2008:074 master's thesis prioritizing of airline service...

2008:074

M A S T E R ' S T H E S I S

Prioritizing of Airline ServiceRecovery Solutions by Service

Problem Deployment Techniquewith a Case Study in IranAir

Mehdi Toghian Chaharsoughi

Luleå University of Technology

Master Thesis, Continuation Courses Marketing and e-commerce

Department of Business Administration and Social SciencesDivision of Industrial marketing and e-commerce

2008:074 - ISSN: 1653-0187 - ISRN: LTU-PB-EX--08/074--SE

Acknowledgments This master thesis is a part of our studies in the filed of tourism and hospitality management, in a joint program of Isfahan University-Iran and Lulea University of Technology-Sweden. I would like to thanks Dr. Dehghannejad, Dr.Shahin and Dr. Salehi, who offered us new way, which was the pioneer program in this field in Iran. Furthermore, there are several people that I would like to thanks for contributing to the quality of this study. I would like to begin with thanking my supervisors, Dr. Shahin and Dr. Dieke, for their essential and great guidelines through the time I have been working on this thesis. In addition, I would like to the top managers of the IranAir and other traveler filled this research questionnaires Finally, I would like my loved ones. I would specially like to thank my father and mother for their endless helps and my wife for her support during my study. Carrying on it and passing the period of this hard work would have never been possible without the help of one of them. Mehdi Toghian December. 2007

Abstract

Nowadays, the competitive world of businesses forces organizations to seriously

increase their customer satisfaction and loyalty and the leading companies have

conducted and experienced almost all of the related strategies. Meanwhile,

customer complaints management and service recovery solutions provide new

competitive advantages to the organizations and those who use more effective

solution to manage service failures is more expected to win the competition.

In this thesis, a new methodology has been proposed to prioritize service

recovery solutions, based on service failures. For this purpose, literature has

been reviewed and classified, considering its contribution to different parts of the

methodology. Two comprehensive sets of service failures and service recovery

solutions have been developed, which in turn has supported the House of Quality

(HoQ) analysis. The proposed methodology has been examined in IranAir as the

major airline in Iran. Data had been gathered from designed questionnaires a

statistically was analyzed. After computing the matrix in HoQ, The total values of

the service recovery solutions have been found and prioritized. Then they have

been compared with the priorities from managers' point of view and the

differences have been finally highlighted.

The outcomes imply that the new methodology has the capability to be

specialized for particular airlines, such as IranAir. The difference between the

results of the proposed methodology and the managers point of view outlines the

fact that the new methodology is much more effective than the traditional

approaches, in which the service recovery solutions are prioritized based on

managers' point of view. However, some recommendations and suggestions has

been presented, by which the applicability and effectiveness of the proposed

methodology is expected to increase.

Keyword: Service, Problem, Deployment, Recovery, Complaint, Failure,

Technique and Airline

Table of contents

Table of contents

1) Introduction....................................................... 1 1.1. Introduction................................................................................. 2 1.2. Research Type ........................................................................... 2 1.3. Keyword ..................................................................................... 2 1.4. Problem Statement..................................................................... 3 1.5. Background of Research ............................................................ 3 1.6. Research Objectives .................................................................. 4 1.7 Research Originality and Value ................................................... 5 1.8. Research Application.................................................................. 6 1.9. Research Questions ................................................................... 6 1.10. Research type .......................................................................... 6

1.10.1. Research population ........................................................ 7 1.10.2. Data collection tools ......................................................... 7

1.11. Chapter design ......................................................................... 7 1. 11.1. Chapter 2 ....................................................................... 7 1.11.2. Chapter 3 ......................................................................... 7 1. 11.3. Chapter 4 ........................................................................ 8 1. 11.4. Chapter 5 ....................................................................... 8

2) Literature review ............................................... 9 2.1. Introduction................................................................................. 10 2.2. Effects of service failure on trust and commitment ..................... 23 2.3. Service failure and employee response...................................... 24 2.4. Service failures and service quality gaps analysis...................... 25 2.5. Reasons for customer dissatisfaction and switching behavior.... 27 2.6. Customer responses to service failure ....................................... 28 2.7. Core service failures................................................................... 29 2.8. Level of service failure and service recovery.............................. 30 2.9. Criticality..................................................................................... 31 2.10. Objective Service Failures and Consumer Complaints:

Supporting Evidence ................................................................ 32 2.10.1. Objective Service Failures and Consumer Complaints:

Opposing Evidence.......................................................... 34 2.10.2 Relationships between Objective Service Failures across 36

Table of contents

2.10.3. Relationships between Objective Service Failures and Complaints ................................................................ 39

2.11. Complaints in the airline industry.............................................. 40 2.11.1. The complaints of frequent flyers ..................................... 43 2.11.2. Free tickets and upgrade of the flight class...................... 44 2.11.3. Personnel ......................................................................... 44

2.11.4 Card ownership ...................................................................... 45 2.11.5. Priority services offered within the program........................... 46 2.11.6. Alliances with the other airlines ............................................. 46 2.12. Service recovery solutions........................................................ 47

2.12.1. The complaining process ................................................. 47 2.12.2. Service recovery .............................................................. 49

2.13. Service recovery: from potential defector to loyalist ................ 57 2.14. Benefiting from service recovery and addressing complaints

and solving problems ............................................................... 58 2.15. Recovery methods and Guidelines........................................... 61 2.16. Service failure recovery training ............................................... 66 2.17. Organizational actions .............................................................. 70 2.18. Employee actions ..................................................................... 72 2.19. Service recovery options: the technology of service................. 73 2.20. Attribution Theory and Justice Theory ...................................... 75 2.21. Service recovery strategies ...................................................... 79 2.22. The service recovery plan ........................................................ 84 2.23 Quality function deployment ...................................................... 86

2.23.1 QFD and the House of quality (HoQ) ................................ 88 2.23.2. Some of the important objectives of QFD......................... 92

2.24. QFD Applications to Services................................................... 93

3).Research methodology .................................... 98 3.1. Introduction................................................................................. 99 3.2. New theoretical methodology ..................................................... 99

3.2.1. Service Problem Deployment............................................. 99 3.2.2. The Problem Priority Matrix................................................ 100

Table of contents

3.2.3. A comprehensive HoQ for SPD.......................................... 103 3.2.4. A comprehensive set of service failures in the

air line industry ................................................................. 104 3.2.5. A comprehensive set of service recovery solutions............ 106 3.2.6. Questionnaire design ......................................................... 107

3.3. Validity of the questionnaire ....................................................... 107 3.4. Reliability analysis ...................................................................... 108 3.5. Research population and sample ............................................... 108

3.5.1. Research population .......................................................... 108 3.5.2. Research sample ............................................................... 108

