs ___ employees respond quickly to my needs The behavior of ___ employees indicates to me that they understand my needs - Expertise (Construct Reliability = .91) You can count on the employees knowing their jobs Employees are able to answer my questions quickly The employees understand that I rely on their knowledge to meet my needs Service environment quality (2 items on Physical environment (Construct Reliability = .90)) 3 subdimensions - Ambient conditions (Construct Reliability = .93) That you can rely on there being a good atmosphere ___’s ambience is what I am looking for in a service ___ understands that atmosphere is important to me - Design (Construct Reliability = .85) This service provider’s layout never fails to impress me This layout serves my purposes They understand that the design of this facility is important to me - Social factors (Construct Reliability = .72) I find the other customers consistently leave me with a good impression of the service The other customers do not affect XYZ’s ability to provide me with a good service They understand that other patrons affect my perceptions of the service Outcome quality (2 items on excellence of experience + Feel good about service product (Construct Rel. = .90)) 3 sub-dimensions

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- Waiting time (Construct Reliability = .82) Waiting time is predictable They try to keep my waiting time to a minimum This service provider understands that waiting time is important to me - Tangibles (Construct Reliability = .91) I’m consistently pleased with the tangibles at ____ I like ___ because it has the tangibles that I want They know the kind of tangibles customers are looking for - Valence of experience (Construct Reliability = .89) 3 item; Affect/ feel; Conative/Tries to give me; Cognitive/Knows the type of experience Service quality (2 items) (Construct Reliability = .90) I would say that they provide superior service I believe they often excellent service VALUE continued Author(s)/ Products Date Sweeney & Durable good Soutar (Non-service) 2001 Australia

Lee & Overby Online 2004 shopping

Sample

Analysis

Scale

273 university students

Factor analysis SEM

7pt. Likert type scale SD – SA

Online SEM survey of 817 recruited online

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Constructs and Items

4 dimensions of Value: Functional/Performance/Quality+ Price + Emotional +Social) (α = 0 80 to 0.94) Quality –workmanship – not easily translatable to services Price -Reasonably priced -Offer value for money -Good product for the price -Would be economical Emotional Product I would enjoy Make me want to use it Feel relaxed about using it Make me feel good Give me pleasure Social Help me feel acceptable Improve the way I am perceived Make a good impression on others Give me social approval 7pt.Likert 2 sub-constructs of Value path to Satisfaction type Utilitarian SDisagree- Price savings (α = 0.89) SA - Retailer offers a good economic value - Overall I am happy with this provider’s prices - The price of the product is at the right level, given the quality Time Savings (α = 0.82) - Making a purchase using this site makes life easier - When I purchase from this site, I save time - Making a purchase from this site is an efficient way to manage my time Service (α = 0.89) - This provider is a highly skilled expert in the area of services & goods it offers - I received excellent service from this provider - This provider strives to attain excellence Selection (Guttman’s Split half = 0.80) - The wide selection of services & goods, this provider offers, meets my needs - This provider has a good selection of goods & services Experiential Value Entertainment (Guttman’s Split half = 0.80) - I think this provider’s site is very entertaining This provider doesn’t just sell products –entertains me

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Parasuraman, Zeithaml & Malhotra 2005

Service performance delivered by Web sites

Chen & Quester 2006

Hairdressers Taiwan

Yap & Sweeney 2007 PRICE Author(s)/ Date Campbell 1999

Retail banking, Australia

Visual (Guttman’s Split half = 0.96) - This provider’s site is aesthetically appealing - The “look” of this site is appealing Escape (Guttman’s Split half = 0.77) - Making a purchase totally absorbs me - Making a purchase from this provider “gets me away from it all” - Making a purchase from this provider helps me forget about the day’s problems Interaction (Guttman’s Split half = 0.80) - I come to the aid of others, especially when I’m logged onto this site - I believe it’s best getting involved in product reviews, etc. - I enjoy giving other customers advice or aid - When I need help, I turn to chat rooms etc. provided by this site provider When this provider gives me info. Or something else of value, I try to reciprocate by providing a comparable level of info. or feedback N=549 EFA, CFA 10-pt.Likert Perceived Value (4 items) Quota type scale 1. The prices of the products and services available at sampling 1 (poor) to this site (how economical the site is). from 10 2. The overall convenience of using this site. respondents (excellent). 3. The extent to which the site gives you a feeling of contacted by being in control. a research 4. The overall value you get from this site for your firm money and effort. 191 x 2 3 dimensions of customer ‘value’ for both customers (1 customer/ (Customer satisfaction) & employees (Staff 1 service Performance) same items (with slight rewording) provider) -Individualised value -Economic value -Social-psychological interaction Multi stage. SEM 9 pt Value (single item) 203/400 by interval Perceived value for money letter box scales

Products

Sample

4 scenarios selling a doll Study 2 – 2 retailer scenarios Interactive TV + Cell phone service

2x2 subject ANOVA 78 male + 30 female MBA students

Bolton& Lemon 1999

O’Neill & Lambert 2001

Athletic shoes UK

Analysis

Scale

Items

7 pt.bipolar Perceived fairness scales 1 (very fair) to 7 (very unfair) with 4 (neither) Price and Profit were both measured by 1(a lot less than normal); 4(about the same as normal); to 7(a lot more than normal) 184 Regressio DichotoPayment equity (I item) households n Leastmous Please rate the overall value of XYZ to your household. Not provided squares + Worth much less/more than I pay (Interactive TV) for cell Max How satisfied were you with the prices charged by phone Likelihood XYZ? Very dis/satisfied (Cellular phone) 189 Study 1 SEM Surprise-3 items Enjoyment (3items) + 177(Study 1.Price affect 2) University 2.Price Consciousness students -Buy on sale -Buy lowest priced -Rely on price Internal Reference Price -Typically spend -Average amount Price Latitude -The most I would pay is… -What price would you consider too -cheap? -What is the lowest price you would expect to find for … to satisfy your needs? -When you shop for … what price range do you have in mind?

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PRICE continued Author(s)/ Products Date Matzler, Renzl Hotels, & Austria Rothenberger 2005 Padula & Mobile Busacca 2005 telecommuni cations Italy

Sample

Analysis

Scale

Items

478 (258 SEM males + 205 females)

100% scale

Perceived price satisfaction(I item) 0%=completely dissatisfied, 100%=completely satisfied

598 university students aged 18-25

7pt.Likert type 1=Complet ely agree – 7=Complet ely disagree

3 dimensions of Price Cheapness: (α = 0.90) (SP = Service provider) -SP practices low prices -SP practices high discounts -SP offers convenience “special” price plans Fairness (α = 0.88) -SP practices prices congruent with costs of production - SP practices prices congruent with service quality -SP practises reasonable prices Variety (α = 0.70) -SP offers a high number of price plans -SP allows choice of price plans -SP offers price plans in response to my personal needs

Factor analysis Regressio n models

As can be seen, the items measuring value and price have much in common. Price, as a product attribute and an element of the marketing mix, is well known as a factor that influences the customers’ perception of a service (Dabholkar, Thorpe & Rentz 1996) and more specifically, product quality (Rao 1984; Dodds, Monroe & Grewal 1991). Indeed a link between price and quality was discussed by Scitovsky as early as 1944 (in Rao 2004), while Bolton and Lemon (1999) referred to their measure of payment equity as a question referring to value. Price may be an indicator of both perceived quality and perceived sacrifice, which in turn influences perceived value (Dodds, Monroe & Grewal 1991). Dodds, Monroe and Grewal, however, provide no indication of the relationship between satisfaction and value, nor discuss the content validity of the perceived value construct. Price is often evaluated subjectively by customers (Dodds, Munroe & Grewal) and indeed customers tend to remember their perception of the price more on a semantic level, as an evaluation or judgement (i.e. whether or not they regarded it as expensive or otherwise), rather than at the sensory level and the exact numerical value (Xia 2005). This is further supported by Garbarino and Lee (2003) who found that price impacted on customer trust in the provider, and by Campbell (1999) who found a providers motives and reputation impacted on perceptions of fairness and price and shopping intentions. As can be seen in Table 2.11, Price has been operationalised as a multi-dimensional construct, and indeed a study of price perceptions of Italian mobile communication operators found three dimensions; fairness or equity (the extent to which price is perceived to provide an equitable exchange between the buyer and seller), cheapness (the perceived economic convenience of the transaction), and variety (the extent to which the customer may choose several price options, each corresponding to different customer needs) (Padula & Busacca 2005). Price is

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operationalised as a determinant of service value (or price satisfaction) (Matzler, Renzl & Rothenberger 2005) or an integral element of value. There does not appear to be any research that empirically tests the difference between a service customer’s post-consumption perception of price and value for money. Overall, empirical research tends to measure value as a trade-off between price and value of the product to the customer, as can be seen in Table 2.11, and as such, appears to be the same construct (Auh & Johnson 2005). Consequently, this thesis treats value and price or cost to the customer as the same construct. This is consistent with the conceptualisation that perceived value is the customer’s perception of the trade-of between benefits and costs (Parasuraman, Zeithaml & Malhotra 2004). However, as tested in the study by Sweeney and Soutar (2001), there are several dimensions, which may include emotional, social and economic cost. In conclusion, the operationalisation of value is indicative of price in many studies and thus further confuses clarification of understanding these constructs so important to the service industry. The content validity of such a construct would need to be very carefully tested, before empirical use.

