Customer Satisfaction and Loyalty in Term Paper

  • Length: 20 pages
  • Sources: 20
  • Subject: Business
  • Type: Term Paper
  • Paper: #470179

Excerpt from Term Paper :

2 of the respondents were self-employed and 11.2% of respondent were white-collar workers with 1.2% of respondents being blue-collar workers. The following chart shows the factor analysis results with VARIMAX rotation of traveler's perceptions of hotel attributes in the study of Choi and Chu (2000).

Factor Analysis Results with VARIMAX Rotation of Traveler's Perceptions of Hotel Attributes

Source: Choi and Chu (2000)

The following chart shows a 'regression analysis results of hotel factors according to Asian and Western travellers overall satisfaction levels.

Regression Analysis Results of Hotel Factors According to Asian and Western Travelers Overall Satisfaction Levels

Source: Choi and Chu (2000)

2.3 Loyalty

2.3.1 Definition of customer loyalty

Kandampully and Suhartanto (2000) define a loyal customer as "a customer who purchases from the same service provider whenever possible, and who continues to recommend or maintain a positive attitude toward the service provider" (p. 346).

2.3.2 Loyalty dimensions

There is no easy way when clarifying a loyal customer, but it could be done by dividing customer loyalty into 3 measurements.




The first one behavioural measurement is a customer which purchase with consistence over a time of period. His constant repeat of purchase would be an indicator of loyalty. The only dilemma is that the purchase done by the client does not result in commitment to one specific brand (Bowen and Chen 2001). "For example, a traveler may stay at a hotel because it is the most convenient location. When a new hotel opens across the street, they switch because the new hotel offers better value" (Bowen and Chen, 2001, p. 213-214). So even if a customer repeats his purchase it is not guaranteed that he is committed to one specific brand.

The attitudinal measurement focus on the loyalty, commitment and engagement a customer has towards a hotel. A guest can have a preferred hotel which he/she adores and would give the hotel the best recommendations to others. The guest will not stay at this hotel even if that would be their preference since the cost was too high for their regular basis. The last composite measurement is a combination of the first two. When measuring composite loyalty it is significant to look at how often the customer buys the product, its brand loyalty, the product preference and how often they switch brands. (Bowen and Chen, 2001)

The work of Teare (1998) entitled: "Interpreting and Responding to Customer Needs" relates that three primary areas of delivery and assurance of quality customer service is:

1) Understanding customers;

2) Designing and delivering services; and 3) Assuring total quality services. (1998; p. 1)

Teare states that consumer behavior is very unpredictable and that this is due to "individual differences and the way in which people categorize purchase decisions." (1998) Teare states "The potential value of theory development in marketing is sometimes neglected and more often underestimated." (1998) Teare relates that this is attributed to a "reluctance by practitioners and applied researchers to engage in academic speculation or to extend 'intuitive' theoretical explanations." (1998; p. 2) Teare relates however that there "is much common ground and theoretical explanations can be considered valuable if they perform one or more of the following functions:

1) the means of classifying, organizing and integrating information relevant to the factual world of business;

2) a technique of thinking about marketing problems, and a perspective for practical application;

3) an analytical tool-kit to be drawn on as appropriate in the solution of marketing problems; and 4) the possibility to derive, in time, a number of principles, or even laws, of marketing behavior." (1998; p. 2)

Teare relates that the customers of a hotel "might reasonably expect to receive an array of benefits from a consumption experience." (1998; p. 2) These benefits include:

1) Meeting basic functional (or physiological) needs such as hunger, thirst, and sleep; and 2) Satisfying more complex expressive (or psychological) needs like enjoying the hotel surroundings, feeling safe, secure and relaxed; fulfilling lifestyle-related aspirations like using and appreciating luxurious facilities and selecting from an appealing choice of food and wine menus." (Teare, 1998; p. 3)

Teare relates that in the 1990s 'total quality management' (TQM) was the most often used philosophy of quality management. The key principles of TQM include:

conformance to specifications;

Do it right;

Do the right thing; and Delight the customer. (Teare, 1998; p.16)

