Chapter 2 Literature Review

2.1 Definition of Service A service is the intangible equivalent of an economic good. Service provision is often an economic activity where the buyer does not generally, except by exclusive contract, obtain exclusive ownership of the thing purchased. The benefits of such a service, if priced, are held to be self-evident in the buyers willingness to pay for it. Public services are those societies as a whole pays for through taxes and other means. By composing and orchestrating the appropriate level of resources, skill, ingenuity, and experience for effecting specific benefits for service consumers, service providers participate in an economy without the restrictions of carrying stock (inventory) or the need to concern themselves with bulky raw materials. On the other hand, their investment in expertise does require consistent service marketing and upgrading in the face of competition which has equally few physical restrictions. Many so-called services, however, require large physical structures and equipment, and consume large amounts of resources, such as transportation services and military. The generic clear-cut and complete, concise and consistent definition of the service term reads as follows: A service is a set of one time consumable and perishable benefits (i) delivered from the accountable service provider, mostly in close coactions with his internal and external service suppliers (ii) effectuated by distinct functions of technical systems and by distinct activities of individuals, respectively (iii) commissioned according to the needs of his service consumers by the service customer from the accountable service provider (iv) rendered individually to an authorized service consumer at his/her dedicated trigger (v) consumed and utilized by the triggering service consumer for executing upcoming business activity or private activity. his/her

2.2 Service Characteristics

Services can be paraphrased in terms of their generic key characteristics. (1) Intangibility. Services are intangible and insubstantial: they cannot be touched, gripped, handled, looked at, smelled, tasted or heard. Thus, there is neither potential nor need for transport, storage or stocking of services. Furthermore, a service cannot be resold or owned by somebody, neither can it be turned over from the service provider to the service consumer nor returned from the service consumer to the service provider. Solely, the service delivery can be commissioned to a service provider who must generate and render the service at the distinct request of an authorized service consumer. (2) Services are perishable in two regards: (i) The service relevant resources, process and systems are assigned for service delivery during a definite period in time. If the designated or scheduled service consumer does not request and consumer the service during this period, the service cannot be performed for him. From the perspective of the service provider, this is a lost business opportunity as he cannot charge any service delivery; potentially, he can assign the resources, processes and systems to another service consumer who requests a service. Examples: The hair dresser serves another client when the scheduled starting time or time slot is over. An empty seat on a plane never can be utilized and charged after departure. (ii) When the service has been completely rendered to the requesting service consumer, this particular service irreversibly vanishes as it has been consumed by the service consumer. Example: the passenger has been transported to the destination and cannot be transported again to this location at this point in time. (3) Inseparability: The service provider is indispensable for service delivery as he must promptly generate and render the service to the requesting service consumer. In many cases, the service delivery is executed automatically but the service provider must preparatorily assign resources and systems and actively keep up appropriate service delivery readiness and capabilities. Additionally, the service consumer is inseparable from service delivery because he is involved in it from requesting it up to consuming the rendered benefits. Examples: The service consumer must sit in the hair dressers shop & chair or in the plane & seat: correspondi ngly, the hair dresser or the pilot must be in the same shop or plane, respectively, for delivering the service. (4) Simultaneity: Services are rendered and consumed during the same period of time. As soon as the service consumer has requested the service (delivery), the particular service must be

generated from scratch without any delay and friction and the service consumer instantaneously consumes the rendered benefits for executing his upcoming activity or task. (5) Variability: Each service is unique. It is one-time generated, rendered and consumed and can never be exactly repeated as the point in time, location, circumstances, conditions, current configurations and/or assigned resources are different for the next delivery, even if the same service consumer requests the same service. Many services are regarded as heterogeneous or lacking homogeneity and are typically modified for each service consumer or each new situation. Example: The taxi service which transports the service consumer from his home to the opera is different from the taxi service which transports the same service consumer from the opera to his home another point in time, the other direction, may be another route, probably another taxi driver and cab. Each of these characteristics is retractable per se and their inevitable coincidence complicates the consistent service conception and makes service delivery a challenge in each and every case. Proper service marketing requires creative visualization to efficiency evoke a concrete image in the service consumers mind. From the service consumers point of view, these characteristics make it difficult, or even impossible, to evaluate or compare services prior to experiencing the service delivery. Mass generation and delivery of services is very difficult. This can be as a problem of inconsistent service quality. Both inputs and outputs to the processes involved providing services are highly variable, as are the relationships between these processes, making it difficult to maintain consistent service quality. For many services there is labor intensity as services usually involve considerable human activity, rather than a precisely determined process; exceptions include utilities. Human resource management is important. The human factor is often the key success factor in service economies. It is difficult to achieve economies of scale or gain dominant market share. There are demand fluctuations and it can be difficult to forecast demand. Demand can be reason, time of day, business cycle, etc. There is consumer involvement as most service provision requires a high degree of interaction between service consumer and service provider. There is a consumer-based relationship based on creating long-term business relationships. Accounts, attorneys, and financial advisers maintain long-term relationship with their clients for decades. These repeat consumers refer friends and family, helping to create a client-based relationship.