3.6. Data analysis/technique ............................................................. 109 3.7. Research executive framework .................................................. 109 4) Research Analysis............................................ 111 4.1. Introduction................................................................................. 112 4.2. IranAir Company......................................................................... 112 4.3. Data gathering............................................................................ 114 4.4. Reliability analysis ...................................................................... 115

4.4.1. Mean and standard deviation of the data ........................... 115 4.4.2. One-sample t- test.............................................................. 115 4.4.3. Mean comparisons............................................................. 118 4.4.4. Correlation analysis............................................................ 137

4.5. Prioritizing SRS using HoQ of SPD ............................................ 158

5) Conclusions and recommendations....................... 165 5.1. Introduction................................................................................. 166 5.2. Conclusions................................................................................ 167 5.3. Limitations .................................................................................. 169 5.4. Recommendations and suggestions for future studies ............... 170

References................................................................. 173 Appendices Appendix A: Research questionnaire (Service failure questionnaire) Appendix B: Research questionnaire (Service recovery questionnaire)

List of tables

List of tables

Table 2.1. Levels of Service Failure and Service recovery ............... 32 Table 2.2. Product-Moment Correlation Coefficients between

Objective Service Failure (SF) Measures for Two Service Industries........................................................................... 38

Table2.3. Product-Moment Correlation Coefficients between Consumer Complaints and Objective Measures of Service Failures (SF) for Two Service............................................ 40

Table 2.4. Consumer complaints against top US airlines by category ............................................................................ 42

Table 2.5. Complaints by flyers 2003 to 2004 ................................... 43 Table 2.6. Getting it right the first time............................................... 63 Table 2.7. Contingencies to service recovery.................................... 81 Table 3.1. Comprehensive set of service failures in

the airline industry ............................................................ 105 Table 3.2. Comprehensive set of service recovery solutions

in the airline industry......................................................... 106 Table 4.1. Descriptive statistics ......................................................... 116 Table 4.2. One sample t-test ............................................................. 117 Table 4.3. Means comparisons in case of gender ............................. 119 Table 4.4. Means comparisons in case of age .................................. 122 Table 4.5. Means comparisons in case of education......................... 125 Table 4.6. Means comparisons in case of monthly earning............... 128 Table 4.7. Means comparisons in case of job ................................... 131 Table 4.8. Means comparisons in case of purpose of trip ................. 134 Table 4.9. Correlation analysis .......................................................... 138 Table 4.10.Comparison of the priorities of SRS according to the

HoQ and the managers’ point of view .............................. 163

List of figures

List of figures

Figure 2.1. Service recovery option................................................... 21 Figure 2.2. A typology of employee reactions to customer

orientation training .......................................................... 68 Figure 2.3. The four phases of traditional QFD ................................. 89 Figure 2.4. House of Quality (HoQ) in QFD....................................... 92

Figure 3.1. Service Problem Deployment .......................................... 102 Figure 3.2. Problem-Priority Matrix.................................................... 103

Figure 3.3. A comprehensive HoQ for SPD....................................... 104

Figure 3.4. Research executive framework ....................................... 110

Figure 4.1. Prioritizing SRS using HoQ of SPD ................................. 159

M.Toghian, M.Sc., Thesis, Chapter 1, 2007 1

CHAPTER 1

INTRODUCTION


1.1. Introduction

In chapter 1 the aims and main question of this research are introduced, the key words

and abbreviations are defined, importance and justification of the research of the study

are discussed and the chapter's design is briefly presented.

1.2. Research Type

1. Practical

2. Development

1.3. Keyword

1. Service;

2. Problem;

3. Deployment;

4. Recovery;

5. Complaint;

6. Failure;

7. Technique and

8. Airline


1.4. Problem Statement

Nowadays; customer complaint management and service recovery are coming vital

issues for decision makers in service industries, such as the tourism industry. It is

actually due to increasing importance of satisfaction and loyalty which are the main

pillars for gaining competitive advantages. As much as the companies try to maintain

customers, they will achieve more market share and in this respect, the service

recovery enhances customer satisfaction and loyalty.

The main aim of this research is to prioritize service recovery solutions according to

the service problem importance from customers’ point of view. For this purpose, the

first phase of a technique that is called service problem deployment (SPD) which is a

special type of quality function deployment (QFD) is used and the application of the

proposed approach is verified and validated in IranAir domestic services as one of the

important service sector in the tourism industry in Iran.

1.5. Background of Research

Although, there are not considerable resources available related to the subject of this

research in Iran, the concepts of service recovery and service failure\complain have

widely been studied and addressed in the international literature ( Cranage, 2004;

Magnini & Ford, 2004; McCole, 2004; Forbes et al., 2005; Simons, 2004; Warden et

al., 2003) and in particular, within the tourism and airline industries ( Cranage, 2004,


Rhoades et al, 2004 , Rhoades et al, 2005 , McCole, 2004 , Weun et al, 2004 , Wirtz,

& Mattila,2004).

However; it is important to note that rarely service recovery solutions have been

prioritized according to the importance of service failure\complaints. One of the

famous resources is Stauss (1993), who had used a four phases approach called

Service Problem Deployment (SPD) to prioritize solutions for preventing customer

problems, generally in the service industry. This research further develops pervious

studies by considering service recovery solutions instead of preventive solutions.

1.6. Research Objectives

1. To develop and apply advanced quality improved techniques called service problem

deployment for prioritizing service recovery solutions (SRS).

2. To Prioritize service recovery solutions according to customer point of view.

3. To compare the traditional approach in which service recovery solutions are

prioritizing according to the managers’ point of view with the proposed approach

4. To determine a comprehensive set of service failures in the airline industry and

especially in the IranAir.

5. To determine a comprehensive set of service recovery solutions in the airline

industry and especially in the IranAir


1.7 Research Originality and Value

Bamfurd and Xystouri (2005) stated in their article that services marketing and

management literature widely acknowledge that keeping current customers and

developing relationships with new ones is a key business strategy. The growing

sophistication of consumers does represent an ongoing challenge to all manner of

service organizations. As consumers become increasingly happy to complain about a

product or service, so it has become more important for service providers to deal with

efficiently dissatisfied customers.

Service recovery is now recognized as a significant determinant of customer

satisfaction and loyalty. As a result, stabilizing the endangered relationship with

dissatisfaction customers by utilizing an effective service recovery policy has become

the main focus of many customer retention strategies.

The proposed approach enhances the managers’ capabilities in the service industry,

not only to prioritize their action plans for preventing service failures through the

traditional approaches but also to prioritize their service recovery solutions, according

to customer point of view.


1.8. Research Application

In general, service industries and in particular, in the tourism and air line industries

1.9. Research Questions

1. How to develop and apply advanced quality improvement techniques such as

service problem deployment (SPD) for prioritizing service recovery solutions?

2. How to prioritize service recovery solutions according to customer point of view?

3. What are the advantages/disadvantages of the proposed approach, comparing with

the traditional approach?