Quality management is said to provide "an infrastructure for maintaining standards and making improvements..." (Teare, 1998; p. 16) in order to make quality management work there are "an array of techniques" which are needed which include:

customer value chain analysis;

cross-functional work flow charts;

internal customer-supplier audits; and supplier partnership audits. (Teare, 1998; p.16)

Marriott's hotel has used TQM along with the philosophy of 'whatever it takes' to satisfy customers. This has encouraged employees in the organization to ask questions and to proactively seek new and innovative methods in customer satisfaction in promotion of change and in challenging ineffective methods and thinking that is outdated. This has been accomplished through provision of service by employees that exceeds the expectations of customers, involvement of employees in decision making at all levels of the organization; and improved retention rates of employees which has been linked to communication that is more effective as well as feedback, training and empowerment. (Teare; 1998; paraphrased) Key measures are stated as:

Quarterly improvement on a rolling annual basis of controllable employee turnover which was monitored quarterly and internally;

Achievement of employee attitude survey target rating which were monitored annually and externally; and Success of quality initiatives through following external guidelines for quality management that is effective. (Teare, 1998; paraphrased)

History of prior loyalty studies

2.3.3 Principles of loyalty

The work of Kandampully and Suhartanto (2000) entitled: "Customer Loyalty in the Hotel Industry: The Role of Customer Satisfaction and Image" published in the International Journal of Contemporary Hospitality Management relates that: "Loyalty of a firm's customer has been recognized as the dominant factor in a business organization's success. This study helps us extend our understanding of the relationship between customer loyalty, customer satisfaction, and image. This is of considerable interest to both practitioners and academics in the field of hospitality management. The objective of this research is to identify the factors of image and customer satisfaction that are positively related to customer loyalty in the hotel industry. Using data collected from chain hotels in New Zealand, the findings indicate that hotel image and customer satisfaction with the performance of housekeeping, reception, food and beverage, and prices are positively correlated to customer loyalty." (Kandampully and Suhartanto, 2000)

The work of Pizam and Ellis entitled: "Customer Satisfaction and Its Measurement in Hospitality Industries" relate that satisfaction of customer has been found to be "the cheapest means of promotion." (1999) in the identification of customer satisfaction, a customer satisfaction measurement (CSM) program must "come from and be incorporated into the firm's corporate culture. In today's competitive environment on of the most important goals of corporate cultures is retaining and satisfying current and past customers. Experience shows that only customer-oriented corporations can achieve this goal. These companies focus on the needs and wants of specific target groups and then work hard to maximize satisfaction with the product or service being offered." (Pizam and Ellis, 1999) Pizam and Ellis state that there are nine theories relating to customer satisfaction which include: (1) expectancy disconfirmation; (2) assimilation or cognitive dissonance; (3) contrast; (4) assimilation contrast; (5) equity; (6) attribution; (7) comparison-level; (8) generalized negativity; and (9) value-precept. (Oh and Park, 1997; as cited in Pizam and Ellis, 1999) the WTO in 1985 related in the work of Pizam and Ellis states that customer satisfaction "is a psychological concept that involves the feeling of well-being and pleasure that results from obtaining what one hopes for and expects from an appealing product and/or service." (1999) Pizam and Ellis relate the work of Parasuraman et al. (1985, 1988, 1991) who identified five generic dimension of service quality that are required to be present in the delivery of the service for it to result in satisfaction of customers. Those five include:

Reliability - the ability to perform the promised services dependably and accurately;

Responsiveness - the willingness to help customers and provide prompt service;

Assurance - the knowledge and courtesy of employees as well as their ability to convey trust and confidence;

Empathy - the provision of caring, individualized attention to customers; and Tangibles - the appearance of physical facilities, equipment, personnel and communication materials. (Pizam and Ellis, 1999)

Within the framework of this model the conceptualization of service quality is as the "gap between customer expectations and the perception of the service provider's performance." (Pizam and Ellis, 1999) Pizam and Ellis relate the work of Naumann (1995) who made suggestion of five objectives that are the most common in customer satisfaction measures:

1) to get close to the customer - this allows one to understand "what attributes are the most important to customers [and to] find which…

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