2.5.6

Differentiating service performance and satisfaction

Before discussing the major construct of satisfaction, the difference between service performance and satisfaction will be briefly covered. The relationship between service performance and satisfaction is complex, due in part to the lack of clear operationalization of the satisfaction and service performance constructs. Oliver (1997), for example, states that service quality is a very similar construct, and certainly a component of satisfaction with the overall performance of the service. The majority of researchers find that service quality or performance is an antecedent to satisfaction, and even that satisfaction with performance is virtually totally determined by the quality evaluation (Voss & Parasuraman 1995).

While service performance is largely based on the customer’s perceptions of attributes, benefits or feature levels of a service (Discussed in the previous section and shown in Table 2.10), and thought to be primarily cognitive, satisfaction is thought to be both a cognitive and an affective response (Oliver 1993a, 1997). This helps explain instances where good service quality does not always result in high satisfaction, as well as those where, if expectations are sufficiently low, customers can still be very satisfied, even though the level of service quality was low. It is suggested that customers who have recent experiences with a service organisation more clearly differentiate between service quality and satisfaction, due to a strengthening of the cognitive component of satisfaction over time (Dabholkar 1995). Customers with a long-term relationship with an organisation, however, tend to merge their conceptualisation of quality or perception of

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performance and satisfaction to “degenerate” into an attitude towards the provider (Cronin & Taylor 1992, 1994a; Dabholkar 1995; Oliver 1993b; O’Neil, Palmer & Beggs 1998). Service performance has also been said to be similar to the construct of overall attitude, as well as related to, but not equivalent to, satisfaction in that it represents a general overall appraisal or global value judgement of a product or service (Taylor & Cronin 1994; Bitner & Hubbert 1994; Bitner, 1990). The early classic definition of an attitude, as a learned predisposition to respond to an object in a consistently favourable or unfavourable way (Allport 1935, in Bitner & Hubbert 1994), has provided the basis for the more recent and accepted definitions, which treat attitudes as being multi-dimensional in nature. The literature, however, suggests that attitude and persuasion are stronger influencers in the earlier stages of the consumption process, rather than the post-purchase stage (Lawson et al. 1999; Ryan 1995). Thus, although this is an area that requires more research, customer attitudes are not examined in this thesis. Additionally, there is insufficient empirical evidence that customer satisfaction is the result of a gap relationship between expectations and perceptions. A summary of major researchers’ comparison between service performance quality and satisfaction is set out in Table 2.12. Table 2.12 Conceptual differences between service performance/quality and satisfaction Comparison Dimension Dependency on Experience of the Product Attributes/ Dimensions Expectation/Standard Cognitive/ Affective Conceptual antecedents

Service performance/ Quality Usually required but depends on measurement. Specific to characteristics defining the quality of the product Experience based, expectation, Ideal or normative, and predictive Primarily Cognitive External cues (For example Price, image, et cetera). Thought to have fewer antecedents than satisfaction. Primarily long-term

Satisfaction Required, as satisfaction is a post-purchase evaluation. Potentially all attributes or dimensions of the product (Including quality & non-quality related) Predictions, norms, needs, et cetera

Cognitive and Affective Conceptual determinants (For example equity, dissonance), as well as factors such as external cues, which influence expectations and perceptions) Temporal Focus Can be short term (encounter specific) or longer term, but usually overall/longer term satisfaction is measured. Source: developed from Oliver 1995; Rust & Oliver 1994; Woodruff et al.1991

It can be inferred that satisfaction is more a conceptual evaluation or attitude (O’Neill, Palmer & Beggs 1998) based on the evaluation of service performance, while perception of service performance is more an experience based evaluation at the service attribute level. In summary, the operationalisation of, and relationship between, the constructs of service performance or quality and satisfaction are not clear and thus, further empirical research is needed.

2.6

Customer satisfaction

Customer satisfaction has been recognised as a central construct for marketing researchers and organisations for more than two decades. This recognition arose as a consequence of the significant influence of customer’s satisfaction on outcomes such as post-purchase behaviour Chapter 2 Literature Review

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and organisational profitability (Luo & Homburg 2007; Yiksel & Rimmington 1998) and even employee loyalty (Kantsperger & Kunz 2005). Early social scientists treated the satisfaction construct as a measure of post-consumptive attitude (La Tour & Peat 1968; Ryan 1995). The majority of researchers from the 1980’s and 1990’s, however, tended to treat satisfaction more in terms of a judgement or evaluation than an attitude. Furthermore, satisfaction was treated as a complex construct with numerous associated measurement issues (Yiksel & Rimmington 1998; Oliver 1997; Tse & Wilton 1988), as further discussed in Section 2.6.1. Difficulties in measuring customer satisfaction begin with an operational definition. As can be seen in Table 2.13., there is no one definition of satisfaction. Table 2.13 Definitions of customer satisfaction Source

Definition

Hunt (1977, p.459).

An evaluation rendered that the (consumption) experience was at least as good as it was supposed to be

Oliver (1981, p.27)

The summary psychological state resulting when the emotion surrounding disconfirmed expectations is coupled with the customer’s prior feelings about the consumption experience

Hill (1996, p.98)

The customer's perception that a supplier has met or exceeded expectations.

Oliver (1997, p.13)

Satisfaction is the customer's fulfilment response and their judgment of how a product or service feature, or the product or service itself, provided (or is providing) a pleasurable level of consumption-related fulfilment (including levels of under or over fulfilment)

Tse & Wilton (1998, p.204)

The customers response to the evaluation of the perceived discrepancy between prior expectations (or some of the norm of performance) and the actual performance of the product as perceived after its consumption

Satisfaction is a customer’s post-purchase evaluation of the overall service experience (processes and Lovelock, Patterson & outcome). It is an affective (emotion) state or feeling reaction in which in which the customer’s needs, Walker (1998, p.116) desires and expectations during the course of the service experience have been met or exceeded.

These definitions purport three generalizable maxims regarding customer satisfaction. First, satisfaction is subject to an individual’s perception and is the conclusion of a psychological process (Rust & Oliver 2000; Yiksel & Rimmington 1998). The “perception” of satisfaction is in the customer's mind and may, or may not, conform with the reality of the situation and may vary with situational variations. Because satisfaction is an individual and subjective evaluation, possible comparative references include prior experience as well as word-of-mouth from others. Second, all encounters and experiences with a service provider potentially impact on the customer’s overall satisfaction (Bitner & Hubbert 1994; Ryan 1998). In addition, satisfaction with events or encounters can be evaluated during consumption; after consumption of an encounter or event; and as an overall satisfaction with the overall experience (Oliver 1997). Overall service satisfaction is likely to represent a function of satisfaction with all multiple experiences or encounters with the particular organisation (Bitner & Hubbert 1994). Due to the importance of all service experience, overall satisfaction is the focus of this research study.

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The third maxim regarding satisfaction, is that satisfaction is a fulfilment response to either one or multiple desires (if a complex situation, such as a high involvement purchase), as a result of a combination of cognitive and affect appraisal of the purchase outcomes (Oliver 1997). This implies that dissatisfaction will result if fulfilment is not attained. This definition does not constrain fulfilment to meeting basic needs. Over-fulfilment can be satisfying if it provides additional unexpected pleasure; and under-fulfilment can be satisfying if it gives greater pleasure than anticipated in a given situation. Affect does not necessarily have to be joy; it may be relief or happiness that the service, such as a medical procedure was less painful than expected. In practice, the ability to measure customer’s satisfaction and dissatisfaction levels and apply that information to a service business provides the operator with the potential to increase competitive advantage by product differentiation, increasing customer loyalty, retention and positive word-of-mouth (Yiksel & Rimmington 1998). In order to understand the best method of measurement, the next section briefly examines the two major satisfaction models and standards.

2.6.1 Measuring customer satisfaction It is generally agreed in customer satisfaction/dissatisfaction research, that the state of satisfaction is the result of a comparison (Oliver 1989; Yi 1990). The need to operationalise customer satisfaction (and in particular, the standards used by customers in the comparison process), for empirical research has resulted in the development of two theories, equity and disconfirmation, both based on a comparison process (Wirtz 1993; Woodruff et al. 1991; Woodruff, Cadotte & Jenkins 1983).

Equity theory. Equity theory proposes that the net gain of the customer should equal the net gain of the seller to provide the customer with a perception of distributive justice (Wirtz 1993). Equity theory predicts customers to be more satisfied with equitable exchanges (where the inputs and outcomes for both customer and seller approximate each other), than with inequitable exchanges. The customers expect an implicit agreement or psychological contract from the provider, where the customer expects to be treated fairly (Lovelock et al. 1998). The customer compares their input (such as price paid and other sacrifices) against the seller or provider’s input into the event. The provider can also promise more explicit contracts, either through advertising or direct communication with the customer and failure to deliver on promises destroys customer trust and is the cause of dissatisfaction (Lovelock et al. 1998). It is proposed