2.3 Service Specification Any service can be clearly and completely, consistently and concisely specified by means of following 12 standard attributes which conform to the MECE principle (Mutually Exclusive, Collectively Exhaustive). (1) Service Consumer Benefits (2) Service-specific Functional Parameters (3) Service Delivery Point (4) Service Consumer Count (5) Service Delivering Readiness Times (6) Service Consumer Support Times (7) Service Consumer Support Languages (8) Service Fulfillment Target (9) Service Impairment Duration per Incident (10) Service Delivering Duration (11) Service Delivery Unit (12) Service Delivering Price The meaning and content of these attributes are: (1) Service consumer benefits describe the (set of) benefits which are triggerable, consumable and effectively utilizable for any authorized service consumer and which are rendered to him as soon as he triggers one service. The description of these benefits must be phrased in the terms and wording of the intended service consumers. (2) Service-specific functional parameters specify the functional parameters which are essential and unique to the respective service and which describe the most important dimension(s) of the servicescape, the service output or the service outcome, e.g., maximum emailbox capacity per registered and authorized e-mailing service consumer. (3) Service delivery point describes the physical location and/or logical interface where the benefits of the service are triggered from and rendered to the authorized service consumer. At this point and/or interface, the preparedness for service delivery readiness can be assessed as well as the effective delivery of each triggered service can be monitored and controlled.

(4) Service consumer count specifics the number of intended, clearly identified, explicitly named, definitely registered and authorized service consumers which shall be and/or are allowed and enabled to trigger and consume the commissioned service for executing and/or supporting their business tasks or private activities. (5) Service delivering readiness times specify the distinct agreed times of every day of the week when (i) the described service consumer benefits are (a) triggerable for the authorized service consumers at the defined service delivery point and (b) consumable and utilizable for the authorized service consumers at the respective agree service level, (ii) al the required service contributions are aggregated to the triggered service, and (iii) the specified service benefits are completely and terminally rendered to any authorized triggering service consumer without any delay or friction. (6) Service consumer support times specify the determined and agreed times of every day of the week when the triggering and consumption of commissioned services is supported by the service desk team for all identified, registered and authorized service consumers within the service customers organizational unit or area. The service desk is/shall be the so called the Single Point of Contact (SPoC) for any authorized service consumer inquiry regarding the commissioned, triggered and/or rendered services, particularly in the event of service denial, i.e., an incident. During the defined service consumer support times, the service desk can be reached by phone, e-mail, web-based entries, and fax, respectively. The time data are specified in 24 hour format per local working day and local time, referring to the location of the intended service consumers. (7) Service consumer support languages specify the national languages which are spoken by the service desk team(s) to the service consumers calling them. (8) Service fulfillment target specifies the service providers promise of effectively and seamlessly deliver the specified benefits to any authorized service consumer triggering a service within the specified service delivery readiness times. It is expressed as the promised minimum ratio of the count of successful individual service deliveries related to the count of triggered service deliveries. The effective service fulfillment ratio can be measured and calculated per single service consumer or per service consumer group and may be referred to different time periods (work hour, work day, calendar week, work month, etc.).

(9) Service impairment duration per incident specifies the maximum allowable elapsing time between (i) the first occurrence of service impairment, i.e., service quality degradation, service delivery disruption or service denial, whilst the service consumer consumes and utilizes the requested service, (ii) the full resumption and complete execution of the service delivery to the content of the affected service consumer. (10) Service delivering duration specifies the promised and agreed maximum allowable period of time for effectively rendering all specified service consumer benefits to the triggering service consumer at his currently chosen service delivery point. (11) Service delivery unit specifies the basic portion for rendering the defined service consumer benefits to the triggering service consumer. The service delivery unit is the reference and mapping object for the Service Delivering Price, for all service costs as well as for charging and billing the consumed service amounts to the service customer who has commissioned the service delivery. (12) Service delivering price specifies the amount of money the commissioning service customer has to pay for a distinct service delivery unit or for a distinct amount of service delivery units. Normally, the service delivering price comprises two portions: (i) a fixed basic price portion for basic efforts and resources which provide accessibility and usability of the service delivery functions, i.e., service access price, and (ii) a price portion covering the service consumption based on (a) fixed flat rate price per authorized service consumer and reference period for an unlimited amount of consumed services, (b) staged prices per authorized service consumer and reference period for staged amounts of consumed services, and (c) fixed price single consumed service delivering unit.

2.4 Service Delivery The delivery of a service typically involves six factors: (1) The accountable service provider and his service suppliers (e.g., the people) (2) Equipment used to provide the service (e.g., vehicles, cash registers, technical systems, computers systems)

(3) The physical facilities (e.g., buildings, parking, waiting rooms) (4) The requesting service consumer (5) Other customers at the service delivery location (6) Customer contact The service encounter is defined as all activities involved in the service delivery process. Some service managers use the term moment of truth to indicate that defining point in a specific service encounter where interactions are most intense. Many business theorists view service provision as a performance or act (sometimes humorously referred to as dramalurgy, perhaps in references to dramaturgy). The location of the service delivery is referred to as the stage and the objects that facilitate the service process are called props. A script is a sequence of behaviors followed by all those involved, including the client(s). Some service dramas are tightly scripted, other are more ad lib. Role congruence occurs when each actor follows a script that harmonizes with the roles played by the other actors. In service industries, especially health care, dispute resolution, and social services, a popular concept is the idea of the caseload, which refers to the total number of patients, clients litigants, or claimants that a given employee is presently responsible for. On a daily basis, in all those fields, employees must balance the needs of any individual case against the needs of all other current cases as well as their own personal needs. The dichotomy between physical goods and intangible services should not be given too much credence. These are not discrete categories. Most business theorists see a continuum with pure service on one terminal point and pure commodity good on the other terminal point. Most products fall between these two extremes. For example, a restaurant provides a physical good (the food), but also provides services in the form of ambience, the setting and clearing of table, etc. And although some utilities actually deliver physical goods like water utilities which actually deliver water utilities are usually treated as services. In a narrow sense, service refers to quality of customer service: the measured appropriateness of assistance and support provided to a customer. This particular usage occurs frequently in retailing. The following is an incomplete list of service industries, grouped into rough sectors. Parenthetical notations indicate how specific occupations and organizations can be regarded as service industries to the extent they provide an intangible service, as opposed to a tangible good. (1) Business function (that apply to all organizations in general) (i) consulting

