Service Quality and Its Impact on Customer Loyalty - Research Proposal Example

SERVICE QUALITY AND ITS IMPACT ON LOYALTY: A CASE OF REGENCY TRAVELS & TOURS BY ABRAHAM S. THAZHAHOOT 0026) RAMI MANSOUR (20092242) Stenden University Qatar ©DECEMBER, 2014 Table of Contents 3.4 Qualitative method 14 3.5 Data Collection 15 3.6 Establishing Trustworthiness 15 3.9 Data Analysis 16 1.0 Introduction/Background Service Quality is considered to be the crucial root for any organization or tourism agency in the world (Hernon, & Whitman, 2001). This can be attributed to the increased complexity and heightened competitiveness in the current business environment hence a major source of competitive advantage for any tourism business enterprise or organization. To this regard, it has become exceedingly important for any organization that wishes to succeed to exploit available opportunities in a bid to manage quality through incorporating systematic processes. One key systematic process is the Total Quality Management (TQM) which ensures long-term success through customer satisfaction through improved processes, services, products and the organizational cultures of the organization (Rust, & Oliver, 1994). Another systematic process is the Continuous Quality Improvement (CQI) which aims at improving the workplace environment by placing most emphasis on productivity improvement and simplification of work (Hernon, 2010). As a matter of fact, maintaining a business no longer exists as the main priority for most organizations, experiencing growth and development has become essential for any companies or organisations that wish to achieve a sustainable future. Schneider, B., & White, S. S. (2004) and Hernon, & Whitman, (2001) postulates that Service quality is essential in improving customer care, making marketing more effective, improving efficiency in service delivery and most importantly in training and development of staff skills and professional development. Analyzing the service quality of an agency enables the organization to perform in its peak condition and produce favorable outcomes. This involves employing different systems that have been proved to be effective like quality management whose benefits can only be realized correctly applied. This is mainly based on the ability of the organization to have proper understanding of shared goals and beliefs as regards the individual roles which contribute towards achieving the overall organizational goals and vision. Consequently, it is important that we appreciate the fact that irrespectively of the size of the organization, continued success is to a large extent dependent on the quality of services offered. Kumar, & Meenakshi (2010) postulates that service quality is the gap between the customer’s expectations of a service and the customer’s perceptions of the service received. While quality may be broad in meaning, proper understanding of what quality entails especially from the strategic viewpoint is important in not only implementing, but also formulating service quality mechanisms. This has led to postulation of numerous theories with the main theory being the total quality management which mainly gives focus to the fitness of final products the services provided to customers. Total Quality Management (TQM) The Total Quality Management (TQM) refers to a group of methodologies that draw on the knowledge of the principles and the practices of not only the behavioral sciences, but also the analysis of quantitative and nonquantitative data in addition to other aspects like economies theories and analysis of organizations processes for continual process quality improvement (Paluch, 2011). Most of the principles and the processes that make TQM are outlined in quality standards like the ISO series and other quality award programs like Deming Prize and Baldrige National Quality Program (BNQP). TQM gives focus to a number of aspects which form the primary elements of TQM. These are that it is customer-focused, ensure total employee involvement, it gives focus to process, integrated system, employs strategic and systematic approach, seeks for continual improvement,. Additionally, TQM is fact-based in its decision making and is anchored in communications. This theory will prove especially important in this study as we consider how Regency Travels & Tours defines their elements and the format, core values and principles on which the organization operates and thereafter seek to determine the core values and concepts define behaviors of a high performing organization. Continuous Quality Improvement (CQI) Continuous Quality Improvement has evolved from improving the workplace environment to placing more emphasis on productivity improvement while also simplifying work. This is actually inline ISO 9001:2000 standard which requires continual quality improvement. Among the activities that seek to ensure continuous Quality Improvement include Six Sigma and Benchmarking. It is worth appreciating the fact that what makes these theories homogeneous is their emphasis on synchronization of quality into production and delivery processes of the organization and while also giving much emphasis to the incorporation of the employees in major procedures and processes of the organization which directly relate to their daily activities like process redesign. This is because the improvement of the final tourism service is mainly dependent on the commitment and understanding of the requirements of the organizations and what is expected of them in terms of offering quality services to both current and future customers. While it has always been argued that measuring quality in the tourism sector is a complex