Evaluating the Perceived Value of Service Evaluating the Perceived Value of Service Delivered by Taiwanese Airlines in the Delivered by Taiwanese Airlines in the

Domestic MarketDomestic Market

Jin-Ru Yen Dawna L. Rhoades Ger-Yuan Hsu

The 12th International Conference on ISO 9000 & TQM

April 9-11, 2007

12-ICIT:12-ICIT: 06-0406-04

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contentscontents

Motivation, research scope, and objectives Methodology Empirical study Conclusion

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Evolution in Marketing ConceptsEvolution in Marketing Concepts

Phases Focus

Product qualityProvide products with predefined qualities (defined by manufactures)

Sales techniqueApply sales promotion to increase revenues in short run

Customer satisfactionProvide products and services with high customer satisfaction

Perceived quality and customer value

Provide products with higher customer values than competitors

Customer value management Relate CVM to profits

MotivationMotivation

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PZB (Parasuramsan, Zeithaml, Beery) model has been applied in a lot of research relating to service quality.

Little research includes the concept of ‘value.’ Little research measures customers’ perceptions

toward both the organization of interest and its competitors.

Works in the LiteratureWorks in the LiteratureMotivationMotivation

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Taiwan Domestic Air Taiwan Domestic Air Market & Research Market & Research

ScopeScope

Routes within the main island (business traveler)

Taipei-Kaohsiung

Routes between the main islands and offshore islands (tourist and local resident)

Taipei-Kinmen

Taipei-Makung

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To apply the concept of value and measure customers’ perceptions of values delivered by different airlines that compete each other

To apply the structural equation model to investigate factors that affect customer values

To develop customer value map from the point of each airline

Research ObjectivesResearch Objectives

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Conceptual FrameworkConceptual FrameworkMethodologyMethodology

Service quality

Brand image

Perceived cost

Customer value Willingness to buy

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Structural Equation ModelStructural Equation Modelη1＝γ11ξ1＋ζ1

η2＝β21η1＋γ22ξ2＋ζ2

ξ1

ξ2

η 1

η 2

x1

x2

x3

x4

x5

y1

y2

y3

y4

y5

δ1

δ2

δ3

δ4

δ5

ε1

ε2

ε3

ε4

ε5

ζ1

ζ2

β21

γ11

γ22

λy11

λy21

λy31

λy42

λy52

λx11

λx21

λx32

λx42

λx52

y1＝λy11η1＋ε1

y2＝λy21η1＋ε2

y3＝λy31η1＋ε3

y4＝λy42η2＋ε4

y5＝λy52η2＋ε5

x1＝λx11ξ1＋δ1

x2＝λx21ξ1＋δ2

x3＝λx32ξ2＋δ3

x4＝λx42ξ2＋δ4

x5＝λx52ξ2＋δ5

MethodologyMethodology

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Questionnaire DesignQuestionnaire DesignMethodologyMethodology

Characteristics of passengers

Characteristics of trips

Perceptional questions

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Perceptional Perceptional

QuestionsQuestions

number

categorycontents

1

Service quality

Seats are comfortable.

2 Food is delicious.

3 Aircraft are new.

4 Schedule is on time.

5 Flight attendants provide needed services.

6 Ground staffs provide needed services.

7 The airline has a good record of flight safety.

8 The check-in service is efficient.

9 Flight attendants quickly respond to requested services.

10 Ground staffs quickly respond to requested services.

11 Flight attendants are courtesy and professional.

12 Ground staffs are courtesy and professional.

13 Have confidences in the flight attendants.

14 Have confidences in the ground staffs.

15 Flight schedules are convenient for your itinerary.

16 It is convenient to purchase flight tickets.

17 It is easy to change or return flight tickets.

18 The frequent flight program is attractive.

19 It is easy to obtain fare information.

20 It is easy to obtain flight schedules.

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Perceptional Perceptional

QuestionsQuestions

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Brand image

The airline is innovative.