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that the customer’s perception of the provider’s effort and degree of tangible and intangible resources used influences the degree of customer satisfaction (Patterson, Johnson & Spreng 1997; Wirtz 1993; Oliver 1997; Oliver & Swan 1989). Oliver and Swan (1989), in a study of satisfaction with individual service encounters provide empirical support for equity theory and conclude equity significantly influences satisfaction and is a mediating variable between input, outcomes, and satisfaction. The main criticisms of equity theory are that buyer outcomes, rather than equity, determine satisfaction and that this limits operationalisation of satisfaction. For example, satisfaction with bargaining with a sales-person has limited application to general consumption experiences (Oliver & Swan 1989; Wirtz & Bateson 1999a). It appears that not all consumption situations result in customers using an equity judgement in determining satisfaction (Oliver 1997). Some may be more sensitive to an equity consideration because of their individual characteristics and situational variables. Equity processes are largely, but not solely, under the control of the marketer (Oliver 1997). Equity, as a standard that customers use to evaluate their interaction with a seller, could also be used as a standard in the disconfirmation model to explain more general disconfirmation comparisons (Woodruff et al. 1991). Equity disconfirmation, however, has only been supported empirically in social interactions, as opposed to a consumption transaction (Oliver & Swan 1989). Equity captures the comparison of inputs and outcomes, while disconfirmation captures the expectations of performance (Oliver 1997). As predicted by Oliver and Swan (1989) and Oliver (1997), research has started, although inconsistently, to incorporate equity theory into the disconfirmation model, rather than remaining an alternative (Wirtz 1993). It is also possible that equity is a situational variable, and should be measured as such. Disconfirmation of expectations paradigm. The dominant model in measuring satisfaction and service performance (particularly with well known instruments, such as SERVQUAL) (Parasuraman, Zeithaml & Berry 1988) is the ‘Disconfirmation of Expectations Model’ (Brady & Cronin 2001; Oliver 1997; Yap & Sweeney 2007). The expectancy/disconfirmation paradigm is a derivative of the adaptation-level theory, with early empirical applications by organisational theorists in job satisfaction (Porter 1961; Locke, 1969; Ilgen 1971, in Oliver 1997), and states that customers compare the actual product and/or service with their prior expectations (Danaher & Gallagher 1997). Therefore, the disconfirmation model is dependent on the constructs of customer expectations and perception of the performance of the goods or service for standards of measurement (Wirtz 1993). If perceived service performance (P) is greater than the customer’s pre-purchase expectation (E) of the performance, then the result will be satisfaction (Wirtz 1993) and a positive perception of service performance (Parasuraman, Zeithaml & Berry

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1988). It is also acknowledge that there are many factors which influence expectations, and consequently perceptions, including; enduring service intensifiers, personal needs, transitory service intensifiers, self-perceived service roles and situational factors (Wirtz & Bateson 1999b; Voss, Parasuraman & Grewal 1998; Parasuraman, Zeithaml & Berry 1994), as well as an individual’s characteristics, including the customer’s attitudes towards the service and/or service provider (Lovelock, Patterson & Walker 1988).

As a result of the intangibility and resultant subjectivity of evaluation of services, the measure of the disconfirmation gap, used in the measurement of both constructs of service quality and satisfaction, is difficult to measure empirically. There are three main obstacles adding to the difficulty in obtaining reliable and generalizable measures of customer expectations of a service (Bolton & Drew 1991; Cadotte, Woodruff & Jenkins 1987; Gronroos 1987; Oliver 1993; Tse & Wilton 1988; Zeithaml, Berry & Parasuraman 1993; Yi 1990). These can be categorised as; the situational nature of customer expectations, comparison standards, and the difficulty in measuring customers’ expectations in addition to their perceptions of a service. These three issues are discussed in more detail in Appendix D. All three measurement issues are caused by the inclusion of a separate measure of expectations (E) as well as perceptions (P), to provide an equation of P-E to gain a value for disconfirmation. While researchers acknowledge the important role played by customer expectations as a reference point in evaluating services and researchers have few qualms using the customers’ subjective perception of the performance of the service, the expectations standard has drawn much controversy (Woodruff et al. 1991), and thus researchers have begun to measure perceptions rather than attempting to measure expectations as well as perceptions. Further support for the use of a ‘performance only’ measure of disconfirmation is drawn from examination of the three main theories that model the way in which customer expectations interact with satisfaction (La Tour & Peat 1979). First, contrast theory suggests that satisfaction is a function of the discrepancy between a customer’s expectations about performance of a product or service and the perceived performance. A refinement of the contrast theory is the assimilation-contrast theory (La Tour & Peat 1979) which adds that if the discrepancy is not too large, assimilation will occur, whereby performance is judged to be higher than it might otherwise have been, if the discrepancy had been large. Assimilation-contrast theory allows a zone of indifference in which any difference between service expectations and performance will be assimilated and viewed in a favourable light by the customer (Craig-Lees, Joy & Brown 1995; Patterson & Walker 1988). The customer adjusts their perceptions of the service performance or their expectations to avoid cognitive dissonance (Patterson, Romm & Hill

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1997).The third theory, cognitive dissonance, is thought to enable customers to (mis)perceive performance so that it appears to be consistent with their expectations, and thus avoiding psychological tension resulting from any inconsistency between the expected and obtained performance (Festinger 1957 in Lawson et al. 1999; La Tour & Peat 1979). One research study, which empirically tested several theories of disconfirmation, found that 50 percent of 40 respondents fit the classical disconfirmation model (one evaluated measure of performance), while 37.5 percent used disconfirmation between performance or expectations (when this is measured separately) as a direct determinant of satisfaction (Oliver & DeSarbo 1988). The remaining 12.5 percent of respondents appeared to use equity to some degree as a determinant (although never as the only determinant) of satisfaction and thus equity (or perceived value) is a significant, though lesser, predictor, along with disconfirmation, of satisfaction at the aggregate level (Oliver & DeSarbo 1988; Oliver 1993b). The clear majority of consumers, however, used the evaluated measure of the service performance (Oliver & DeSarbo 1988; Oliver 1993a). This result is further supported by some service quality research, which argues that expectation models are flawed and that perception only measures provide a more accurate measure (Cronin & Taylor 1992, 1994). Similarly, satisfaction research shows performance perceptions to be a more convenient and better predictor of satisfaction, than the disconfirmation model (Yiksel & Rimmington 1998; Basky & Labagh 1992). Therefore, while not all research finds the perception only measure to be better (See Bayraktaroglu and Atrek (2010), who found that measures using just perceptions and those using both expectations and perceptions were both valid and reliable models.), there is sufficient rationale for this study to use the measurement of evaluated perceptions only, rather than expectation and performance measures. Table 2.14 sets out key empirical research which has measured customer satisfaction as evaluated measures.

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Table 2.14 Items that measure satisfaction Author(s)/ Date Shu 1998

Oh 1999 Caruana, Money & Berthon 2000

Products

Sample

Analysis

Scale

Constructs and Items

Aransas National Wildlife Refuge USA 2 Luxury hotels USA Audit firms

282 (1 person in each group Prize $500) 545 guests

SEM

7 pt. semantic differential

Overall Satisfaction 4 items: “Dissatisfied - Satisfied”; “DispleasedPleased”; “Unfavourable- Favourable”; “Negative – Positive” Customer satisfaction Single item (1=Very unsatisfied – 6=Very satisfied) Satisfaction (α= 0.87) -If I had to choose all over again, I would not feel differently about choosing XYZ -I think we did the right thing when we decided to choose XYZ -I believe that purchasing services from XYZ is usually a satisfying experience Satisfaction Sat 1 = 5 items measuring affect (Interest, Enjoyment, Surprise, Anger & Shame/sheepishness) + Sat 2. (My choice to purchase this service was a wise one. I think that I did the right thing when I purchased this service. This facility is exactly what is needed for this service.) Satisfaction -Very displeased – Very pleased -Very unfavorable – Very favourable -Disgusted with - Contented with -Very dissatisfied with – Very satisfied with -Unhappy with - Happy with Satisfaction (Sig. impact from 2 sub-cons. of Value) (α= 0.88) -I really like doing business with this provider -I have a favourable attitude toward doing business with this provider over the next few years -I believe this provider has many desirable features Satisfaction (α= 0.93) Cognitive -Worthwhile visiting this provider Affect-Enjoyed visiting Experiential- Good experience Global-Overall satisfaction Satisfaction My feelings towards the clinic are very positive I feel good about coming to the clinic for my treatment Overall, I am satisfied with the clinic and the service it provides I feel satisfied that the results of my treatment are the best that can be achieved The extent to which my treatment has produced the best possible outcome is satisfying

SEM

6 pt. Likert type n=80 (Every PCA 7 pt. Likert 5th customer +Regressi type 1=SD on sorted on to 7=SA data base)

Cronin, Brady Sports & & Hult 2000 entertainment (n=1247) Transport, food & heath(n=797) USA

Convenience SEM & quota in 1 medium metropolitan area,

Jones, Banks & Mothersbaugh Hairdressers & Beatty 2003

- 228 - 206

Lee & Overby Online 2004 shopping

Online survey SEM of 817 recruited online

7pt. Likert type SD SA

Spinks, Tourist Lawley & attractions Richins 2005 Australia

SelfSEM completed questionnaire of 412 visitors Study 1 SEM n=778 Study 2 n=340

5 pt. Likert type scale

Dagger & Sweeney 2006

Oncology patients Australia

9 pt. Likert type (1Very Low to 9 Very High)

Moderator 10 pt. regression semantic analysis differential

7 pt. Likert type SA- SD

Services include a variety of different experiences and thus comprise a multitude of service encounters (Bitner & Hubbert 1994; Ryan 1995). Although there are studies that measure satisfaction with a single item (Chu 2002), as can be seen in Table 2.14, the majority of studies do use multiple item measures, and it is generally agreed that a single item on satisfaction levels does not give any insight into the antecedents of the customer’s satisfaction (Danaher & Haddrell 1996). Further, Oliver suggests that the satisfaction response is comprised of both a cognitive (disconfirmation of expectations and attribution) and affective substrata (Oliver 1997). As can be seen in table 2.14, it is now well accepted that satisfaction consists of both cognitive Chapter 2 Literature Review