4. Which service failures could be included in the comprehensive list of airline service

failures?

5. Which service recovery solutions could be included in the comprehensive list of

service recovery solutions?

1.10. Research type

The research type is descriptive and development based. It is also a survey and case

study, considering the IranAir examination.


1.10.1. Research population

1. Top managers of IranAir

2. Domestic travelers of IranAir, departure from and arrive in Isfahan

1.10.2. Data collection tools

Interview, questionnaire, e-journals, textbooks

1.11. Chapter design

1. 11.1. Chapter 2

In chapter 2 the literature on the subject of the study is reviewed, the reviewed

material is classified and the contribution of previous work towards this study is

addressed, this chapter provides the bases for designing the frameworks included in

chapter 3 which intern provides the new methodology to be developed.

1.11.2. Chapter 3

In chapter 3 the research methodologies, theoretical and executive frameworks of the

study are developed. The statistical tools and techniques used for analysis are

determined and the approaches for validity and reliability of the data analysis are


addressed, the questioner needed for supporting the methodology is designed in this

chapter and the statistical population and sample selection are presented.

1. 11.3. Chapter 4

In chapter 4 the proposed methodology is employed in IranAir which is one of the

airlines in Esfahan, the data gathered from the questioner are analyzed and entered

into the house of quality for further analysis. Finally the results of the implementation

of the new methodology are compared with the managers and staff points of view.

1. 11.4. Chapter 5

In chapter 5 major concussions and recommendations are presented and subjections

for future studies are pointed out.


CHAPTER 2

LITERATURE REVIEW


2.1. Introduction

Most managers realize that no service system is perfect. Mistakes do happen.

When they do, it is referred to as a service failure. Fortunately, service failure does

not always mean lost customers. When customers experience a service failure,

their confidence in the company becomes uncertain. What the company does after

the service failure can make things better or worse (Berry et al., 1994). Most

dissatisfied customers will do business again if their problems are solved

satisfactorily (Adamson, 1991). In fact, it has been suggested that, through a

phenomenon called the “service recovery paradox” (Hart et al., 1990), a successful

service recovery can result in higher customer satisfaction and loyalty than if no

service failure had occurred. Satisfaction and loyalty are reflected in the bottom

line. Return on investment of service recovery yields returns of 30-150 percent

(Brown, 2000)

Goodman and Ward's (1993) study for the US Office of Consumer Affairs suggests

that for every five customers who encounter a problem, one will be lost for good.

Non complainers were found to be the least loyal customers – even more disloyal

than complaining dissatisfied customers whose problems were not resolved.

Keaveney (1995) conducted a study of 500 service customers using a critical

incident technique (CIT). She identified over 800 service-firm behaviors that

caused customers to switch service providers. These issues were coded into eight


general categories: pricing, inconvenience, core service failure, failed service

encounter, response to failed service, competition, ethical problems and

involuntary switching.

Prior research on consumer complaining behavior has covered a wide variety of

topics and consumer behavior issues. A consistent theme emerging from this

research is that complaint frequency is not an accurate indicator of the extent of

marketplace dissatisfaction (Best and Andreasen, 1977). Halstead (1996) stated

that despite widespread dissatisfaction with products and services, consumers

choose not to complain for a variety of reasons, which can be summarized as high

transaction costs. These include the time, cost, and effort involved, uncertainty

about how to complain, and beliefs that redress will not be provided

Thus, whereas dissatisfaction is considered to be a necessary condition for

complaining to occur, it has not been shown to be sufficient. Empirical tests have

produced surprisingly small correlations between consumer dissatisfaction and

complaints. On average, only about 15% of the variance in complaints is explained

by consumer dissatisfaction (Bearden and Ted, 1983). This finding has important

implications for the present research. If the relationship between consumer

dissatisfaction and complaints is small (albeit significant), will the objective service

failure/complaint relationship be any stronger? The limitations of subjective

satisfaction measures may be partially responsible for the low correlations found.


Perhaps objective measures of actual service failures rather than subjective

measures of consumer dissatisfaction would exhibit stronger theoretical

relationships with consumer complaints. This hypothesis will be tested in the

present research. A review of the complaining behavior literature indicates that

conflicting arguments exist for the relationships between objective service failures

and complaints. A discussion of these competing arguments follows (Halstead et

al., 1996).

Many organizations (companies or firms) still regard customer complaints as not

only an unpleasant fact of business life but also a waste of time and money in

investigating these concerns. Frequently, barriers are placed in front of customers

who decide to complain. Moreover, many frontline employees subtly imply to

customers that complaining may not be appropriate in the circumstances.

According to Tax and Brown (1998), perhaps only 10 per cent of dissatisfied

customers actually lodge a formal complaint – and the majority here ‘‘are

dissatisfied with the way companies resolve their complaints’’. According to

Gruberfirst (2004), many consumers ‘‘have more negative feelings about an

organization after they go through the service recovery process’’. However, in the

quest for progress and advancement, progressive service organizations worldwide

place their customers first (Buttle & Burton, 2001).


Bhandari et al. (2007) stated that service failures can occur for a range of reasons.

These have been categorized in a variety of ways, including the following: the

theory of attribution in which customers are perceived as rational information

processors (Folkes, 1984); a typology of service failure in particular industries,

such as retailing (Kelley et al., 1993); service delivery failures, including the failure

to respond to customer needs and requests, as well as unprompted and unsolicited

employee actions (Bitner et al., 1990; Schroefer and Ennew, 2002); outcome

failures (Bitner et al., 1990; Stauss, 2002); and process failures (Smith et al., 1999;

Gronroos, 1988; Stauss, 2002). The services marketing literature also

distinguishes service failure not only by type but by the degree of severity or failure

magnitude (Smith et al., 1999).

Understanding the source of the service failure is an important component in

engineering and managing a service system. It allows organizations to identify

bottlenecks (Shostack, 1992) or the root cause of failure and is therefore essential

in developing effective strategies of service recovery (La and Kandampully, 2004).

Bhandari et al. (2007) stated that service failure is often associated with a

customer’s complaint; however, while a relationship between the cost of the

service and the likelihood of complaint is often assumed (Andreasen and Best,

1977), complaints are not often related to the expense incurred by the customer in

the service encounter (Gilly and Gelb, 1982; Hart et al., 1990). Furthermore, in the


recognition that up to two thirds of customers never complain or express

dissatisfaction with failed service encounters (Stephens and Gwinner, 1998), it is

important to study as many customers’ responses to service failure as possible.