affair, it should be well understood that the industry is highly competitive making it impossible to used cost as the only yardstick for measuring the level of competitiveness. To this regard, we must appreciate the fact that quality is very important in not only ensuring sustainable tourism development, but also creating and improving jobs thus making promotion of quality in the tourism industry a priority for the different aspects of the industry operations. This is because management of quality is important as it plays a very important role while each and every organization seeks to deal with the different complexities and challenges of the hospitality industry. As a matter of fact, the success of any business to a large extent depends on the ability of the organization to use a wide range of information not only to define, but also to plan, implement and control a number of not only complex, but also independent tasks by employing the use of a finite set of data while minimizing resources. This study will therefore seek to understand how service quality effects of customer loyalty, using a case study of Regency Travel and Tours based in Qatar. The study focuses on how the various services provided by the agency influences customer loyalty and customer satisfaction. 1.2 Problem Description Despite the issues of quality being an essential element for sustainable tourism development and a main factor for job improvement and creation, the measuring quality especially in the tourism industry has proved to be complex. Various studies on Regency Travels & Tours have indicated that the organization encourages ongoing training and certification in a bid to empower and improve the skills of their employees. This I believe is aimed at improving the organization’s bottom line and enhance business processes as a result of enhanced efficiency. If the organization’s bottom line is not improved, the organization would face challenges in not only meet challenges in meeting, but also exceeding the expectations of the customers who expect high quality services to be delivered to them hence consequently ensure there is customer loyalty which forms the bedrock of any successful business. This study will therefore seek to understand how service quality impacts on customer loyalty Problem Statement To what extent does service quality influence customer loyalty at Regency Travel and Tours? 2.0 Literature Review This section will seek to give an overview of previous literature on the subject from other studies which will enable us review the study from a critical view of the previously conducted studies on the subject. The section will seek to introduce different concepts including the concepts of service quality, dimensions of service quality customer satisfaction and the correlation between customer satisfaction and service quality. The section will also introduce a theoretical framework for the study. This chapter will be organized into different areas including service quality, customer satisfaction and customer loyalty. 2.1 Service Quality It is without doubt that Service Quality is evolving into an important tool of competitive advantage especially in the tourism industry (Veldhuisen, 2011). This is in concurrence with a previous study by Morre (1987) whose findings argued that concentration on service quality leads to differentiation that enhances an organization’s competitive position whose benefits are more profound in the long run. It is evident that service quality plays a critical role in determining the level of customer satisfaction. A two dimensional model was developed by Gronroos (1984) in a bid to measure service quality who defined service quality to be the customer’s comparison between the expected services and he actual services received. Previously, another study by Mccleary and Swan (1996) had described quality services to be the perception of the difference between the expectation for the service performance before using the service and the perceptions of the customer after receiving the service. Service quality has been widely categorized into two perspectives which are the European and Americans. The Europeans perspective gives much focus to functional and technical aspects of services with organization’s image in mind by giving focus to three dimensions of service quality which involves measuring the performance of any product by considering functional quality, technical quality and corporate image. On the other hand, the American perspective gives much focus to functional quality in measuring performance of services which involves dividing the service quality into five dimensions which include responsiveness, tangibility, reliability, assurance and empathy. The first conceptualization model of service quality was presented by Gronroos (1984). He used a 2 dimensional model to study the quality of services. The first dimension was ‘technical-quality’, by which the outcome of service performance was meant. The second dimension was ‘functional-quality’, meaning subjective perceptions of how service is delivered. Functional quality reflects consumers’ perceptions of their interactions with the service providers. The model of Gronroos compares the two dimensions of service performance with the expectations of customers. Gronroos’ general conclusion was that each single customer has its own single perception of the quality of a service. While the model can be said to be general and without any methodologies of measuring technical and functional quality, the model will prove especially important for our study in developing a conceptual framework that will best represent our study. The drawbacks of the Gronroos model led into development of a new model of service quality measurement referred to as SERVQUAL model. The SERVQUAL model is an analytical tool that identifies the existing gaps in variables affecting service quality within the five dimensions namely Assurance, reliability, empathy, responsiveness and tangibility. This being a marketing study, the model will be especially important in finding the perception of service quality as we will be able to measure performance as SERVPERF model in order to find perception of service quality. We will however have to content with the model’s drawbacks which include the findings that SERVQUAL factors have proved to be inconsistent and not comprehensive for different applications. 