(ii) customer service (iii) human resources administrators (providing services like ensuring that employees are paid accurately) (2) Childcare (3) Cleaning, repair and maintenance services (i) janitors (who provide cleaning services) (ii) gardeners (iii) mechanics (4) Construction (i) carpentry (ii) electricians (offering the service of making wiring work properly) (iii) plumbing (5) death care (i) coroners (who provide the service of identifying cadavers and determining time and cause of death) (ii) funeral homes (who prepare corpses for public display, cremation or burial) (6) dispute resolution and prevention services (i) arbitration (ii) courts of law (who perform the service of dispute resolution backed by the power of the state) (iii) diplomacy (iv) incarceration (provides the service of keeping criminals out of society) (v) law enforcement (provides the service of identifying and apprehending criminals) (vi) lawyers (who perform the services of advocacy and decision-making in many dispute resolution and prevention processes) (vii) mediation (ix) military (performs the service of protecting states in disputes with other states)

(x) negotiation (not really a service unless someone is negotiation on behalf of another) (7) education (institutions offering the services of teaching and access to information) (i) library (ii) museum (iii) school (8) entertainment (when provided live or within a highly specialized facility) (i) gambling (ii) movie theatres (providing the service of showing a movie on a big screen) (iii) performing arts productions (iv) sexual services (v) sport (vi) television (9) fabric care (i) dry cleaning (ii) self-service laundry (offering the service of automated fabric cleaning) (10) financial services (i) accountancy (ii) banks and building societies (offering lending services and safekeeping of money and valuables) (iii) real estate (iv) stock brokerages (v) tax preparation (11) food service industry (12) personal grooming (i) hairdressing (ii) manicurist/pedicurist (iii) body hair removal (iv) dental hygienist

(13) health care (all health care professions provide services) (14) hospitality industry (15) information services (i) data processing (ii) database services (iii) interpreting (iv) translation (16) risk management (i) insurance (ii) security (17) Social services (i) social work (18) transport (19) public utility (i) electric power (ii) natural gas (iii) telecommunications (iv) waste management (v) water industry

2.5 Service Quality Research on service quality is now of major concern to industries such as the tourism/hospitality industry, which are basically people-oriented. There is widespread agreement in the general service management literature that the provision of service quality is concerned with generating customer satisfaction. Grnroos (1984), Parasuraman, Zeithaml & Berry (1985), and Johnston (1988) define service quality in terms of customer satisfaction, that is, the degree of fit between customers expectations and perceptions of service. Other authors attempt to deal more specifically with the issue of service quality measurement. Smith (1982)

argues in support of the proposition that service quality is difficult to quantify, and identifies measures used in manufacturing firms. Voss (1985) proposed that it is the intangible aspects of the service package which are most difficult to measure, and concludes that as a result service quality tends to be ignored. Johnston & Morris (1985) argue that service organizations tend to measure only what is easy to measure and quantify, and shy away from the use of soft, qualitative measures. Kaplan (1983) argues similarly but for manufacturing businesses, that there is a tendency to measure only what is easily quantifiable (such as financial performance and productivity) even though other aspects such as quality, innovation and flexibility may be crucial to a companys competitive success. In industries such as tourism/hospitality however, they deal with issues that are less quantifiable than manufacturing. A variety of authors agree that measures of service quality may either be hard or soft. Hard measures are those which are said to be quantifiable or objective; for example, computer downtime or the proportion of telephone calls answered. Soft measures are those which are more likely to be qualitative, judgmental, and subjective and based on perceptual data, for example, customers satisfaction with speed of service or managers assessment of staff attitude towards customers. Soft measures of service quality are particularly relevant to the measurement of the quality of intangible aspects of service. Silvestro et al. (1990) posit that information on service quality can be gathered from internal and/or external data sources. Internal data are those generated by the staff or management inside an organization, enabling the organization to ensure that it is meeting its own internal specification of service quality. However, internal measurement of service quality alone may be of little value if an organization has no means of assessing whether or not the service levels set internally are generating customer satisfaction. Silvestro et al. (1990) point out that customers also inevitably assess the quality of the service during and after its provision. Their assessments result in a level of customer satisfaction. Thus service organizations may measure service quality not only on the basis of their own internal data but also by using external data, by monitoring customer satisfaction. Whilst the measurement of customer service perceptions are now widespread in tourism/hospitality, an understanding of managements perception of guest expectations, as well as staff responses to such management expectations, are yet to be explored. Hochschild (1983) has described the work performed by service providers as emotional labor that requires them to subsume their own feelings to the goals of their employer and the immediate needs of a paying