All except competition and involuntary switching are directly controllable by the

service provider. Forty-five per cent of switches were due to failure in only one of

these eight areas – the most common being core service failures, pricing and

service encounter failures. As a consequence of service failure, 75 per cent of

customers had told at least one other person, although only 7 per cent told the

original service provider, and 85 per cent had switched. Dawe (2000) reveals that

the consultancy eLoyalty has identified a `churn checklist' ranging from the obvious

service failures – for example, staff rudeness and product failure – to more

relationship-orientated issues including failure to recognize customers as

individuals or to adapt services to their specific needs. Keaveney's (1995) study

also confirmed that even satisfied customers switch service providers – the main

reasons being convenience, competitor actions or price. Reill (1997) suggests that

14±15 per cent of switchers do so because their complaint was not handled

satisfactorily.

The link between a satisfied customer, the level of customer retention and

profitability is well established in the literature (Heskett et al., 1994). Long-term

relationships just do not happen by chance. They are cultivated and grounded


firmly in an organization’s approach to service and value, which are enhanced by

an effective service recovery system. Not only do satisfied customers conduct

repeat business, they also act as advocates. Furthermore, such customers may

even be less sensitive to the price of the service(s) being offered.

Atalik (2007) stated that the principal law of a quality system is ‘‘Do it right the first

time’’ (Lovelock et al., 2001). Unfortunately, in complex business environments,

things can and do go astray. Customer satisfaction is certainly linked to the fault-

free delivery of a service as well as to what transpires when something goes

wrong. According to Lovelock et al. (2001), when customers experience

dissatisfaction, four basic courses of action are available to them, which include:

1. Do nothing (but the service provider’s reputation is diminished in the customer’s

eyes and the customer will consider defecting if it occurs again).

2. Complain in some form to the service organization.

3. Take some kind of overt action with a third party.

4. Defect and simply do not patronize the organization in the future (while telling

others by engaging in a negative, word-of-mouth campaign (McCole, 2004).

Bhandari et al. (2007) stated that in order to manage customer complaints, the

concept of service recovery solutions has been developed. Service recovery has


been identified as one of the key ingredients for achieving customer loyalty (e.g.

Andreassen, 2001; Tax and Brown, 2000). As a result, developing effective service

recovery policies has become an important focus of many customer retention

initiatives (Stauss and Friege, 1999).Service recovery policies involve actions

taken by service providers to respond to service failures (Gronroos, 2000;

Johnston and Mehra, 2002). Both, what is done (e.g. restitution and compensation)

and how it is done (i.e. employee interaction with the customer) influence customer

perceptions of service recovery (e.g. Andreassen, 2000; Levesque and McDougall,

2000). Justice theory appears to be the dominant theoretical framework applied to

service recovery (Tax and Brown, 2000), and holds that customers evaluate the

fairness of service recovery along three factors: outcome, procedural, and

interactional fairness (e.g. de Ruyter and Wetzels, 2000; Goodwin and Ross, 1992;

Smith et al., 1999; Tax et al., 1998). Wirtz & Mattila (2004).Stated that when

services or products fail, people tend to engage in causal attributions (e.g. Weiner,

2000). Yet, research investigating consumer attributions in a service recovery

context is relatively scarce (Bradley and Sparks, 2002; Maxham and Netemeyer,

2002).

Customers evaluate the fairness of a service recovery along the three dimensions

of distributive, procedural and interactional fairness. Distributive justice refers to the

perceived outcome, whereas procedural fairness involves the processes, policies

and rules by which recovery effort decisions are made (Smith et al., 1999).


Interactional fairness focuses on the interactional treatment during the service

recovery process, including an apology, perceived helpfulness, courtesy, and

empathy of the service staff in dealing with the recovery. The three fairness

dimensions are driven by different aspects of the service recovery process.

Compensation is effective in restoring customers’ perceptions of distributive justice,

while the speed by which service failures are corrected or complaints are handled

is one of the major determinants of customers’ perceptions of procedural fairness

(Blodgett et al., 1997;). Finally, the presence or absence of an apology is strongly

linked to customers’ perceptions of interactional justice (Clemmer and Schneider,

1996). Wirtz & Mattila (2004).Stated that Robust findings in research on service

encounters indicate that satisfaction intervenes consumers’ behavioral intentions

(e.g. Cronin et al., 2000; Oliver, 1997). Moreover, previous work in service

recovery suggests that service recovery satisfaction is a necessary processing

stage between service recovery attributes and post-recovery behaviors (Smith and

Bolton, 1998; Stauss, 2002).

Maxham and Netemeyer (2002) stated that as Johnson, Nader, and Fornell (1996)

propose, how customer satisfaction is conceptualized has a significant impact on

the modeling and measurement of the construct and its antecedents. In the current

study, satisfaction with the service encounter is different from satisfaction with

service recovery (Bitner & Hubbert, 1994; Maxham & Netemeyer, 2002; Spreng,

Harrell, & Mackoy, 1995). Satisfaction with service recovery is defined as the


degree to which customers are satisfied with a service provider’s transaction-

specific service recovery efforts following a service failure (Boshoff, 1999; Boshoff

& Staude, 2003; Maxham & Netemeyer, 2002). Satisfaction with the recovery

measures customers’ judgment about the firm’s recovery efforts (Oliver, 1981). The

former is multi-attribute in nature, whereas the latter is likely predicated chiefly on

the remedial action taken (Bitner, Booms, & Mohr, 1994; Boshoff, 1999; Boshoff &

Staude, 2003). The two constructs may also have differential impacts on consumer

responses. According to Maxham and Netemeyer (2002), in a service-failure

context, satisfaction with recovery is a stronger indicator of the likelihood of

spreading positive word-of-mouth (WOM), but satisfaction with the firm (or service

encounter) is a stronger predictor of purchase intention.

Maxham and Netemeyer (2002) stated that studies conducted in a service failure

and recovery context have focused on how service recovery affects satisfaction

with service recovery (Boshoff, 1999; Maxham & Netemeyer, 2002; Smith &

Bolton, 1998) and satisfaction with the entire service experience (Maxham &

Netemeyer, 2002; Smith & Bolton, 2002; Smith et al., 1999). However, most prior

studies have examined either one of these two constructs as the dependent

variable (Boshoff, 1999; Smith & Bolton, 1998; Smith et al., 1999) without

examining the effect of service recovery satisfaction on overall service satisfaction.

Indeed, only one study investigated the relationship between the two satisfaction


constructs and concluded that the recovery effort was an important determinant of

customers’ satisfaction (Spreng et al., 1995).

Boshoff (1997) stated that failure to ensure customer satisfaction, both initially and

belatedly, through service recovery could lead to a decline in customer confidence,

lost customers, negative word-of-mouth, possible negative publicity and the direct

cost of reperforming the service (Berry and Parasuraman, 1992). In essence, the

service firm’s true test of commitment to service quality and customer satisfaction

depends on how it responds after disconfirmation (Zemke and Bell, 1990).