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and emotional or affect evaluations. Additionally, satisfaction is a cumulative evaluation of a customer’s service experience with that provider and therefore also includes an experiential component (Auh & Johnston 2005; Spinks, Lawley & Richins 2005). Therefore, an examination of the literature indicates that satisfaction with a service needs to include experiential, affective and cognitive measures, as well as an overall evaluation, such as that used by Spinks, Lawley and Richins (2005) in the service industry, as suggested in Figure 2.10. Individual Characteristics

Service Performance

Situational Variables Cognition Affect

Satisfaction Experiential Behavioural Intentions

Overall

Figure 2.10 Elements of satisfaction developed from the literature

The final construct to be examined is that of post-purchase behaviour and intentions. 2.7

Post-purchase Intentions and Behaviours

The post-purchase stage of the purchase process includes an evaluation of the consumer's service experience performance and results in an evaluative feeling of satisfaction or dissatisfaction (Patterson 1993). Satisfaction, as discussed in the preceding section, ranges from extreme dissatisfaction through a zone of tolerance to extreme satisfaction or delight (Oliver 1997; Oliver & DeSarbo 1988). The importance of degree of satisfaction to a service provider is that the post-purchase evaluation influences post-purchase behaviour and thus is a measure of the most important element of a business (Parasuraman, Berry & Zeithaml 1990, 1993; Patterson 1993; Peterson & Wilson 1992). There is considerable empirical evidence to show that customer satisfaction has four potential categories of outcomes. Firstly there are those outcomes that have an impact on the customer and an additional three outcomes that impact on the organization itself. These three are related to marketing communications efficiency; employee capital and overall performance (Luo & Homburg 2007). This study is delimited to a focus on customer related outcomes, which include behavioral intentions and customer behaviors (customer loyalty/repurchase; word-of-mouth/personal recommendations and switching) which have a significant effect on future purchases and thus organisational viability.

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There is some doubt as to the cost-benefit of retaining customers. For example, Cooil et al. (2007), cited research finding loyal customers do not cost less to service and do not pay higher prices than other customers for the same service. A significant but modest positive relationship between satisfaction and ‘share of wallet’ (the percentage a customer spends on a particular service in relation to what is spent with other service providers in the same service type), has been found from a longitudinal study of Canadian bank customers over a four year period (Cooil et al. 2007). Therefore, organisations may be wise to focus on increasing the share of wallet, rather than other behavioural outcomes such as loyalty (Cooil et al. 2007). Unfortunately for most service types, any measure of this would be reliant on customer information and so may not be accurate. Negative post-purchase behaviours may arise from dissatisfaction and include four possible responses; a consumer may choose to make no response, or they may choose one or more of three other reactions. These include voice, third party or private responses (Singh 1988). A voice response results in the consumer seeking redress from the seller, but taking no other action. Third party response is a more serious result, when the dissatisfied consumer takes legal action against the seller. The last possible action is that of private response, where the consumer may or may not continue to do business with the organisation, but will tell others of their dissatisfaction with that organisation and potentially jeopardise future sales from those other consumers as well. Indeed, the last three avenues involve complaint handling which strongly affects consumer trust and commitment to the organisation, whereas prior experiences with the firm has a limited influence on these variables (Tax, Brown & Chandrashekaran 1998). This means that complaints also represent critical ‘moments of truth’, and the way in which they are handled, affects a consumers' desire to continue or end the relationship. Years spent building a consumer relationship can be lost, when a service failure is coupled with poor problem resolution. If, however, an organisation can identify items that cause dissatisfaction and satisfaction before the consumer arrives at the post-purchase behaviour stage, they may be able to improve their service to avoid dissatisfaction and subsequent negative behaviour (Singh 1991a). Loyalty or commitment is also influenced by the service provider’s specific knowledge of and relationship with the customer and switching costs (information search costs, substitutability and convenience) (Lee & Cunningham 2001; Patterson 2004), which has only a limited relationship with the customer’s perception of the actual service performance. When switching costs were low, satisfaction had a greater more positive impact on purchase intentions than

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when switching costs were higher (Patterson 2004). Lee and Cunningham (2001) found financial and time costs did not significantly influence customer loyalty with banks and travel agents, perhaps due to low differentiation between service providers. It would be expected that in a high involvement and personal service such as health and well-being services, loyalty, commitment and provider-customer relationship would be high, and thus switching costs would appear high. This suggests that satisfaction would not have a high impact on behavioural intent in high involvement purchases (Patterson 2004). Post-purchase behaviours, such as loyalty and word-of-mouth, are more difficult to measure than consumers’ post-purchase intentions. This is illustrated in Table 2.15 where all, but the last study (Cooil et al. 2007), measure intent and not actual behaviour. Therefore this study will also measure the construct of Customer postpurchase behavioural intent, rather than the actual behaviour. Table 2.15 Items used to measure post-purchase behavior and intentions Author(s)/ Date Cronin et al. 1997

Products

Sports & entertainment (n=1247) Transport, fast food & health (n=797) Mitra, Reiss 2 Credence + & Capella 2 Experience 1999 2 Search services Oh 1999 2 Luxury hotels USA Transaction specific. Cronin, Brady Sports & & Hult 2000 entertainment (n=1247) Transport, fast food & heath (n=797) USA

Sample

Analysis

Snowballing in SEM 1 medium metropolitan area, USA

Scale

Constructs and Items

9 pt. Likert type (1 Very Low - 9 Very High)

Purchase intentions (2 items) (α= 0.82 to 0.90 dependent on industry) -The probability that I will use this facility’s services again is… -The likelihood that I would recommend this facility’s services to a friend is…

Behavioural intentions (α=0.927) -Intention to use that service again -Willingness to provide positive word-of-mouth communication to friends 545 guests SEM 6 pt. Likert Intention to repurchase type Single item (1=Very unlikely – 6=Very likely) WOM (Likelihood of recommending to others) Single item (1=Very unlikely – 6=Very likely) Convenience & SEM 3 items Behavioural intentions (3 items) (α= 0.87) (Also quota in 1 9 pt. Likert used in Babakus & Boller 1992; Cronin & Taylor medium type 1=Very 1992) metropolitan low – very -The probability that I will use this service again is... area high -The likelihood that I would recommend this service to a friend is... -If I had to do it over again, I would make the same choice Lee & Banks ( Convenience Regression 9 pt. from - 4 Customer loyalty (α=0.70) Cunningham n=84)& sampling of = SD to +4 -I will definitely go back to this provider next time I 2001 Travel agents office =SA use the same service (n=81) personnel in a -I would find it extremely difficult to discontinue large city patronage of this service provider McDougall & Dentist n=129 SEM 7 pt.Likert Future intentions (α not provided) Levesque Auto service n=72 scales from -If it were easy, I’d switch to another service 2000 Restaurant n=133 1=SD to provider Hairstylist n=114 -If people asked me, I’d strongly recommend that 7=SA Canada Church cong. they deal with this service provider -The next time I have dental needs, I’ll go back to this … provider Jones, Banks & n=228 Moderator 10 pt. Repurchase intentions (α= 0.99) (from Mothersbaug Hairdressers n=206 regression semantic Satisfaction) h & Beatty analysis differential -Unlikely – Likely 2003 -Very improbable – Very probable -Impossible - Possible -No chance – Certain 119+106+ 110 marketing MANOVA students

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Author(s)/ Date Quester & Lim 2003

Products

Sample

Analysis

Scale

Constructs and Items

TAFE students (n=253) Australia

Convenience

SEM

7 pt. Likert type (1=SD to 7=SA)

Brand Loyalty (α= between 0.63 & 0.90) 3 dimensions: Cognitive (4 items) Affective (7 items) Conative/behavioural (5 items)

Online survey SEM of 817 recruited online

7 pt. Likert type

Loyalty (with sig. influence from satisfaction)(α=0.90) -I consider this provider to be my first choice when I need this type of product -This provider is the primary source I consider when I need the type of product it offers -I consider this provider to be my primary source of this type product Behavioural intentions -Not given

Lee & Overby Online 2004 shopping

(1 = SD to 7 = SA)

Paterson 2004

Dry cleaners Mechanics Hairdressers Australia Parasuraman Service Zeithaml & performance Malhotra delivered by 2005 Web sites

Quota of SEM 265+239+ 225 customers

10 pt. Juster

N=549 EFA, CFA Quota & SEM sampling from respondents contacted by a research firm

5 pt. Likert type scale (1 = very unlikely, 5 = very likely).

Dagger & Sweeney 2006

Oncology patients

Study 1 n=778 SEM Study 2 n=340

7 pt. Likert type SA to SD

Cooil et al. 2007

Banks Canada

4,319 households over 4 years

2 level latent class regression model Annual changes

Loyalty Intentions How likely are you to . . . - Say positive things about this site to other people? - Recommend this site to someone who seeks your advice? - Encourage friends and others to do business with this site? - Consider this site to be your first choice for future transactions? - Do more business with this site in the coming months? Behavioural intentions - If I had to start treatment again, I would want to come to this clinic - I would highly recommend the clinic to other patients - I have said positive things about the clinic to my family & friends - I intend to continue having treatment or any follow up care I need at this clinic - I have no desire to change clinics - I intend to follow the medical advice given to me at the clinic - I’m glad I have my treatment at this clinic rather than somewhere else Share of wallet % of total business $ conducted with nominated bank/ divided by total $ spent over all banks.