customer. Indeed, she described service encounters as the commercialization of human feeling, and warns of the individual and social effects that may engender. Klaus (1985) has described service encounters as interlocking behavior composed of task and ceremonial elements, in which the former are the economic exchange elements and the latter the psychological need satisfaction that provider and customer provide each other. Surprenant et al. (1983) apply social interdependence theory to describe the service encounter, along with McCallum & Harrison (1985). Interdependence theory holds that the behaviors of each party have an effect on the outcomes received by the other. It further suggests a framework for analyzing the balance of dependence or interdependence that shapes the nature and content of the interaction. Key to the issue of dependence and interdependence is the possession of market-place power and the strategy of the organization, as noted by Czepiel (1992). The service quality construct is mostly conceptualized in the context of service marketing literature (Lee, Lee & Yoo, 2000). Therefore, it deals with the concept of perceived service quality. According to Zeithaml, Parasuraman & Berry (1990), perceived service quality is the extent to which a firm successfully serves the purpose of customers. Customers determine the perceived or cognitive value of service based on their experience with the service delivered. Ghobadian, Speller & Jones (1994) stated that customers expectations, service delivery process and service outcome have an impact on perceived service quality. Yoo & Park (2007) found that employees, as an integral part of the service process, are a critical element in enhancing perceived service quality. Furthermore, Edvardsson (2005) pointed out that service quality perceptions are formed during the production, delivery and consumption process. The author concluded that customers favorable and unfavorable experience, as well as their positive and negative emotions may have an important impact on perceived service quality. Similarly, ONeill & Palmer (2003) have reported that customers perceptions of service quality may, to a large extent, be influenced by the degree of their prior experience with a particular service. In the hospitality industry, several studies have examined hotel attributes that guests may find important when evaluating the performed service quality. Literature suggests that cleanliness (Atkinson 1988; Knutson 1988; Gundersen, Heide & Olsson 1996), security and safety (Atkinson, 1988; Knutson, 1988; Gundersen et al. 1996), employees empathy and competence (Atkinson 1988; Knutson 1988; Barsky & Labagh 1992; Gundersen, Heide & Olsson 1996; Choi & Chu 2001; Markovic 2004), convenient location (Knutson 1988; Barsky &

Labagh 1992), value for money (Atkinson 1988; Gundersen, Heide & Olsson 1996; Choi & Chu 2001) and physical facilities (Choi & Chu 2001; Markovic 2004) are attributes that hotel guests perceive as being important. It should be noted that according to some authors, perceived service quality has been accepted as an antecedent of customer satisfaction (Churchill & Suprenant 1982; Oliver 1997). What is more, Rowley (1998) argued that perceived service quality is an attitude related to, but not the same, as satisfaction. It is evident that the relationship between these two concepts is complex and that they have a causal ordering.

2.6 Quality in the Hospitality Services Quality is an important topic in management and marketing research but there is no agreed definition of the word among scholars and practitioners. Faced with the great number of points of view, Garvin (1988) describes several categories of the way in which the concept can be defined. A first perspective is that high quality is identified by customers with the help of their senses, for example by looking to the furniture design in a hotel room, by testing the food, by perceiving the atmosphere of a restaurant. A more technical point of view is represented by definitions based on `superior product/service attributes`, or those underlining `conformance to specification` which involves carrying out operations with zero defects. Finally, other definitions are customer-oriented. So, it is recognized that the customer decides what quality means based on the fitness for use from his/her perspective, or on the basis of the best value received for his/her money. Service quality is considered the life of hotel (Min & Min, 1996) and core of service management (Chen, 2008). Service quality is related with customer satisfaction (Shi & Su, 2007) and customer satisfaction is associated with customers revisit intention (Han, Back & Barrett, 2009). If an effective image is portrayed to customers, it will create competitive advantage for hotel (Ryu, Han & Kim, 2008). As a result of service development process three concept of service is composed and these three steps are service process, system and service resourcesstructure (Edvardsson, 1997). Marketing is the main factor that only focused on the customer satisfaction (Flint, Woodruff & Gardial 1997; Peter & Olson 1996). Customer satisfaction plays an important role in financial performance of hotel (Nilssom, Johnson & Gustafsson, 2001). In hotel industry, as service has direct interaction with customers, that is why customer satisfaction

can be a replication of service quality in hotels (Shi & Su, 2007). There are some factors that have significant role in measuring customer association with hotel: age, gender, income and culture (Ryu, Han & Kim, 2008). Hotel performance is directly allied to service quality improvement. There is a significant relationship exist between improvement in service quality and hotel performance change (Narangajavana & Hu, 2008). High level development tools are used for the satisfaction of multiple users about service and quality (Hope & Wild, 1994). The key problem lies with hotel manager is to retain and fascinate customers (Shi & Su, 2007). Customers revisit intention and emotions are mediated by customer satisfaction (Han, Back & Barrett, 2009). Customer satisfaction plays a role of mediator in perceived value of hotel and behavioral intention (Ryu, Han & Kim, 2008). Both public and private sectors have reviewed the service quality and to fulfill their demand, customer-focused approach was highly practiced (Pyon, Lee & Park, 2009). The managers of hotels are key element of decision makers. It is necessary to scrutinize the perceptions of hotel managers about hotel ranking and they should correlate it with improving service quality and performance (Narangajavana & Hu, 2008). Hotel managers should focus on keeping the number of service failure low and observe customer complaints constantly (Min & Min, 1996). For improving service quality, four aspects were identified: (1) service delivery, (2) hotel employees, (3) guest amenities and surroundings, and (4) prestige (Narangajavana & Hu, 2008). There are many aspects of service performance and quality, some of them are: (1) Service quality of reception hall, guestroom and restaurant, (2) Technique of employee, (3) Decoration and atmosphere of hall, guestroom and restaurant (Han, Back & Barrett, 2009; Ryu, Han & Kim, 2008), (4) Safety of room and courtesy of attendants, and (5) Savor and variation of food (Han, Back & Barrett, 2009; Shi & Su, 2007). For providing good quality service, employee management is a critical issue for organizations. It affects business results directly (Nilssom, Johnson, & Gustafsson, 2001). Quality service values customers' satisfaction and is necessary step for a competitive advantage (Berry, Parasuraman, & Zeithaml; Adsit & Hater; Vanetti & Veale, 1993) and service quality is affirmative to please the attitude of consumers toward the noticeable utility value in the future (Lin, 2007). In every organization service and quality plays a vital role for every customers (Brombacher, 2000). Customer is the main person who defines the quality (Berry, Parasuraman, & Zeithaml; Adsit & Hater; Vanetti & Veale, 1993). For providing good quality service to customers, it is necessary for hotel managers to understand the expectations of its customers (Shi & Su, 2007; Nilssom.