2.2 Customer Satisfaction Lawfer, (2004) postulates that satisfied customers are a key factor in the formation of a customer’s desire to purchase future products. Nowadays, customer satisfaction is considered as the corporate level strategy and it is a source of successful entrepreneurship. Satisfaction refers to an action of fulfilled need, desire, demand or expectation with every customer who is rationale always compares the costs and benefits for any product or services while also comparing their expectations about any given product/service with the actual benefits arising ownership of the product and using a particular service (Butscher, & Butscher, (2002). Previous studies on the subject have postulated that the overall satisfaction refers to the outcome of the evaluation of the set of experiences of the customer that are linked with the specific service provider with others studies postulating that the more an organization concentrates on the expectations of the customer, the greater the customer satisfaction (Brandi, 2001; Butscher, & Butscher, 2002). To this regard, satisfaction has been widely defines as the feelings that could either be of pleasure or disappointment arising from comparison of the perceived performance of the product with respect to the expectations (Gitomer, 1998). Other studies have always used this postulate satisfaction as a function of the beliefs about fair treatment. Lastly, different studies came to a conclusion that measuring the satisfaction level continuously should be done if any organization wishes to be successful (Hayes, 2008). 2.3 Customer Loyalty Customer loyalty has been largely studied in consumer and service market context. A common used definition is given by customer loyalty pioneers who postulate that customer loyalty is not only a behavioral phenomenon, but also behavioral aspects hence loyalty could be said to the attitude of a customer (Harvard Business Review Press, 2011). The two dimensions of customer loyalty, relative attitude (high or low) and repeat patronage (high or low) will indicate four types of loyalty. A more elaborate definition of customer loyalty was given by Oliver (1999, p. 72) in his study which he described brand loyalty as, “A deeply held commitment to either rebuy or repatronize a preferred service consistently in future hence causing repetitive same-brand or same brand-set purchasing despite situational influences and marketing efforts having the potential to cause switching behavior.” Hughes, (2003) postulates that the different dimensions of service loyalty include; word-of-mouth communications which involves saying positive things about the given company to other people and making positive recommendations; purchase intention which involves considering the organization as the first choice to buy services while also doing more business with the organization in the future; price sensitivity which involves continuing to do business to a competitor that offers more attractive prices while also paying a higher price compared to the charges of the competitors for the benefits currently being received and lastly complaining behavior which involves switching a competitor in case there is a problem with the services of a given organization and complaining to other consumers and external agencies in case of a problem with the services of a given organization. Zeithami, Berry & Parasuraman (1999) postulated that if service quality relates to retention of customers at the aggregate level, as other researches has indicated, then evidence of its impact on customer’s behavioral response should be detectable. The author offers a conceptual model of the impact of service Quality on particular behaviors that signal whether customers remain with or defect from a company. Results from a multi-company empirical study examining relationship from the model concerning customer behavioral intentions show strong evidence of their being influenced by service quality (Hernon & Whitman, 2001). The authors’ discussion centers on ways the results and research approach of their study can be helpful to researchers and managers. 2.4 Conceptual Framework Figure 1: A conceptual framework From the conceptual framework, it is evident that there exists a strong explanatory power and a direct effect between service quality and satisfaction. As a matter of fact, it is evident that satisfaction is an indicator of customer loyalty. Consequently, the perception of customers towards the quality of service presents a gap since the provided quality level is always below the customer expectations. A gap could exist between the management perception of customer expectations and the expected quality, management perception of the customer expectations and service quality specifications, service quality specifications and actual service deliver, actual service deliver and external communication to customers and lastly perceived quality and expected quality. Purpose of the study The purpose of this study is to examine the impact of service quality on customer loyalty in the case of Regency & Tour through the analysis of the different methods of analyzing service quality in the hospitality industry. 