A review of the table above shows that the most recurrent measures of behavioural intent (particularly Cronin, Brady & Hult (2000); Dagger & Sweeney (2006); Parasuraman, Zeithaml & Malhotra (2005)), include the likelihood that the customer would: • Say positive things about this site to other people • Recommend this site to someone who seeks your advice • Encourage friends and others to do business with this provider • Return to this provider next time I use the same service

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Of further interest is that Quester and Lim (2003) argue that a measure including all dimensions of attitudinal measures (cognitive, affective and conative) provides a deeper, more encompassing measure of post-purchase evaluations. This claim, however, has not been supported by other studies, and appears to be more allied to the satisfaction evaluation. Overall, the measures for post-purchase behavioural intent, and in particular the four items listed above, appear to have good face validity and generalisability across product types. There does not appear to be any need for further exploratory research for this construct. 2.8

Modelling Factors that influence Satisfaction and Post-purchase Intention

All theorised constructs; Individual consumer characteristics, Situational variables, Service performance, Satisfaction and Post-purchase behavioural intent were found to be influential on the way in which consumers evaluate services. Many scales have been used in the measurement of these constructs, but there is still room for further scale development, particularly for Situational variables, and Service performance. Gaps in the existing studies relating to the measurement and modelling of factors that influence a customer’s service perception, satisfaction, and behavioural intent of services are summarised next.

2.8.1

Gaps and issues found in the literature

Although the empirical measurement of customer satisfaction with a range of products (both goods and services), has been researched for over three decades, there is still no standard way of measuring this vital construct. There is a lack of discriminate validity between the service quality and satisfaction constructs and service performance (Brady & Cronin 2001). As customer satisfaction is so important for providers, it is understandable that a wide range of products have been used to determine the empirical qualities of satisfaction. As can be seen in the tables included in section 2.3 to 2.7, this thesis has purposefully limited the review to those studies that measure satisfaction with services, because of the unique attributes of a service when compared to a goods based product. It is possible that a study of specific service organisations and even specific service encounters may not be generalisable to other service types. Even studies that attempt to overcome this by sampling from different service types only cover eight (Brady & Cronin 2001) to eleven service types (Turner & Reisinger 1998) – a relatively small sample of the different services available. Studies using goods have been included because of their rigor and if they appeared to use measures that could also be used to measure services. There have been no major changes in measurement over the past decade.

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It appears that similar methodologies and operational definitions have been used for both services and goods (Oliver 1993), although, as for different service types, attributes which customers use to make their satisfaction judgement appear to differ significantly between product types. Diverse operational definitions for satisfaction and perceived performance also exist between different authors, resulting in the use of different models and consequently, findings. The research design and sampling of the studies show that the majority of the studies are exploratory, descriptive or explanatory, following in the footsteps of Churchhill and Surprenant (1982), Bolton and Drew (1994), and Parasuraman, Zeithaml and Berry (1988). As usual for marketing research and indeed any social science, there were only a relatively small number of causal or experimental studies. The majority of the studies use questionnaires to gather data to test models. A substantial number of the studies use a two-stage research design to gather data through focus groups or interviews followed by quantitative data collection to then reduce the items using principal components or factor analysis, as suggested by Churchill (1979). Principal component analysis and factor analysis have both been used to determine dimensions of provider attributes that influence satisfaction and service quality. The components or factors are then analysed using a form of regression analysis or structural equation modelling to determine the relationship between the factors and satisfaction. Though many rigorous studies have been conducted, there is still no a universal confirmation on the antecedents of satisfaction. Some of the limitations of the studies included some lack of detail about research design, although, in general, it appears non-probability sampling was used more than probability sampling. Also, many of the studies in the service industry use relatively small sample sizes, although it is suggested that for factor analytical studies a sample of 200 is a fair sample size, while 300 is good, and 500 very good (Comrey & Lee 1992, in Tabachnick & Fidell 1996). Therefore it is suggested that where possible, sample sizes should be at least 500 (Comrey & Lee). Research into service performance and satisfaction research requires careful evaluation in order to determine the best analytical methods to use. The next section proposes a conceptual model to address the research objectives.

2.8.2 Conceptual Model The next stage in this study is to provide an initial conceptual model to indicate the relationship between the five major constructs; Individual consumer characteristics, Situational variables, Service performance, Satisfaction and Post-purchase intent. Just as there are variations to the items and dimensions used to measure these constructs, so too is there variation in the way in

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which research models have tested for significant relationships between the post-purchase constructs. Consumer characteristics and Situational variables. There are clear indications from the customer behaviour literature that post-purchase behaviour, including satisfaction, is influenced by the customer’s personal characteristics and situational variables as well the customer’s perceptions of the product (Oliver 1997; Walker 1995; Lawson et al. 1999). Individual characteristics and situational environmental influences have been found to have a lesser direct influence on satisfaction than the cognitive evaluation (confirmation or disconfirmation of expectations) of service performance (La Tour & Peat 1979; Yi 1990). The Situational variable mood (pleasure and arousal) has been shown to impact on both perceived service performance/quality and satisfaction (Jiang & Lu Wang 2006). Service performance or experience, however, can also impact on mood, as shown when physical evidence or design influenced both dimensions of mood, with a positive affect on pleasure, but a negative affect on arousal (Sherman, Mathur & Belk-Smith 1997). While operationalisation and the relationship between these variables require further research; it is proposed that Individual characteristics and Situational variables will influence the consumer’s perception of service performance and satisfaction. Service performance and Satisfaction. There is an increasing acceptance that service performance is an antecedent to satisfaction. It is now well accepted that service performance (although often labelled as service quality) is an antecedent to overall customer satisfaction (Brady & Cronin 2001; Oliver 1997; Cronin & Taylor 1992, 1994; Voss & Parasuraman 1995). More importantly for the context of this study, service performance or service quality has been found to be an antecedent to client satisfaction with health services (Alden, Hoa & Bhawuk 2004; Duffy & Ketchland 1998). Research suggests, however, that more than 50 percent of the unexplained variance in satisfaction might be attributed to other factors, including value (Rust & Oliver 1994; Zeithaml 1988), attribution and equity (Bolton & Drew 1994), trust (Garbarino & Johnston 1999), location, (Bull 1999), information availability and atmospherics (Peyrot, Cooper & Schnapf 1993, in Duffy & Ketchland 1998). Key reasons for dissatisfaction given were: high, deceptive or unfair pricing (30%); inconvenience in terms of time, location and delays (21%); and unsatisfactory service encounters with staff (34%) (Lovelock et al. 1998). Price may be an indicator of perceived quality or performance (Dodds, Monroe & Grewal 1991; Padula & Busacca 2005). There was a partial consensus on the relationships between value, perceived quality or performance and satisfaction in four competing models, which resulted in

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the best model showing that value (operationalised as Price) had a stronger mediating effect on service performance to satisfaction, than it was as a direct effect on satisfaction (Caruana, Money & Berthon 2000; Cronin, Brady & Hult 2000). Therefore, the relationship of this price/value construct to other relevant constructs needs to be tested to find the best fit. Additionally, customer evaluated perceptions of information (Marketing communications) provided by the provider and the waiting environment (Physical evidence) both had a direct impact on customer satisfaction, as well as the sub construct of satisfaction with waiting time (Bielen & Demoulin 2007). Word-of-mouth communication, a form of marketing communication, was measured as a customer specific antecedent with two other dimensions; personal relationship with the bank managers and amount of comparison shopping. However, in spite of the importance of word-of-mouth and marketing communication to services, Gounaris, Stathakopoulos and Athanassopoulos (2003) found that word-of-mouth and advertising campaigns for Greek banks have been found to have only low impact on perceived service quality, and in particular on perceptions of place or convenient location. Perhaps if these observed measures were included as underlying indicators of service performance, the degree of variance in satisfaction explained by service performance would increase. There is sufficient evidence to propose and test if the customer’s perception of service performance is better operationalised by the seven elements of the extended marketing mix for services than the five dimensions of SERVQUAL. Traditional observed measures of the five SERVQUAL dimensions are seen as functions of the unobserved or latent variable of Tangibles, Reassurance, etcetera, which in turn are functions or dimensions of the latent variable of SERVQUAL, and thus are reflective indicators. Therefore changes in SERVQUAL would be manifested by changes in the underlying latent variables and indeed the observed variable (Fornell & Bookstein 1982, in Diamantoploulos & Siguaw 2006). If, however, the observed measures are viewed as causing rather than being caused by latent variables, they are formative or causal (MacCallum & Browne 1993, in Diamantoploulos & Siguaw 2006) or defining characteristics of the latent construct (Rossiter 2002, in Diamantoploulos & Siguaw 2006). The wrong choice can result in a Type I or Type II error, as shown in Table 2.16 Table 2.16 Impact of the choice of measurement perspective “Correct “ auxiliary theory Reflective Formative Researcher’s choice of measurement perspective

Reflective Formative

Correct decision Type II Error

Type I Error Correct decision

Unfortunately, an error may not be corrected by simply reversing the paths, as the refinement of items used in measurement varies between the multi item scale development guidelines

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pioneered by Churchill (1979) and further developed by other researchers such as Rossiter (2002) used for reflective indicators, and index construction strategies (Diamantopoulos 2001; Diamantopoulos & Siguaw 2006). Satisfaction and Behavioural intent. Many of the descriptive studies also examine the relationship between satisfaction and behaviour and it is evident that there is a positive relationship between satisfaction and post-purchase behavioural intention (Alden, Hoa & Bhawuk 2004; Luo & Homburg 2007; Parasuraman, Berry & Zeithaml 1990, 1993; Patterson 1993; Peterson & Wilson 1992). Additionally, Cronin, Brady and Hult (2000) and Brady et al. (2005) found that as well as service performance (Service quality) showing a direct influence on behavioural intentions, consumer satisfaction also mediated this influence. As a result of the analysis of previous research, the following conceptual models are proposed in figure 2.11 and 2.12.