Johnson & Gustafsson, 2001) and then develop such programs that can address issues of customers (Narangajavana & Hu, 2008) and bring improvement in service quality (Chen, 2008). Expectation is based on the customer's demands and values but company's image or status in the market also plays an important role (Edvardsson, 1997). To identify and enumerate what drives what will track towards quality improvement, reduction in cost and ultimately customer satisfaction (Buckley & Chillarege, 1995). To measure customer behavioral intention: hotel image, value and customer satisfaction should be included (Ryu, Han & Kim, 2008). Service is able to collect vital information about the behavior of products in dealings with customers (Petkova, Sander & Brombacher, 2000). Service quality has an encouraging effect on the attitude of consumers toward the professed transaction value in the future (Lin, 2007). Customers' behavioral intention shows great interest in being influenced by service quality (Zeithaml, Berry & Parasuraman, 1996). Service quality improvement with changing requirements of customers can be done with team work (Chen, 2008). When customers face any problem related to service, like unclean room, uncomfortable room temperature and non-functioning phone lines, then these problems must be resolved within now time (Min & Min, 1996). Reception hall is considered the most important source of customer satisfaction (Shi & Su, 2007). Program to progress service quality should comprise issues of customer dissection, service provided, culture of hotel, communication with customers, recruitment and training of service employees, and their appraisal system. To bring improvement in service quality, there is a need to emphasis on tangible and intangible assets (Narangajavana & Hu, 2008). For hotel managers, it is not necessary to just get room related revenue, but revenue can be generated by improving service related facilities like better service production, error free delivery, upgrading guest facilities and augmenting prestige of hotel (Narangajavana & Hu, 2008). Hotel employees generally perceive that only two things are important in service quality; one is cleanliness of room and other is courtesy of employees (Shi & Su, 2007), but other aspects that make a standard of hospitality and important for service quality improvement are atmospheric impression and decoration of hotel (Shi & Su, 2007) along with previous two aspects (Min & Min, 1996). Customers demand and expectations continue to change according to market that is why hotel managers must timely know those expectations and improve their service quality accordingly (Chen, 2008). Besides this, different customers have different perception of service quality, so there is a need to cater this problem also (Shi & Su, 2007). Customers expectation about quality and for inexpensive

products is higher (Petkova, Sander & Brombacher 2000). Service quality should be sensitive to changes in room like temperature, comfort and atmosphere, but insensitive to changes in room size and fixtures (Min & Min, 1996). Three things are included in service standardization: (1) service quality standardization, (2) service method standardization, and (3) service process proceeding (Chen, 2008). In a development methodology there are four stages which include requirements analysis, knowledge acquisition, system development, and system assessment. When service quality is improved, then it will lead to customer satisfaction that will result in good business results (Johnson & Gustafsson, 2001). There is a difference of culture among countries that have different quality expectations. The higher the difference in culture is, the higher the technical quality will be in performance than that of functional quality, while the lower the difference in culture is, the higher the functional quality will be in performance than that of technical quality (Lin, 2007). Research about service and quality shows that many companies are to increase the impact of service quality on profits (Zeithaml, Berry & Parasuraman 1996). The service company introduces a service concept and this concept contains attractive added-value which is suitable to the customer's needs. Resources is needed for the service process that must provided by the service system (Edvardsson, 1997). Hotels that recognize high pressure in the competitive environment tend to adopt standardized management systems more willingly than hotels that fail to extricate such pressure (Alonso-Almeida & Rodrguez-Antn, 2011).

2.7 Customer Satisfaction and Loyalty Customer satisfaction is one of the most popular phrases in business, with over 72 million links on the Internet and also a very broad subject that is interpreted in many ways in business practices and in academic literature. The word satisfaction seems to derive from Latin words satis (enough) and facere (to do or make) (Oliver, 1997). Expectation is an important part of the satisfaction process and is the anticipation of future consequences based on prior experience, current circumstances, or other sources of information. Expectation can be many things varying from wishes to hopes (Oliver, 1997; Bolton & Drew, 1991). Katona (1975) notes that satisfaction depends not only on the quality of the product, but also what the person whose satisfaction is studied expects from the product. Mihelis et al. (2001) argue that customer satisfaction is a dynamic parameter of the business organization and