Effective managerial responses depend, however, on effective research of the

phenomenon. Unfortunately, several limitations in consumer complaint behavior

(CCB) research have been noted. Singh (1990a and b), for instance, contends that

researchers in the past tended to collect facts rather than testing hypotheses or

theories while CCB has often been conceptualized too simplistically, ignoring its

multidimensional nature. Despite the fact that several studies report that the

purchasing and consumption of services result in higher levels of customer

dissatisfaction than with products, service dissatisfaction and service recovery are

relatively neglected areas (Johnston, 1995), particularly in respect of the service

firm’s response options (Gilly et al., 1991; Goodwin and Ross, 1992,).


To examine aspects of service recovery, a theoretical model was constructed to

serve as a guideline in this study. This model is depicted in Figure 2.1 and consists

of four main elements:

1. Aspects related to customer satisfaction/dissatisfaction and the disconfirmation

paradigm;

2. Complaint behavior responses;

3. Service recovery options (the technology of service); and

4. The outcomes of service recovery.


Figure 2.1. Service recovery option (Boshoff, 1997)

The CCB and service quality literature suggest that the outcomes of service

recovery are (improved) customer satisfaction and (improved) service quality

perceptions leading to positive behavior intentions such as repeat purchases and

loyalty. Several researchers have attempted to provide a definitive, empirically

supported answer to the question of the relationships among service quality

perceptions, customer satisfaction and behavior intentions.


When failure occurs, firms have two options:

1. Investing effort into resolution of the conflict by proposing a compromise to

achieve a favorable outcome; or

2. Avoiding resolution of the incident

There are six aspects of organizational responses to customer complaints:

1. Timeliness

2. Facilitation

3. Redress

4. Apologies

5. Credibility

6. Attentiveness

The aim of this research is to propose a new framework by which, analysis and

prioritizing service recovery solutions could be facilitated and more effective. For

this purpose, first the literature on both service failures and service recovery

solutions are reviewed and two different and comprehensive sets of each are

proposed. Then, an advanced quality improvement technique, called service

problem deployment is modified to compare service failures with service recovery


solutions. The proposed approach is further analyzed in Iran Air domestic

services.

2.2. Effects of service failure on trust and commitment

Trust is valuable because it plays a role in reducing transaction costs (Noordewier

et al., 1990) and is a prerequisite for even being considered as a product source

when a consumer searches for alternatives. What specific service failure will

actually be detrimental depends on the consumer’s subjective judgment. This

means that not all service gaps are equally bad in all situations, but differ

depending on a number of variables.

Service failures test the commitment of an organization’s customers. Service

encounters can result in failure as perceived by customers in a number of ways,

including the unavailability of a service, slow service and errors in delivery. By

failing to honor its promises, the trust which goes to the foundation of a relationship

is undermined through a recovery process; service failure can be transformed into

a positive act which creates increasingly strong attitudes of customers towards a

supplier (Hart et al., 1990).


Bejou and Palmer (1998) stated that a service failure can occur at any stage of a

customer’s relationship with a supplier. It has been argued that a failure occurring

early in the customer’s relationship with a supplier will be perceived more

adversely than one which occurs later in a relationship because the customer has

less experience of successful service experiences to counterbalance the failure

(Boulding, 1993).In the context of service failure, equity theory has been used to

argue that customers who feel that they are getting a better ratio of benefits to

costs than their exchange partner will feel a greater sense of commitment to their

exchange partner (Goodwin et al., 1992; Kelley and Davis, 1994). It has been

argued that committed customers are likely to expect a favorable response when a

service failure occurs. Committed customers have high expectations of service

recovery.

2.3. Service failure and employee response

Cranage (2004) stated that Bitner et al. (1990) collected a list of complaints and

service failures from hotel, restaurant and airline customers using a critical

incidents technique (Swan, 1975), and were able to categorize all of them into

three major groups:

1. Employee responses to service delivery system failures;

2. Employee responses to customer needs and requests; and


3. Unprompted and unsolicited employee reactions.

It is important to note that all three categories refer to employee responses or

reactions. The majority of the respondents considered these as major failures. Of

those that rated these as major failures, over half indicated that they would never

return.

2.4. Service failures and service quality gaps analysis

Warden (2003) stated that gap research has developed as the main model for

understanding how consumers of services are satisfied. When expectations of

service are not met, the resulting gap leads to dissatisfaction, and when

expectations are surpassed, the result is satisfaction (Zeithaml et al., 1990).

Zeithaml and Bitner (1996) refer to this difference between adequate service and

perceived service as measure of service adequacy (MSA). More serious service

failures will have increasingly negative MSA scores and make it difficult for a

customer to trust the seller. A customer’s original zone of tolerance reflects

acceptable service quality. If the perceived service level does not reach the zone of

tolerance (adequate service at minimum) then the result is gap, which in this case

is labeled intercultural provider performance gap. The three central constructs of

attribution theory are encountered during the attribution process stage and can

contribute to reducing the seriousness of the service failure:


1. Stability. If the failure is an exception (normally expectations are met) the

customer may tend to overlook such an event. Since, in the case of a short stay,

the customer is only visiting, he/she may assume that this failure is indeed the

exception and not the rule.

2. Locus of causality. The cause of the problem may not lie with the service

provider, but instead with unrealistic or culturally biased assumptions of the

customer. Thus, a visitor may assume that he/she had expectations that were too

high and not blame the provider.

3. Controllability. Although the service provider has not provided the service

expected by the customer, the provider has no way to know the foreign customer’s

standards. Such an assumption on the part of the customer will reduce the service

failure seriousness in his/her own mind.

Buttle and Burton (2001) stated that customer's attitude towards a firm depends in

part upon this perception of value. The attitude is likely to deteriorate if the cause of

customer dissatisfaction is inadequate customer value. Bolton (1998) found that

consumer perception of losses experienced during transactions reduce relationship

duration and that the effect, in absolute terms, of a recent service failure is greater

than a recent service transaction. The aim of `zero defects', strived for in

manufacturing, is more difficult to achieve in a services context. Complete

standardization of interactions is hard to achieve, and possibly undesirable.

Furthermore, customers acknowledge that in service encounters which they help to


co produce their own work may be the cause of their own dissatisfaction. Many

customers will recognize and accept this reasoning. Service failures are thus an

important issue, as is how firms remedy them.

2.5. Reasons for customer dissatisfaction and switching behavior

McCole.(2004) Stated that avoidable breakdown occurs, the customer in question

is likely to engage in switching behavior. Keaveney (1995) presented eight major

reason or causes behind service switching behavior. They included:

1. Pricing (high price, price increases, unfair pricing and/or deceptive pricing);

2. Inconvenience (location or hours, and/or wait times);

3 Core service failure (service mistakes, billing errors and/or service catastrophes);

4. Service encounter failures (uncaring, impolite, unresponsive and

unknowledgeable staff);

5. Responses to service failure (negative responses, no response, and/or reluctant

response);

6. Competition (found better service elsewhere);

7. Ethical problems (cheating, and/or conflict of interest);

8. Involuntary switching (“unavoidable breakdown”).


It is interesting to note that three out of the eight refer to service failure, and if these

occur on a regular basis, even if there are structural bonds in place, then switching

behavior becomes increasingly likely. The important point here is that managers

are able to distinguish between “unavoidable breakdown” and “avoidable

breakdown”.