Product

Promotion

Individual Characteristics

Place

Price

Service Performance

People

Process

Physical E.

Situational Variables

Satisfaction

Behavioural Intentions

Figure 2.11 CSP conceptual model of consumer post-purchase evaluation process

Figure 2.11 conceptualises the new CSP model of service performance, while Figure 2.12 conceptualise the SERVQUAL model of service performance. Both models include the influence of individual characteristics and situational variables on both service performance and satisfaction. These competing models and relationships will be tested in Chapters 7, 8 and 9.

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Reliability

Assurance

Individual Characteristics

Tangibles

Service Performance

Responsive

Empathy

Situational Variables

Satisfaction

Behavioural Intentions

Figure 2.12 SERVQUAL conceptual model of consumer post-purchase evaluation process

2.9

Conclusion

It is important that a service provider manage the interacting variables in the dynamic process of interaction with a customer to provide satisfaction for that customer. Therefore, the level of customer satisfaction needs to be measured and monitored. However, it is first necessary to identify the determinants or key drivers of customer satisfaction and post-purchase behavioural intent in order to measure it. If a consumer’s post-purchase evaluation, satisfaction and behavioural intent can be measured, it can also be analysed, so that areas not providing adequately for the consumer can be identified, and used to improve post-purchase behaviour.

In conclusion, this chapter has overviewed the existing literature in the areas relevant to addressing the research question for this thesis, “How do mature customers evaluate health and well-being services?” It identified that while research has shown that there are some differences and similarities between the constructs of service performance or quality and satisfaction, there is no single model which conceptualises the customer post-purchase evaluation process. Additionally, further research needs to be conducted on the research objective to identify any differences in the way in which different mature age groups evaluate health and well-being services. The qualification of attributes (and their respective importance to the overall level of satisfaction), used to measure satisfaction with a service, would enable the provider to identify the area(s) of the marketing mix which require modification and potential strategies for increasing satisfaction levels. Identification of the constructs and existing measures has assisted in the development of conceptual models in Figure 2.11 and 2.12. The next chapter of this thesis provides a discussion of the exploratory research design and findings, with a further refinement of scale development for the relevant constructs. Chapter 2 Literature Review

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3. Stage I Method and Results

3.1

Introduction

The previous chapter reviewed the literature relating to post-purchase consumer behaviour and identified the key constructs. This chapter will explain and justify the research paradigm for this research and also presents the design and findings of stage one of the two-stage research design used to address the research objectives of this thesis. 3.1. Introduction

3.2. Paradigm justification

3.3. Research design

3.4. Stage I Method

3.5. Depth interviews

3.6. Focus groups

3.7. Conclusion

Figure 3.1 Outline of Chapter 3

This chapter has seven sections as set out in Figure 3.1. After the introduction in section 3.1, the research paradigm and methodology for Stages I (Exploratory research), and II (Descriptive and explanatory research), will both be outlined and justified in section 3.2. Section 3.3 includes a description and justification of the research design with a focus on first Stage of this two stage research design in Section 3.4. (Explanation and findings of the Stage II research are discussed in Chapters 5 to 9.) Section 3.5 and 3.6 provide the research design and results for the exploratory focus groups and interviews respectively, followed by the conclusion in Section 3.7.

3.2

Paradigm justification

This section justifies the critical realism paradigm used in this thesis, which has influenced the design and methodology of both stages of primary research. Adoption of the critical realism paradigm harnesses the benefits of both qualitative and quantitative data to achieve the research

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objectives of this thesis. The critical realism paradigm is located on a continuum between the two opposing paradigms of positivism and phenomenology (or constructivism), (Perry, Reige & Brown 1999) as illustrated in Table 3.1. The four major paradigms of social science, set out in the title row of Table 3.1, are categorised and characterised by the researcher’s philosophical assumptions and response to three fundamental and interconnected questions concerning ontology, epistemology and methodology (Guba & Lincoln 1994). Table 3.1 Basic beliefs (metaphysics) of alternative inquiry paradigms Paradigms

Ontology (Nature of data)

Epistemolog y (Nature of researcher)

Positivism Naïve realism: reality is real and apprehendable

Objectivist: Investigator & investigated “object” assumed to be independent. Replicable findings are true Experiments/

Methodology surveys:

Mostly quantitative methods

Critical Realism Reality is "real" but only imperfectly and probabilistically apprehendable, so triangulation from multiple sources required for understanding Modified objectivist: Observer with some level of participation, but objectivity is sought, Replicated findings probably true

Case studies/ convergent interviewing: Triangulation, Use of qualitative & quantitative methods such as SEM

Historical realism

Phenomenologism or Intrepretive Social Science

"Virtual" reality shaped by social, ethnic, economic, political, cultural, and gender values, crystallised over time.

Critical relativism: multiple local and specific “constructed” realities

Subjectivist & Transactional: Investigator & investigated assumed to be interactively linked -Dotted lines between Ontological & Epistemological rows. Findings are value mediated Dialogic/ Dialectical Researcher changes the social world in which participants live/work

Transactional & Subjectivist: Fusion between ‘what can be known’ & a particular investigator & a particular object or group. Findings are created as investigation proceeds. Hermeneutical/ dialectical: Researcher is a passionate participant within the world being investigated

Source: Neuman, 2003; Perry, Reige & Brown 1999, developed from Guba & Lincoln, 1994, p. 109

The first question, ontology (Row 2 of Table 3.1), is defined as metaphysics or studying the nature of “being” (Collins 1997, p.795). Ontology addresses the question, “What is the form and nature of reality and consequently, what can be known about reality?” The ontological position defines the relationship between the researcher and what can be known. Epistemology (Row 3 of Table 3.1) is defined as the study of knowledge or how we know; especially the critical study of the validity, methods and scope. Epistemology can be said to be the relationship between the study of “being” or reality (ontology) and the researcher or “the theory of knowledge”, while methodology (Row 4 of Table 3.1) is the study of procedures in an inquiry to discover more about a particular reality (Hunt 1977). The second column of Table 3.1 sets out the position that the positivist paradigm holds for each of the three main questions of ontology, epistemology and methodology. The third, fourth and fifth columns do the same for the paradigms of critical realism, historical realism and phenomenologism respectively. Although some researchers have equated the logical positivist paradigm with quantitative research and the phenomenological paradigm with qualitative research, it should be emphasised Chapter 3 Stage I Exploratory Research

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that the key features of either paradigm are extreme or ‘pure’ versions and reflect the absolute end of a continuum (Neuman 2003). Increasingly, there is a move from researchers to develop methods and approaches which use a middle ground between these two extremes (Deshpande 1983; Easterby-Smith, Thorpe & Lowe 1991) as used in traditional satisfaction and service performance scale development (Churchill 1979; Parasuraman, Zeithaml & Berry 1988). Research which acknowledges both paradigms can be very rigorous (Johns & Lee-Ross 1998; Easterby-Smith, Thorpe & Lowe 1991; Patton 1990; Jick 1979; Novak & Washburn 1998). Therefore, this thesis uses the strength of this combined approach through the post-positivism genre of the critical realism paradigm. As can be seen in column three in Table 3.1, critical realism sits on the continuum between positivism and phenomenologism and attempts to avoid the extreme subjective and relativist approach of an interpretive phenomenological paradigm, but also considers the changing social context (often ignored in a pure positivist paradigm) (Neuman 2003). Critical realism allows the use of a two stage methodology, which combines the two extreme paradigms of phenomenology and positivism, with a qualitative and quantitative stage and also uses triangulation to improve internal validity and obtain a better understanding of the situation (Perry, Reige & Brown 1999). Combining methodologies or mixed methods research, provides a wider perspective on the phenomena being studied (Dixon 2009; Perry 1998), and in this study, the Stage I, qualitative research, integrates with and supports the major quantitative research in Stage II with a synergistic outcome (Bazely 2009; Woolley 2009). The research design and justification for this thesis will now be discussed in section 3.3.

3.3

Research design and justification

Research design involves a series of rational decisions in order to design research that best answers the research question(s). These decisions include; the purpose of the study; the type of investigation; the unit of analysis; the time horizon, the data collection methods and the sampling design (Sekaran 1992). These will be discussed in turn in the following paragraphs. The purpose of the study. Research design can be grouped into three categories (as shown in columns two, three and four in Table 3.2) according the purpose of the study (Sekaran 1992) or the nature of the problem being researched (exploratory, descriptive and causal) (Zikmund 2003; Patton 1990). This thesis uses both exploratory and descriptive research. It is both traditional and recommended in the field of marketing research to first use exploratory research to explore and gain a better understanding of the dimensions of the problem (factors that

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influence consumer satisfaction and post-purchase behaviour) (Churchill 1979; Parasuraman, Zeithaml & Berry 1988; Sweeney & Soutar 2001). This thesis uses the three exploratory techniques of secondary data, depth interviews and focus groups (as shown in the second row of Table 3.2) to provide triangulation of data in the inductive Stage I. This is followed by a survey in the deductive Stage II. Table 3.2. Classification of research by purpose Purpose

Techniques

Exploratory To gain a better understanding of the dimensions of the problem or constructs. Normally conducted with the expectation that subsequent research will provide conclusive evidence. • Secondary data analysis • Pilot studies • Focus groups • Projective techniques • Depth interviews • Case studies • Experience surveys

Descriptive To describe characteristics of a population or phenomenon. To answer who, what, when, where, why & how questions- but does not give an explanation for the cause of the findings. • Observation • Surveys (Questionnaire) • Secondary data study

Causal Identifies the cause and effect relationships between variables.