is affected by the changes in customers preferences and expectations. Similarly, Anderson and Sullivan (1993) suggest that customer satisfaction is the overall or global judgment regarding the extent to which product or service performance matches expectations. According to Oliver (1997), satisfaction is the consumer fulfillment response. It is a judgment that a product or service feature, or product or service itself, provided (or is providing) a pleasurable level of consumption related fulfillment, including levels of under- or over fulfillment. Consumer Satisfaction is also defined as a post-consumption evaluation that a chosen alternative at least meets or exceeds the expectations. Dissatisfaction, on the other hand, is the outcome of negatively confirmed expectations (Engel, Blackwell, & Miniard, 1990). Giese and Cote (2000) identify three common elements in different consumer satisfaction definitions: (1) consumer satisfaction is a response (emotional or cognitive); (2) the response pertains to a particular focus (expectations, product, consumption experience, etc.); and (3) the response occurs at a particular time (after consumption, after choice, based on accumulated experience, etc.). Loyalty is another concept that is easy to discuss in everyday conversation , but becomes more obtuse when it is analyzed for meaning (Oliver, 1997). Oliver (1997) suggests that customer loyalty is a deeply held commitment to re-buy or re-patronize a preferred product or service consistently in the future, despite situational influences and marketing efforts having the potential to cause switching behavior. Jones and Sassers (1995) argue that there are two types of loyalty: true long-term loyalty and false loyalty in which customers seem to be loyal until certain benefits are exhausted like using all frequent-flier miles. According to Reichheld (2001) loyalty is not bribery or hostage taking. It is about earning peoples enthusiastic commitment to a relationship that will improve their lives over the long term. After all loyalty is about the future, and not the past. As widely agreed (e.g., Reichheld, 1993, 1996, 2001; Oliver, 1997; Heskett, Sasser, & Schlesinger, 1997) there are many positive effects of customer loyalty such as revenue growth due to repurchases as well as referrals, cost decline due to lower acquisition costs and serving experienced customers, and increase in employee retention due to job satisfaction and pride.

2.8 Selected Elements in Customer Satisfaction

To determine the elements of customer satisfaction, among many others, the following resources are used. These sources are actually a combination of different angles like services marketing (Zeithaml & Bitner, 2003), emotion marketing (Robinette, Brand, & Lenz, 2001), strategic marketing (Rust, Zeithaml, & Lemon, 2000), and (marketing) strategy (Treacy & Wiersema, 1995). Zeithaml and Bitner (2003) in Services Marketing identify three major dimensions of customer satisfaction: Price, product quality, and service quality. Service quality has also three sub dimensions: interaction quality, outcome quality, and physical environment quality. Also these sub dimensions are analyzed by five other dimensions known as SERVQUAL: Responsiveness, assurance, empathy, tangibles, and reliability (Parasuraman, Zeithaml, & Berry, 1988; Zeithaml & Bitner, 2003).

Table 2.1 Dimensions of SERVQUAL Responsiveness Assurance Willingness to help customers and provide prompt service. Employees knowledge and courtesy and their ability to inspire trust and confidence. Empathy Tangibles Caring, individualized attention given to customers. Appearance of Physical facilities, equipment, personnel, and written materials. Reliability Ability to perform the promised service dependably and accurately.

Robinette, Brand and Lenz (2001) in Emotion Marketing identify five customer satisfaction and value dimensions. In their definitions the rational value dimensions are product and money; and the emotional value dimensions are equity (trust), experience (relationship), and energy (convenience). Rust, Zeithaml and Lemon (2000) in Driving Customer Equity define customer equity in three areas. Firstly, value equity is the customers objective evaluation of the firms offerings, and includes quality, price, and convenience. Secondly, brand equity is the customers subjective view of the firm and its offerings, and includes awareness, attitudes, and perceptions toward the brand. Finally, retention equity or relationship equity is the customers view of the strength of the relationship between the customer and the firm, and it includes

loyalty, special recognition, affinity, community, and knowledge programs. The focus of the firm, however, may vary among industries. For example in telephone service industry the value equity may be the key driver, in consumer package goods the brand equity, and in banking the retention equity. Treacy and Wiersema (1995) in The Discipline of Market Leaders set three value disciplines: (1) Operational excellence (best total cost): providing customers with reliable products or services at competitive prices, delivered with minimal difficulty or inconvenience; examples: McDonalds, Wal-Mart. (2) Product leadership (best product): providing products that continually redefine the state-of-the-art; examples: Starbucks, Intel. And (3) Customer intimacy (best total solution): selling the customer a total solution, not just a product or service, by building bonds with customers like those between good neighbors; examples: Ritz Carlton, Airborne Express. Treacy and Wiersema (1995) designate the following dimensions that matter for customers: Price, product quality, product features, service convenience, service reliability, expert advice, and support services. As the sources analyzed above use a different combination of satisfaction elements/dimensions, the following six items are selected (judgmentally): Price, Product, Convenience, Service Quality, Service Treatment, and Positive feelings towards the firm or brand. These items are not only common denominators of the four main sources, but also frequently used, albeit with different combinations, in many sources as well as being widely used in common customer satisfaction questionnaires. Price or money or cost item is used by all the sources analyzed above and by many others (Oliver, 1997; Rust, Zeithaml, & Lemon, 2000; Treacy & Wiersema, 1995; Robinette, Brand, & Lenz, 2001). Price also covers the attractiveness of interest rates in banking or fees paid for services. Product is another item that is used by all sources analyzed (Rust, Zeithaml, & Lemon, 2000; Treacy & Wiersema, 1995; Robinette, Brand, & Lenz, 2001). Product also covers the features or conditions of service products. Convenience (accessibility and ease of being customer) is used in Rust, Zeithaml and Lemon (2000), Robinette, Brand and Lenz (2001), Treacy and Wiersema (1995), and in Parasuraman, Zeithaml and Berrys (1988) service quality.