2.6. Customer responses to service failure

McCole.(2004) Stated that the link between a satisfied customer, customer

retention and profitability is well established. Long-term relationships just do not

happen – they are grounded in the firm’s delivery of excellent service and value

and complemented by an effective service recovery system when things go wrong.

Not only do satisfied customers conduct repeat business, they also act as

advocates and may even be fewer prices sensitive. The first law of quality is to “do

it right the first time” (Lovelock et al., 2001) but unfortunately things do go wrong.

Customer satisfaction is linked not only to fault free service, but also to what

transpires when something does go wrong.

According to Lovelock et al. (2001), when customers experience dissatisfaction

they have four major courses of action. They include:


1. Do nothing, but the service provider’s reputation is diminished in the customer’s

eyes, and they’ll consider defecting if it occurs again;

2. Complain in some form to the service organization;

3. Take some kind of overt action with a third party;

4. Defect and simply not patronize the firm again, and tell other people, thus

engaging in negative word-of-mouth behavior.

2.7. Core service failures

Cranage (2004) stated that along these lines is the idea of core service failures.

Core service failures occur when customers do not receive basic services from a

service provider. They are considered core because they have been promised or

contracted, either directly or implied, and are basic to the whole service experience

(Keaveney, 1995) for example, reservations. Customers consider core service

failures as serious. They not only expect core service failures to be corrected, but

they believe that core service failures must be corrected. Replacement and

apology are suggested.


2.8. Level of service failure and service recovery

Cranage (2004) stated that results from a study by Maxham (2001) indicate that

moderate to high service recovery efforts significantly increase post service failure

satisfaction levels, purchase intent, and positive word-of-mouth, where as poor

service recoveries seem to aggravate the dissatisfaction with the initial service

failure. However, the study by Lewis and Sotiris (2001) found different service

failures to be of varying importance and different service recovery efforts more

effective for particular failures. This would indicate that the recovery has to fit the

failure. This was supported in a study by Mattila (2001), in which she found that the

cost to mollify customers might vary tremendously for different types of services.

Some recoveries for a particular failure may not satisfy, while others may either

satisfy or even “delight” (Johnson and Fern, 1999), which leaves the customer

more than satisfied. In their study, they found that customers have clear

expectations of service recovery, but the expectations differ based on the type of

failure. When apology was the appropriate recovery, they found:

1. For less serious failure, a modest apology satisfied, while a follow-up written

apology delighted customers; and

2. Serious failures required a managerial apology to satisfy, but no type of apology

would delight these customers.


Compensation for less serious failures required “back-to-normal” refunds or

discounts to satisfy, and “above normal” to delight, while with serious failures,

above normal compensation only satisfied. Equity or exchange theory has been

used to help explain this (Smith et al., 1999; Walster et al., 1973). The service

failure and the recovery can be viewed as an exchange. In this exchange, the

customer experiences a loss due to the service failure, and the service company

provides a gain, in the form of a service recovery to offset the customer’s loss.

Based on this theory, the larger the loss from the service failure, the more likely the

customer is to be dissatisfied, and the more “substantial” the service recovery has

to be to mitigate the effects of the failure (Smith et al., 1999).

2.9. Criticality

In addition to seriousness of the failure, there is the issue of the “criticality” of the

service to the customer. Criticality is the importance of the service to the customer.

For example, a menu mistake for a wedding reception has a higher criticality than a

menu mistake for a quick lunch. According to Webster and Sundaram (1998),

criticality is the perceived importance of successful service delivery in a given

service encounter. In their study they found that when a service was more critical,

customers felt the service failure was more serious than when the service was

viewed as less critical. An interesting finding was that criticality was defined less by

price than it was by quality, ease of replacement and how special or unique the


occasion. Higher criticality is associated with higher loss and highly critical

situations lead to greater customer dissatisfaction than lower critical situations. The

service recovery strategies implemented for failures high in criticality must take into

consideration the higher loss felt by the customer. Table 2.1 summarizes these

findings.

Table 2.1. Levels of Service Failure and Service recovery (Webster and Sundaram ,1998)

2.10. Objective Service Failures and Consumer Complaints: Supporting

Evidence

Morash and Ozment (1996) stated that several factors could contribute to a

potentially strong relationship between objective service failures and consumer

complaints. First, complaining behavior increases when consumers have easy

access to complaining and when the social climate is favorable for complaining

(Landon, 1977). For the airline and household goods (HHG) moving industries, the

availability of the Department of Transportation (DOT) and the Interstate


Commerce Com- mission (ICC) (and the consumer reports they provide)

establishes a very favorable environment for consumer complaining. Essentially,

the absence of barriers to complaining and information may serve to strengthen the

objective service failure-complaint relationship. The latter conditions of low

complaining barriers can also be formulated in terms of reduced transaction costs

(Williamson, 1975, 1985).

Morash and Ozment (1996) stated that if complaining is viewed as a consumer

transaction (or as part of one), any marketplace or environmental condition that

reduces impediments to consumer complaining can be thought of as reducing

consumer transaction costs, ceteris paribus. As such, it could be argued that the

widespread availability of industry information on service failures could increase

consumer perceptions of the likelihood of successful complaining when they

experience service failures. Both Singh (1989) and Ursic (1985) support this

empirically, finding that consumers' perceived probability of success was a

significant factor in their decision to complain. Thus, low transaction costs and low

complaining barriers in these two industries could strengthen the objective service

failure-complaint relationship.


2.10.1. Objective Service Failures and Consumer Complaints: Opposing

Evidence

Morash and Ozment (1996) stated that competing research suggests that the

relationship between objective service failures and consumer complaints will be

small or no significant. First, the small correlations between dissatisfaction and

complaints indicate that consumer complaining behavior is an extremely complex

and elusive phenomenon that is not easily understood or predicted. Complaints

have not been shown to be a good reflection of problems experienced by

consumers (Andreasen, 1977; Warland, Herrmann, and Willits, 1975). Other

factors contribute to complaining besides poor product/service performance (e.g.,

certain market failures and deceptive practices, Diamond, Ward, and Faber, 1976).

Furthermore, most consumers approach sellers directly before any third party

complaint action is taken (Day and Bodur, 1978; Moyer, 1985). Thus, not all

complaints are not direct reflections of product/service failures, nor do all service

failures necessarily lead to complaints. Some consumers have higher tolerances

for poor service than others. Alternatively, consumers may have low service

expectations for certain industries due to service failures in the past or negative

word of mouth from others (Zeithaml, Berry, and Parasuraman, 1993).