Experiment (Laboratory, field)

Source: Zikmund 2003

The second stage of the research is descriptive and uses surveys as indicated by the purpose of the research to provide descriptive information about: ‘What factor’s influence consumers’ postpurchase evaluation and behaviour when using high involvement services?’ and ‘How these factors influence consumers’ post-purchase evaluation and behaviour when using high involvement services?’. The use of surveys for the purpose of descriptive research to answer questions of who; what; where; how many and how much is often used in the marketing discipline (Yin 1994) as seen in Table 3.2 (Zikmund 2003). This combination of exploratory and descriptive methods is again traditional in previous research measuring the service quality and satisfaction constructs (Churchill & Suprenant 1982; Parasuraman, Zeithaml & Berry 1998; Danaher & Haddrell 1996).

Table 3.3 Qualitative versus quantitative research Comparison Dimension Type of Research Methods of Data Collection Types of questions Sample size Respondent response Administration Type of Analysis Hardware Ability to replicate

Qualitative research

Quantitative Research

Exploratory Participant-observer field research Content Analysis Interviews & Focus Groups Case Studies Projection Techniques Probing Small (eg. case studies) More in depth Requires interviewer with special skills Subjective, interpretive Voice recorders, facilitator guides, etc. Low

Descriptive or Causal Surveys Experiments Observation Secondary data analysis Minimum probing Large (Min 350 respondents for a PhD (Perry 1998)) Variable Fewer special skills required Statistical, summarisation Questionnaires, Computers High

Source: Adapted from Perry 1998; Perry, Reige & Brown;1999; Ryan 1995; Zikmund 2003.

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As can be seen in Table 3.3, exploratory research usually collects qualitative data, while descriptive and causal research usually collect quantitative data (Ryan 1995; Zikmund 2003). Traditionally, both forms of data and research methods are used in a mixed methods or twostage methodology for this type of study requiring clarification of constructs and scale development (Bazely 2009; Chuchill 1979; Parasuraman, Zeithaml & Berry 1985). Again, this thesis fits well within the suggested parameters. In order to achieve the objectives for Stage I, qualitative research was used to further identify, generate and understand measures from data collected in depth interviews and focus groups as suggested in Table 3.3. Therefore, the exploratory stage (Stage I) of this research assists in developing good measures of the appropriate constructs for this research through the generation of items (Churchill 1979) and triangulation of data through a comparison of results from previous research, interviews and focus groups. These measures are then be refined in preparation for collection of quantitative data through a survey in Stage II, thus enabling final testing of the hypotheses. Unit of analysis and the time horizon. The second decision of the research design is the unit of analysis (Sekaran 1992). As the research aims to determine the factors that influence consumer perceptions of service performance and satisfaction with a service, the unit of analysis will be the individual consumer. Although there is research that suggests that satisfaction judgements may change over time (Palmer & O’Neill 2003; Xia 2005), this thesis is conducting a cross-sectional or one-shot, rather than a longitudinal study (Sekaran 1992). The final two steps of the research design, data collection methods and the sampling design (Sekaran 1992; Aaker et al. 2007) differ for the first and second stages of research for this thesis. Therefore, a discussion of data collection methods and the sampling design for the first stage will be continued in this chapter, while the data collection methods and the sampling design for the second stage will be covered in Chapter 5.

3.4

Stage I Method

The literature review has identified reliable and valid measures for the satisfaction and behavioural intent constructs. However, while the literature provides much insight into the antecedents of the satisfaction construct, the review also highlighted the need for further exploratory research to determine factors that influence consumer satisfaction with high involvement services, specifically within the mature market. In particular, it would be beneficial

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to develop an instrument that measures a more comprehensive range of factors contributing to consumer satisfaction than currently exists. It is important to gather perceptions from a range of individual consumers in order to improve the objectivity of operationalising measures and thus add to the reliability of this study (Quester & Smart 1998). This suggests the need for exploratory research to identify additional factors, especially those that may be specific to the older age group.

The main objective for this exploratory stage is RO1; to identify factors that influence mature age consumers satisfaction and post-purchase behavioural intent with services. However, the exploratory research also provides some illumination for the remaining three objectives. The questions were designed to collect as much richness and depth of data as possible. Table 3.4, identifies the association between the research objectives and the questions asked in the depth interviews and focus groups, as set out in a moderator’s guide for the interviews and focus groups in Appendix D. All research objectives are addressed to varying degrees. Table.3.4 Exploratory research objectives and associated questions Research Objectives RO1 To identify factors influencing mature age customers’ satisfaction and post-purchase behavioural intent with a high involvement service and specifically, health and well-being services. RO2 To develop measures to operationalise the factors so developed in RO1. RO3 To develop and test a model of mature age customers’ evaluation of health and well-being services. RO4 To test for differences that age might have on the mature consumer’s evaluation of health and wellbeing services.

Related interview questions Questions 3, 4, 5, 6 & 7

Related focus group questions Question 2, 3, 4, 5, 6 & & 7

Questions 3, 4, 5, 6 & 7

Question 2, 3, 4, 5, 6 & & 7

Question 3 and 4

Question 2, 4, & 7

Question 3, 5,7 & 8

Question 2, 4, & 7

Sum and close

Data collection methods and results for both the interviews and focus groups are discussed in Section 3.5 and 3.6 respectively.

3.5

Interviews

As explained in Section 3.4, depth interviews with those familiar with the provision of services to those in the target age group were suggested for this research as it is important to use exploratory research to maximise the collection of information about factors that may influence consumer service perception, satisfaction and post-purchase behavioural intent (Aaker et al. 2007; Churchill 1979; Hayes 1997). Depth interviews provide the researcher with the opportunity to probe those with expert knowledge in their field in order to gain further insight into the research objectives. Interviews also allow flexibility of time for complex questioning Chapter 3 Stage I Exploratory Research

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and answers (Zikmund 2003). Responses from the interviews also ensure that the most relevant topics are included in the focus groups. However, it is recognised that the consumer’s perceptions provide more direct and valid data than that collected from a third party.

3.5.1

Sampling design for depth interviews

A final research design decision is the sampling design, which includes; ‘who?’ to sample and ‘how?’, or the type of sampling design (probability versus non-probability) (Aaker et al. 2007). Experts interviewed were chosen using purposeful sampling. At this stage of the research, the researcher was also confirming that health and well-being services were amongst the most important, if not the most important service for the mature consumer. Therefore, experienced managers or team leaders (who had been in the position for a minimum of one year) were chosen from a range of organisations that provided some form of service for the mature customer. This assisted in reducing bias towards any particular service type. Six service providers were interviewed as set out in order of interview in Table 3.5. Table 3.5. Interviewees Work Affiliation

Services provided by respondent’s organisation

Gender

National Seniors Research Centre for Productive Ageing

Over 50’s magazine, advocacy and policy groups and discounts

Female

Local City Council

Infrastructure such as footpaths, water, bus shelters, parks, libraries and community activities. Rebates on rates

Female

Community Centre

Advocacy, Health and wellbeing education and social activities

Female

Ray White Real Estate agent

Purchase, rental & sale of housing

Male

Published author and academic

Advocacy, literature and education

Male

Queensland State Government, Department of Communities

Seniors card, Funding of Non-government orgs. such as Health and Community Program services, Rebates on transport, etc.

Female

The interviews were run first to maximise the data collection of the target group, the mature age customers, in the focus groups, and were not expected to yield as much information as discussion with the consumers. The interviews achieved convergence on major data within three interviews, however all six interviews were conducted to ensure all possible information was collected. The interview responses are discussed next.

3.5.2

Depth interview results

The interviews were relatively short, ranging from 30 to 50 minutes. This was due to a combination of two factors: the time paucity of the interviewees (all were interviewed in working hours), and the corroboration of responses achieved the research purpose for the interviews. After this point, there was no need to continue with the interview process. The interview questions followed by a summary of results is set out next.

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It was interesting to note that by coincidence, all six people interviewed were Baby boomers, and yet only one, the oldest interviewed, was happy to identify himself as such. All others, including the only other male, were very reluctant to be labelled as Baby boomers. This was because they felt that the term “Baby boomer” was associated with a negative image, such as selfish behaviour. In addition, they did not feel, nor wanted to feel, as old as the term ‘Baby boomer’ conjured. Thus, the comment, “I feel too young to be a Baby boomer” was a sentiment reinforced by participants in both interviews and focus groups.

Q 1. What services are important and high involvement for the mature customer?

Unsurprisingly, health and well-being services were seen to be the most important by all respondents. The real estate agent said that health and finances often drove the move from one dwelling to another. There was a problem with mature age people selling to get away from the hustle, noise, and expensive rates or rent to a more rural area, but then finding that they have limited access to transport and health professionals. The community centre manager talked of the increased need for mental health services as you age and the need for better diagnosis of mental health problems. A move into retirement housing could also negatively impact on mental well-being, as; “Developers have set up little villages which tend to be isolated from social interaction and help groups – there are none at the retirement villages,” (Quote from the community centre manager). Other important services included finance, property, home services and service providers that kept their pets healthy. Q 2. Client characteristics

The government bodies, the State government, Local council and Community centre concentrated more on the older age ranges and felt that in general, their clients had less financial wealth and needed more assistance than those younger than the mature age population. The Real estate agent believed that his clients were a similar mix of demographics to the general Australian population found in sea-change community, while the lecturer and National seniors’ representative felt that their clients were a little better educated, experienced and wealthier than the average. This suggests that sampling of just one specific service provider type would not be representative.