Service Quality (reliable, accurate, and timely services) is one of the five dimensions used in SERVQUAL (Parasuraman, Zeithaml & Berry, 1988) and is also regarded as an important attribute of customer satisfaction (Oliver, 1997; Zeithaml & Bitner, 2003). Treacy and Wiersema (1995) also use this item. According to Bitner, Booms and Mohr (1994) service reliability is considered as the single most important dimension used by consumers to judge service quality. Service Treatment (the way firm treats customers) is used as empathy and responsiveness in SERVQUAL, as experience in Robinette, Brand and Lenz (2001), and as customer intimacy in Treacy and Wiersema (1995). Also Pine and Gilmore (1999), Freemantle (1998), Barlow and Maul (2000) describe similar concepts under the experience framework. As a recent survey among 1021 banking customers in 6 European countries indicates 53% of the respondents believe that the image and character of the bank primarily resides in its telephone manner (Efma, 2005). Similarly, a Belgian GSM network provider survey reveals that friendliness is still the most important customer satisfier. Positive Emotions towards the firm is analyzed as brand attitudes by Rust, Zeithaml and Lemon (2000), as trust by Robinette, Brand and Lenz (2001), and as customer intimacy in Treacy and Wiersema (1995). Parasuraman, Zeithaml and Berry (1988) cover similar issues under the empathy dimension in SERVQUAL. Moreover, Oliver (1997) and Freemantle (1998) also underline the importance of this dimension. Jones and Farquhar (2003) relate customer attitudes towards a company with customer loyalty. Gobe (2001) argues that the biggest misconception in branding strategies is the belief that branding is about market share when it is really always about mind and emotions share.

2.9 Cognitive vs. Emotional Dimensions in Customer Satisfaction and Loyalty Oliver (1997) suggests that the overly simplified question Are you satisfied? does not tap into the complexity of the satisfaction response. Because satisfaction can mean a variety of things, researchers are advised to determine the cognitive (processing states) and affective (the emotions) substrata of the satisfaction response (Allen & Wilburn, 2002). Wetzels (1999) also distinguishes satisfaction in two similar dimensions: affective and calculative. Cognitive satisfaction, to begin with, is how customers rationally calculate the product or services they are receiving. This dimension has many similarities with the concept of (perceived) value or utilitarian benefits, which are mostly related with the objective product attributes like

product quality and price. Customers, based on their experiences with the product or services, evaluate constantly whether or not they receive a good value for what they gave up (or paid). Emotional satisfaction, conversely, is the hedonic or experiential benefits that customers cannot calculate rationally or objectively. It is about trust and relationship (Robinette et al., 2001). It is the ambiance of a restaurant. It is the sense of belongingness to a firm, or happiness of being a customer of the firm. It is the feeling that indicates whether the product or service received is a good choice. It is, for instance, the way a firm treats its customers, or positive customer emotions towards the firm. It is similar in definition to the cult of the customer, you will know it when you see it, and you will miss it when its gone (Treacy & Wiersema, 1995). Oliver (1997) suggests that satisfaction in consumer contexts responds to both cognitive knowledge of the outcomes of purchasing, and the emotions that accompany these outcomes and related events. When both are present and similarly valenced, synergy occurs such as in the form of customer loyalty. Numerous studies confirming this suggest that a strong customer loyalty is only possible if customers are cognitively and emotionally satisfied (e.g., Wetzels, 1999; Oliver, 1997; Mano & Oliver, 1993; Jones & Sassers, 1995; Robinette, Brand, & Lenz, 2001). Mano and Oliver (1993) argue that, both conceptually and empirically, product satisfaction is naturally tied to cognitive judgments [thinking] and to affective [feeling] reactions elicited in consumption. Emotions and cognition is interrelated, although there are debates on which one comes first or which one is more important. Wetzels (1999) study indicates that calculative commitment is somewhat weaker than affective commitment. In other words, functional satisfaction such as good pricing or convenient location supplier emerges. On the other hand, a balanced and honest [even emotional] relationship with the customers will create affective commitment and this would create more satisfied customers which in turn create a long-lasting profitable relationship for both parties. As affective (emotional) and cognitive factors are widely accepted in the customer satisfaction and loyalty process, it would also be valuable to analyze them in customer contact settings. Therefore, the following questions should be considered: (1) What are the elements of emotional and cognitive satisfaction? (2) What is the role of emotional and cognitive satisfaction in: (2a) Customer contacts (transactional satisfaction)?

(2b) General satisfaction? (2c) Customer loyalty (intentions)?

2.10 Transactional vs. General Dimensions in Customer Satisfaction and Loyalty When the time horizon is taken into account, there are two different conceptualizations of customer satisfaction: transaction specific satisfaction and general (cumulative) satisfaction (e.g., Oliver, 1997; Sharma et al., 1999; Rust, Zahorik, & Keiningham, 1995; Anderson, Fornell, & Lehman, 1994; Parasuraman, Zeithaml, & Berry, 1994). The former is event specific and can be defined as the post consumption evaluative judgment of a particular transaction. The latter form of satisfaction is about all previous transaction experiences over time. General satisfaction is thus the outcome of a learning experience over time. Anderson, Fornell and Lehman (1994) argue that cumulative satisfaction, rather than transaction-specific satisfaction, is a more fundamental indicator of the firms past, current, and future performance. Rust, Zahorik and Keiningham (1995) suggest that there are good reasons to select either option and argue that cumulative focus better correlates with retention, but transactional focus better reflects quality improvements and provides a more accurate picture of the current performance of the company. According to Parasuraman, Zeithaml and Berry (1994), components of transaction-specific evaluations that lead to transaction satisfaction are the evaluations of service quality, product quality and price. Components of global evaluations are the aggregation of transaction experiences. Transactional satisfaction refers to the customer satisfaction with regard to the last transaction with firms contact centers (i.e., satisfaction with the last contact). Froehle and Roth (2004) use a similar construct in their new measurement scales for evaluating perceptions of the technology-mediated customer service experience: Attitude towards contact episode [which] reflects the customers overall attitude towards the entire contact. General satisfaction on the other hand, refers to the overall satisfaction of customers with all satisfaction elements and dimensions (i.e., satisfaction with being a customer of the firm). The term cumulative satisfaction is reserved for a future longitudinal research which will analyze the aggregation effect of transactional satisfactions on the general satisfaction and loyalty intentions. As transactional and general factors are widely accepted in the customer