Morash and Ozment (1996) stated that these factors suggest a low or no

significant correlation between objective service failures and complaints. Only one


empirical study was found that directly examined the objective service failure/third

party complaint relationship. Bolton and Chapman (1989) tested the relationship of

three airline complaint factors to one type of service failure- delayed flights.

Significant but very moderate correlations were found for two of the three complaint

factors. One surprising result in their study was the finding that poor service

performance with respect to flight times also led to complaints about different

aspects of service performance. The notion that a single service failure could

potentially lead to multiple complaints has severe consequences for service firms.

Although they did not use the term or explanation, it is possible that a "halo effect"

may exist for complainers whereby poor performance in one service area may

"color" their perceptions, predisposing them to negatively evaluate and complain

about other service areas or attributes. Furthermore, this halo effect may be

supported by low incremental transaction costs (Williamson, 1975, 1985).

Once a consumer has gone through the trouble and cost of complaining about one

service attribute, the incremental transaction cost of complaining about other

service attributes is marginal. In total, complaints may beget more complaints. The

foregoing hypothesized relationships between complaints also suggest the

possibility that objective service failures are interrelated. Some firms may be

consistently poor service performers (Hart, 1988; Heskett, Sasser, and Hart,

1990).Much like a "domino effect" of problems, objective failures in one service

attribute or area may engender service failures in other attributes or areas. This


possibility has not been tested empirically in the literature, however. This research

will evaluate both the domino effect hypothesis across objective service failure

attributes as well as the previous halo effect hypothesis across complaint

attributes.

2.10.2 Relationships between Objective Service Failures across

Morash and Ozment (1996) stated that Service attributes the Interco relations are

found in Table 2.2 for the objective (actual) measures of service failures for both

industries. As reflected in Table 2.2, much more complete objective data exist for

the HHG moving industry than for the airline industry. For example, canceled

airline flights are not classified by the U.S. DOT as late because of concerns about

encouraging unsafe practices. Thus, no correlation exists between these two

measures. Further, because canceled flights would tend to mitigate mishandled

baggage complaints, a no significant correlation between these two measures

appears. The only significant correlation for the airline industry is between late

arrivals and mishandled baggage (r - 0.44), which might be expected as missed

flights and connections can give rise to baggage problems (i.e., a modest domino

effect of service failures). For HHG carriers, many of the objective service failures

are significantly related but at a much lower level than the previous complaint

relationships. The lower but significant correlations nevertheless do provide some

support for the existence of a domino effect of service failures. For the core service


attributes (the first three variables), the objective service failure measures are all

significantly related, yet the correlations are nowhere near as high as for the earlier

complaint measures. The correlations for the core HHG service failure measures

average only 0.33. In contrast, the previous complaint correlations averaged

between about 0.70 to 0.90 for both industries. Thus, there appears to be only a

low level tendency for firms with objective service failures in one core area to have

service failures in other core areas. Similar conclusions are reached for the

peripheral objective service failure measures (the fourth, fifth, and sixth measures).

Whereas many of these coefficients are significant, they are also at a relatively low

level (an average correlation of 0.27). Although these correlations imply that

domino effects exist, they are not operating at any level comparable to the earlier

halo effects for the complaint ratios.

Morash and Ozment (1996) stated that Compared to the previous global complaint

index, the global objective service failure index also tends to have the highest

information content as reflected by the higher correlations with the other attribute

measures (average r = 0.50). Thus, the global problem index is, in general, the

best indicator of overall objective service failure problems, although not as good an

indicator as the global complaint index. Table 2.2 also suggests that certain

peripheral service failure measures are good informational proxies at least for the

overall total problem index. For example, the relatively high correlation coefficient

(0.85) with the global problems index for the more obscure measure "average


number of days to settle claims" may hint at overall service failure problems.

Consequently, managerial proxy logic might appropriately be applied to service

failure measurement, particularly when a great deal of accuracy and detail is not

needed, when the proxy measure can be obtained more easily, and when

budgetary or time constraints exist. With these exceptions, the objective service

failure measures are not highly correlated.

Table 2.2. Product-Moment Correlation Coefficients between Objective Service Failure (SF) Measures for Two Service

Industries: Passenger Airlines and HHG Moving (Morash and Ozment 1996)


2.10.3. Relationships between Objective Service Failures and Complaints

The correlations between objective service failures and complaints are significant,

but at a relatively low level (Table 2.3.). The average correlations for all pairings

are 0.23 and 0.31 for the airline and HHG moving industries, respectively.

Complaints and objective service failures tend to be only somewhat more strongly

related for the same (or similar) core service attributes. If only rim correlations are

considered (i.e., attributes related with global measures), the average correlations

are only slightly higher (0.24 and 0.43, respectively). Complaints and objective

service failures appear to provide different information content, yet are

nevertheless related. Although most of the correlations in Table 2.3 are significant

given the sample sizes, they represent only about 5 to 15% of the explained

variance in complaints. However, if both a global objective failure measure and a

global complaint measure are used, the HHG correlation is 0.61 or 37% of the

complaint variation explained. Thus, whereas prior research has identified that

overall consumer dissatisfaction explains only about 15% of the variance in overall

complaints (e.g., Bearden and Ted, 1983; Oliver, 1987), this research shows that

global objective service failures explain about one-third of the variance in overall

complaint. The possible reasons for this improved predictability may be related to

both information pooling diversification effects and to the inherent measurement

advantages of objective versus subjective measures. This will be discussed further

in the next section.


Table2.3. Product-Moment Correlation Coefficients between Consumer Complaints and Objective Measures of Service

Failures (SF) forTwo Service Industries: Passenger Airlines and HHG Moving (Morash and Ozment 1996)

2.11. Complaints in the airline industry

Atalik (2007) stated that although airlines have customer satisfaction as a major

goal, not all airlines experiences are satisfactory from the consumer’s perspective

service failures do occur in this industry. Air transportation may be particularly

susceptible to the problem of service failure because of the number of different

providers involved in delivering the service, the high number of passengers and the

people-based nature of the service. If service failures are an unpleasant fact for

airlines, then these organizations must develop clear strategies for responding to


service failures as a way of minimizing the adverse affect of the complaints of their

customers. Frequent flyer programs, which develop customer loyalty, offer

incentives to consumers based on cumulative purchases of a given product or

service from an organization. Reward programs are now increasingly common in a

range of industries and include rewards for frequent flyers, preferred hotel guests

and frequent shoppers at a particular enterprise. The levels of customer complaints

have significant implications for the profitability of airlines. Wirtz and Johnston

(2003) highlight the positive correlation between the profits and the service

excellence of Singapore Airlines (SIA). They are comparing us against many

industries and on many factors’’ (Wirtz and Johnston, 2003).