22The airline has good reputation.

23The airline is the brand leader in domestic air market.

24

Perceived costs

The fare of the flight ticket is inexpensive.

25The waiting time in the check-in counter is short.

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Perceived value

The airline is more valuable than others.

27The service is more valuable than the cost for it.

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Exploratory analysis

Structural equation model

Customer value analysis (Bradley T. Gale, 1994)

MethodologyMethodology

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Sample Distribution by RouteSample Distribution by Route(survey conducted in April and May, 2005)(survey conducted in April and May, 2005)

Empirical studyEmpirical study

Taipei-Kaohsiung Taipei-Kinmen Taipei-Makung

airlinesnumber of

respondents (%)

airlinesnumber of

respondents (%)

airlinesnumber of

respondents (%)

Far Eastern Air

Transport 158(36.3) Far Eastern Air Transport 47(37.9) Far Eastern Air

Transport 17(17.4)

TranAsia Airways 45(10.3) TranAsia Airwa

ys 29(23.4) TranAsia Airways 43(43.4)

Uni Airways 87(20.0) Uni Airways 29(23.4) Uni Airways 38(38.9)

Mandarin Airlines 145(33.3) Mandarin

Airlines 19(15.3)

total 435(100) total 124(100) total 98(100)

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Estimation Results : Taipei-KaohsiungEstimation Results : Taipei-Kaohsiung

GFI=0.90 CFI=0.98 ECVI=1.90 NFI=0.97

Measures of brand image

0. 76( 17. 15*)

- 0. 49( - 9. 38*)

0. 51(9. 87*)

Quality of service

Perceivedcost

Brand image

Perceivedvalue

Measures of perceived value

Measures of service quality

Measures of perceived cost

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Estimation Results : Taipei-OffshoreEstimation Results : Taipei-Offshore

GFI=0.91 CFI=0.99 ECVI=2.12 NFI=0.98

Measures of brand image

0. 79( 13. 72* )

- 0. 53( - 7. 25* )

0. 51( 7. 16* )

Quality of service

Perceivedcost

Brand image

Perceivedvalue

Measures of perceived value

Measures of service quality

Measures of perceived cost

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Estimation Results (SEM): Offshore Routes Estimation Results (SEM): Offshore Routes

Path

Taipei-Kaohsiung route Taipei-offshore route

Standardized coefficient (t value)

Standardized coefficient (t value)

Brand image → perceived value(β21) 0.51 (9.87) 0.51 (7.16)

Perceived costs → perceived value(γ2

2)-0.49(-9.38) -0.53(-7.25)

Service quality → brand image(γ11) 0.76 (17.15) 0.79 (13.72)

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Customer Value Analysis (Taipei-Kaohsiung) Customer Value Analysis (Taipei-Kaohsiung)

Items

Airlines

F T U M

Relative value of brand image

1.000 0.993 0.979 0.951

Relative value of perceived cost

1.000 0.954 1.019 0.898

Relative value of perceived customer

value1.000 1.040 0.961 1.060

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Customer Value Analysis (Taipei-Kinmen)Customer Value Analysis (Taipei-Kinmen)

Items

Airlines

F T U M

Relative value of brand image

1.000 1.013 0.990 0.926

Relative value of perceived cost

1.000 1.053 1.038 1.086

Relative value of perceived customer

value1.000 0.963 0.954 0.853

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Customer Value Analysis (Taipei-Makung)Customer Value Analysis (Taipei-Makung)

Items

Airlines

F T U

Relative value of brand image

1.000 0.984 1.016

Relative value of perceived cost

1.000 0.846 0.964

Relative value of perceived customer

value1.000 1.165 1.044

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Brand image and perceived price

have equal influence on perceived customer value.

The key factor in customer value was low perceived costs.

Premium branding effects were not observed.

ConclusionsConclusions

Questions and CommentsQuestions and Comments