satisfaction and loyalty process, it would also be valuable to analyze them in customer contact settings. Therefore, the following questions should be considered: (3) What is the role of transactional and general satisfaction in customer loyalty (intentions)? (4) What is the role of transactional satisfaction: (4a) in general satisfaction? (4b) in customer loyalty (intentions)? (5) What is the role of time in evaluating transactional satisfaction?

2.11 Emotions and Customer Satisfaction Emotion is a fairly new topic in consumer behavior and the role of emotion has gained a major role in understanding the consumption experience in the last decade (Oliver, 1997). Emotion is also linked to consumers satisfaction response and indirectly to repurchase intent (Edwardson, 1998) argues that customer satisfaction measurement and research, as commonly applied, needs to now move to the next stage and consider the specific and unique consumer emotions and emotional knowledge structures that comprise the variety and richness of the consumer experience. Liljander and Bergenwall (1999) identify three main research streams dealing with emotions and satisfaction: (1) satisfaction is in itself seen as an emotional response to a product (2) emotions are treated as a mediator between cognitive evaluations and (3) emotions are modelled as an independent factor contributing to the level of perceived satisfaction. As their research indicates, emotions that consumers associate with the service play an important role in forming satisfaction, and positive emotions enhance satisfaction. Zeithaml and Bitner (2003) analyze emotion and mood as part of the service purchase and consumption stage and note that: (1) Customers with positive moods are more willing to participate in behaviors that help service encounters succeed. (2) Moods and emotions enhance and amplify experiences making them either more positive or negative. (3) Moods and emotions affect the way the service is consumed and how it will be remembered. Van Dolen and colleagues (2001) research similarly indicates that positive emotions contribute positively, while negative emotions contribute negatively to satisfaction.

Oliver investigated (1997) the emotions that would likely be associated with an expectancy disconfirmation framework. In this framework, higher expectations require higher performances for creating positive effects and emotions. Expectations thus play an important role in forming the satisfaction (e.g., Anderson & Sullivan, 1993; Oliver, Rust & Varki, 1997; Anderson, Fornell, & Lehman, 1994) as well as in forming the associated emotions. In Olivers words, positive encounters will create positive expectations which, in turn, will enhance the likelihood of interpreting the next encounter as positive (Oliver, 1997). Olivers research (1997) concludes, however, that the questions of whether satisfaction is an emotion and the emotional role of satisfaction in consumption have not been answered due to the contradictory findings in the literature. As he suggests the overly simplified question Are you satisfied? does not tap into the complexity of the satisfaction response.

2.12 Emotions and Customer Contacts Chase and Dasu (2001) suggest that practitioners have not carefully considered the underlying psychology of service encounters -- the feelings that customers experience during these encounters, feelings so subtle they probably could not be put into words. As Edwardson (1998) similarly asks, has anyone bothered to ask customers how they actually feel? Anderson and Sullivan (1993) propose that quality which falls short of expectations has a greater impact on satisfaction and repurchase intentions than quality which exceeds expectations. They further argue that an important component of managing satisfaction is the ability to control the impact of negative disconfirmation through complaint handling and effective customer service. A recent study (Beaujean, Davidson, & Madge, 2006) shows that a big prize awaits companies that can develop deeper and more lasting relationships with their customers. Yet many businesses rely too much on IT and perform poorly on the front line. The key to correcting frontline performance is the consistent handling of moments of truth -- those few interactions (for instance, a lost credit card, a cancelled flight, a damaged piece of clothing, or investment advice) where customers have an unusual amount of emotional energy invested in the outcome. Chase and Dasu (2001) note that behavioral science, applied with equal doses of empathy and imagination, can improve service delivery. More importantly, it can change the impressions that customers remember, refer back to, and pass on to future customers. Barlow and Maul

(2000) propose that there is a chance of creating positive emotional value when frontline staff is aware of customers emotional state. Van Dolen and colleagues (2001) suggest that training, motivating, and rewarding CSRs to evoke positive emotions in customers has the potential for raising overall customer satisfaction and profits. Freemantle (1999) argues that if customers like a company and its people, there is a higher probability that they will buy from that company. Therefore, the degree to which customers like your company (and its people) is a function of the emotional value you add to the relationship. For example, an insurance company tripled the success of referral requests by creating emotional relationship with its customers. After a positive contact CSR were just sending a postcard, saying good clients are appreciated, with a reply card asking if the client has a friend or relative to refer (Robinette, 2001). It appears thus that emotions play an important role in creating stronger relationships with customers, and that it is desirable to evoke positive emotions when customers are dealing with firms frontlines such as contact centers.