3.0 Methodology 3.1 Introduction This section on research methodology is organized under the following sub headings; research design, target population, sampling techniques and sample size, research instruments, validity of the instruments, data collection procedures and data analysis techniques. 3.2 Research Design This research is an evaluative research that will hopefully determine whether the level of service quality is up to the world-class standards or not. And if not, an effective evaluation to the company that covers the gaps and weaknesses for them to improve and develop these areas. The evaluative design mainly aims at providing a useful feedback which should aid in decision-making. Consequently, the study should not fail to influence the short-term decisions while also having the ability to have influence when a delayed impact arises in case of congenial conditions. Additionally, the design should be able to influence decision-making and policy formulation for Regency Travels & Tours. 3.1 Research Objectives The objectives of the study relating to evaluating the quality of service in Regency Travels & Tour and find out the negative and positive impacts that the quality can have on the company will be to; i. To examine the influence of service quality on customer loyalty at Regency Travels & Tour ii. To identify and examine customer’s opinion on the service quality of Regency Travels & Tour. iii. To identify and examine the service quality gaps that gaps that could be existing at the Regency Travels and Tours. iv. To provide practical recommendations to overcome the service quality gaps at Regency Travels & Tours. 3.2 Research Questions i. How does service quality influence customer loyalty at Regency travels & Tours ii. What are the opinions of customers on service quality at Regency Travels and Tour? iii. What service quality gaps exist at Regency Travels & Tours? iv. What are the best practical strategies to solve the service quality gaps that exist at Regency Travels & Tour? 3.4 Qualitative method The qualitative method is generally not concerned with numbers. It involves gathering a great deal of information about a small number of people rather than a limited amount of information about a large number of people. The information collected is generally not presentable in numerical form. For purposes of this study, we will use interviews for data collection. This is because they are useful in obtaining detailed information about opinions, perceptions and opinions which is just what this study seeks to collect. Additionally, interviews achieve high response rate in addition to interviewees not being able to be influenced by others in the group. 3.5 Data Collection The main research instruments to be used to collect data will be interviews and as stated by Kothari (2003) and Cohen and Manion (1997) that for descriptive studies, this are the methods to be used in collecting data. This study will employ the use of structured interviews and semi-structured interviews. Which will be essentially, verbally administered questionnaire in which a list of predetermined questions will be asked with little or no variation and without scope for follow-up questions to responses that would require further elaboration. The semi-structures interviews will help to define the areas to be explored. The participants of the interview will be selected using clustered sampling methodology with each cluster being made up of five employees. Additionally, since we will mainly use the structured interviews, each interview will last for between thirty to forty five minutes. The responses of the interview will be recorded digitally using computers 3.6 Establishing Trustworthiness Trustworthiness in qualitative research consists of different aspects which include credibility, transferability, dependability and confirmability. To ensure credibility, the study will adopt the use of research methods that are well established in qualitative investigation. Additionally, we will develop an early familiarity with the culture of Regency Travels & Tour before embarking on the study. Consequently, random sampling and triangulation will be used to select participants and for data collection respectively. As regards to dependability, we will report the processes within the study in detail and ensure that the research design is a prototype which will ensure that future repetition of the research will yield similar results. On confirmability, a detailed methodological description will be given which will ensure that the reader is able to determine how far the data and constructs emerging from the study can be accepted. This will be achieved through audit trail and the data oriented approach. 3.9 Data Analysis Quantitative data from closed ended items in questionnaires will be analysed using descriptive statistics inform of frequency counts percentages and means. Qualitative data from interviews of open ended items of the questionnaire will be organized and interpreted in emergent themes. References Bello, O. W. (2012). Mobile Telecommunication Customer Loyalty in Nigeria: Determining factors. Munich: GRIN Verlag GmbH. Brandi, J. A. (2001). Building customer loyalty: The 21 essential elements in action. Dallas TX: Walk the Talk Co. Butscher, S. A., & Butscher, S. A. (2002). Customer loyalty programmes and clubs. Aldershot, England: Gower. Cahill, D. L. 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