Q 3. What factors or attributes do you believe might influence your client’s evaluation of your service?

Value for money, good service, honesty, timing of the service delivery, being accessible, the employees, good, clear two-way communication and delivering what was promised were the main attributes that respondents thought of without prompting. Of these, two-way

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communication has not been empirically tested in previous research. Physical evidence was also included, once the respondents were prompted.

Q.4a. Post-purchase evaluation process. How well do you think the model (See the conceptual model from Chapter 2, in the Interview Guide in Appendix E) maps your client's evaluation process?

All six interviewees thought the model made logical sense, and could not think of any changes or improvements.

Q.4b. If customers’ perceptions of service performance were measured using the seven marketing elements of Product, Price, etc. Do you think this model represents your clients’ perceptions, and would it be useful?

The interviewees were very positive about the concepts and the suggested relationships. The State Government respondent from the Department of Communities was concerned about the use of price, but we discussed that price could also be interpreted as the cost to the customer, and not only a monetary cost, but that it could be emotional, etcetera, the interviewee could also see that this would be useful information. Q.5. Can you think of any individual characteristics that influence customers’ behaviour?

All interviewees provided some service to Baby boomers and older, and so were in an expert position to comment on the mature age consumer group. People’s gender was the most obvious characteristic, with issues such as males tending to be more reluctant to seek health and wellbeing services, while older women were seen as requiring more financial services, as those women’s husbands had typically dealt with the household finances. Two interviewees commented on the rudeness and “queue jumping” behaviour they had observed in older female consumers. Financial wealth was also an obvious variable that enabled the wealthier faster and easier access to services. This may also influence their perception and evaluation of the service. Age was not seen to be a major influence on behaviour, although all interviewees felt that there is a stereotype of the spend-thrift Baby boomers, versus the older generation who had grown up in harder economic times. The interviewees felt that Baby boomer consumption patterns were formed as a result of their life living through wealthy economic times, rather than a result of age. There was some disagreement as to whether or not the stereotypical Baby boomer existed. Some comments from the depth interviews that further illuminate the need for further research into the phenomena we call the ‘Baby boomers’ are listed below. ‘Baby boomers are more fussy and more demanding (than older consumers) – it would be useful to know what standard of service baby boomer’s expect - what quality do they expect?’ .

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‘Baby boomers are more likely to purchase more than older generations who would make do with what they have.’ These comments were countered later by another comment that ‘Baby boomers aren’t all affluent, so they may not have that attitude’. That is, Baby boomers may also limit purchasing to fulfill a need, as much as do the older generations. However, the majority of respondents supported the view that Baby boomers have different consumer behaviour to preceding generations of consumers, as suggested by authors such as Morton (2008) and the (University of Oklahoma 2008).

Q.6. Situational variables

The interviewees generally found it difficult to think of responses to this question that were not controlled by the service provider. When prompted by the interviewer, they suggested personal situational factors such as weather, health and mood. It was also suggested that the amount of light was a variable that would make it easier for an older or frail person to walk safely.

Q.7. Any other influences?

None of the interviewees could think of anything extra. The main purpose of the interviews was to ensure that the preparation for the focus groups was adequate, and as items recorded from the interviews were also repeated in the focus groups, the interview data was not used for item generation. In summary, the interviews provided early convergence on their responses and while they provided the normal richness of qualitative data with small examples, they did not generate any new items to those found through the literature review. The focus groups are discussed next.

3.6

Focus groups

Focus groups can be broadly defined as a research technique that collects data through group interaction on a topic determined by the researcher (Morgan 1997). Focus groups can provide; general background information about a topic of interest, impressions of products or other objects of interest, an insight into the language used by respondents when discussing a phenomenon of interest (useful for the design of questionnaires), and stimulating new ideas and creative concepts, including the generation of hypotheses (Bickman & Rog 1998). The advantage of a focus group, as an exploratory research tool, is that it can identify important types of phenomena and answer questions about “what?” as in “What factors influence a

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consumers satisfaction?” This allows follow up quantitative research to measure frequency and magnitude of the types of phenomena (Bickman & Rog 1998). Other advantages, over interviews, as set out in Table 3.5, include the collection of large amounts of rich data (Bickman & Rog 1998; Zikmund 2003) and results that tend to be easily understood (Bickman & Rog 1998). Table 3.6 Advantages and limitations of focus groups versus personal interviews Focus Groups Advantages

Disadvantages

Data from a group of people is collected more quickly than interviewing individuals. Data from two eight person focus groups can produce as much data as ten individual interviews (Fern 1982, in Morgan 1997,p.14) Large and rich amounts of data in the respondent’s own communication can be collected. Respondents can be asked to qualify or give contingent answers to questions. Allows non-verbals to be used to interpret responses. Synergism between group members may uncover richer and more in depth data, especially for topics that are not thought through in detail or habitually perceived or surveyed from a particular viewpoint.

The moderator requires certain skills, which are not as important in a more structured interview. An unskilled moderator may bias results (e.g. by providing cues about desirable responses). The small numbers of respondents and the use of convenience sampling common to most focus groups significantly limits generalization to larger populations.

The results (verbal responses) of a focus group are usually easy to understand. Focus groups are flexible and allow the examination of a wide variety of topics in a wide variety of settings. Participants may feel more confident and able to express their own views and feelings, rather than in a more structured interview.

Dysfunction between group members or the moderator (shyness, etc.) or detrimental environmental conditions may limit the amount of data uncovered. Responses between members of an interactive group are not independent from each other, restricting generalisation of results. The open ended nature of response obtained in focus groups often makes summarization and interpretation of results difficult. Less is learned of the individuals in the group. If the participants’ involvement in the topic is only low or moderate, the researcher may only collect scattered information about the topic.

Source: Bickman & Rog, 1998; Morgan, 1997

Disadvantages of focus groups, as set out in Table 3.5, were minimised as follows: •

As with all research, focus groups require specific skills on the part of the researcher to ensure that the focus group provides a valuable contribution to the research (First row, column two of Table 3.5; Bickman & Rog 1998; Morgan 1997). In this study, the researcher had previous focus group moderation skills and experience. Further, the focus group interview protocol (Appendix E) was developed from the literature review and the research objectives, and used the guidelines suggested by Stewart and Shamdasani (1990), Krueger (1998a, 1998b) and Edmunds (1999), to ensure consistency and moderator objectivity. Focus group discussions were recorded digitally with additional notes and then transcribed and analysed using content analysis (Janis 1965, in Stewart & Shamdasani 1990, p.107; Krueger 1998) with data constructed into an overview grid (Morgan 1997) as set out in the results in Section 3.6.2.



Dysfunction between group members or the moderator, such as shyness or detrimental environmental conditions, may limit the amount of data uncovered. The group members

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appeared to be independent to each other, providing a wide range of responses, with no one person dominating the conversation. •

The open ended nature of response obtained in focus groups often makes summary and interpretation of results difficult, but as the major objective was to list factors influencing the customer post-purchase evaluations, it was relatively simple to summarise and interpret the data.

The focus group design and findings are discussed next.

3.6.1

Focus group sampling design

Three focus groups were used to explore factors or items, which could be used to establish an instrument to measure satisfaction. The sampling frame consisted of mature (43 and older), Australian consumers. Purposeful judgement sampling (Sekaran 1992) was used to sample three focus groups. A focus group was conducted in each of three locations to gather information from the forty plus group from a rural area; a metropolitan area and a regional coastal area, in an attempt to include a wide range of lifestyles and collect data from as diverse a sample as possible. Focus groups were conducted with three groups who met occasionally at their meeting places (See Table 3.6 for details) and thus were reasonably comfortable with each other and the venue. This enhanced the respondents ability to interact with each other, both verbally and nonverbally (Stewart & Shamdasani 1990).

3.6.2

Focus group results

The profile of respondents is discussed first, followed by the responses to focus group objectives. As shown in Table 3.7, the demographics of each focus groups varies; from the younger, wealthy full time working Baby boomers from a capital city in Group B, through to Group C, which was composed of a mix of Baby boomers from a rural area covering the entire range of income and sources of income. The older consumers who mostly rely on the Government pension were well represented in Focus Group A and were from a coastal sea change town. Thus, all demographics from the target population were represented in the focus groups. Table 3.7 shows a break down of the groups according to the three main age groups of the study. As these data were collected in 2007 (Stage II, the survey, was collected in 2008), the younger ten years plus the older nine years of Baby boomers (abbreviated to BB in the table) (ABS 2005) includes people aged 43 to 61 years.

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Table 3.7 Profile of focus group participants (ordered by age)

Metropolitan

Group B Work place,

Group & location

Age

Gender

Highest formal education

Average annual Income

People living on income

Main source of income

40-44

M

Uni or equiv.

40-59,000

1 adult

40-44

F

Uni or equiv.

≥60,000

1 adult

Full-time work

45-54

F

Uni or equiv.

≥60,000

2 adults

Full-time work

45-54

F

Uni or equiv.

≥60,000

1 adult +I child

Full-time work

40-44

F

Uni or equiv.

20-39,000

1adult +3 child

Part-time work

Full-time work

40-44

F

Uni or equiv.

≥60,000

3 adult+2 child

Full-time work

Member’s home

40-44

M

Tech/ Trade

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