Atalik (2007) stated that in the airline industry, numerous studies are concerned

with the complaints of consumers. The findings of one study of US airlines between

1995 and 2002 reveals the wide-ranging nature of the typical complaints by

consumers. Aspects of these complaints are reproduced in Table 2.4. From a

report on the website of the US Department of Transportation (2005).The specific

issues, which include complaints about frequent flyer programs, are set out in

Table 2.5. These are derived from information supplied by the Canadian

Transportation Agency (2004) and indicate a wide range of concerns. Even a

cursory review of the information in the table above indicates that the quality of

service is a significant issue. The main complaints by frequent flyers about the


service they receive (Canadian Transportation Agency, 2004) revolves around:

Points redemption; Reservations; Space available.

Table 2.4. Consumer complaints against top US airlines by category (Atalik, 2007)


Table 2.5. Complaints by flyers 2003 to 2004 (Atalik, 2007)

2.11.1. The complaints of frequent flyers

Atalik (2007) stated that members were asked to indicate the main type of

complaints they had concerning their program. Subsequently, they were asked to

make recommendations about how these complaints might be addressed. The

complaints can be grouped into five categories.

1. Lack of free tickets and upgrades of the flight class (93.75 per cent).

2. Behavior of personnel (32.89 per cent).

3. Card ownership issues (e.g. high miles needed to retain membership) (65.79 per

cent).

4. Nature and level of priority services offered within the program (56.74 per cent).


5. Lack of alliance with other airlines (46.88 per cent).

These complaints are discussed in more detail below.

2.11.2. Free tickets and upgrade of the flight class

Atalik (2007) stated that most members complained about free tickets and

upgrading their flight class. The high amount of mileage required to qualify for free

tickets is a factor here and this may have an adverse effect on the attractiveness of

the program for both current and potential members. From the viewpoint of current

members, the high mileage factor reduces the motivation of flyers and diverts them

to other carriers that have programs, which offer similar rewards for fewer miles.

The lack of flexibility in converting rewards is also a factor. One of the most

common complaints by members suggests that they are unable to use their free

tickets when they want

2.11.3. Personnel

Atalik (2007) stated that many members complained about the behavior and

demeanor of the airline personnel. The focal point of such complaints is as follows.

Personnel are uninformed about the frequent flyer program.


1. Inappropriate training received by the cabin crew.

2. Lack of the language proficiency of the cabin crew.

3. Sensitive behavior of the ground personnel.

4. Rude and insensitive personnel at the check-in desk.

5. Uninformed and insensitive ‘‘foreign’’ personnel.

6. Personnel are not of a ‘‘cheerful’’ disposition.

2.11.4 Card ownership

Atalik (2007) stated that literature review shows that most members have

complaints on the ‘‘ownership’’ aspects of the frequent flyer card, which include the

high miles required to maintain Elite membership. Although some members have

been Elite members for long periods, they may be relegated if they fail to achieve

the required annual miles for remaining in that class. In this context, it may be

appropriate to reconsider the number of miles for retention or to include domestic

flights in the calculations. In addition, the high number of new members of

Miles&Miles can adversely affect the level of services given to the Elite members.


2.11.5. Priority services offered within the program

Atalik (2007) stated that many members have complaints concerning the types of

priority services offered within the program. The focal points of these complaints

are. Because there are many Elite members, some priorities are not available.

1. No priority in the holding list.

2. No priority in the reservations.

3. No priority in check-in process.

4. Inadequate VIP and similar lounges.

5. Limited food and beverage choices.

Inability to ‘‘win’’ miles from domestic flights.

2.11.6. Alliances with the other airlines

Atalik (2007) stated that some members complained about alliances with other

airlines. In particular:

1. There is an inadequate level of co-operation with the other airlines.

2. There are limited destinations.


2.12. Service recovery solutions

2.12.1. The complaining process

Buttle and JBurton (2001) stated that Spreng et al. (1995) found that in both

positive and negative recovery outcomes, recovery can take on greater importance

than the original service failure (Berry and Parasuraman, 1993). They state that

outcome is the `primary driver' of consumer evaluations of service in initial

encounters, but process is more important during service recovery. Blodgett et al.

(1995) identify two important forms of justice within recovery: `distributive justice'

(fair settlement) and `internactional justice' (polite and respectful treatment).

Blodgett et al. (1993 and 1995) investigated the complaining behavior process. The

1995 study found that dissatisfaction leads customers to seek redress if they

perceive a positive likelihood of success but only if they are the type of person who

complains.Stability and controllability of the initial problem were also found to

influence dis/satisfaction evaluations. Halstead et al. (1996) suggest that a single

genuine failure can lead to further complaint on other issues: a `halo effect'.

Warden et al.(2003) stated that service failures are often followed by recovery

attempts on the part of the service provider. Such recovery strategies are well

documented as playing an important role in a consumer’s final level of satisfaction


(Bitner et al., 1990; Hoffman et al., 1995; Kelley et al., 1993; de Ruyter

andWetzels, 2000; Swanson and Kelley, 2001).If the service failure is not followed

by a recovery attempt, the consumer will lock in the experience (Hart et al., 1990)

and evaluate the service relatively low. Although a service failure recovery strategy

may not be exactly what the customer expects, it may be enough to create

satisfaction. Bitner et al. (1990) found that responses to failure incidents, such as

apologies, compensatory actions, and explanations, could lessen the

dissatisfaction of customers. Bitner et al. (1990) found that even the simple act of

offering an apology can increase satisfaction and overcome many service failures.

A failure event may even present an opportunity to obtain higher ratings

fromcustomers than if the failure had never happened (Etzel and Silverman, 1981;

McCollough and Bharadwaj, 1992; Michel, 2001; Tax and Brown, 1998). Although

work by Andreassen (2001) and McCollough et al. (2000) did not support the

existence of a recovery paradox, it did support the importance of recovery in

diminishing dissatisfaction.

Warden et al.(2003) stated that Andreassen’s (2000) results showed that recovery

satisfaction levels were not affected by the specific failure, and that a recovery

improves customers’ satisfaction, although not a valid replacement of good service

at the start. When considered within the context of intercultural service encounters,

an effective recovery strategy should contribute to the attribution of a service failure

to the category of an exception (unstable attribution) as the customer perceives the


service provider as having normally good service and this specific failure as a rare

event. Because a tourist is only visiting, a recovery attempt will reinforce the

perception that an error is an unusual case. Sensitivity to the possibility of cultural

differences will also encourage the customer to perceive a failure as being caused

by cultural misunderstanding (locus of causality) and not intentional on the service

provider’s part. Such favorable attribution, however, could be lost, if no recovery

were attempted. This would lead to attributing a failure to the service provider and

the failure retaining its initial seriousness.

2.12.2. Service recovery

Atalik (2007) stated that service recovery is concerned with the process of

addressing service failures. Specifically, this entails service recovery with the

productive handling of complaints and includes all actions taken by a service

provider in order to resolve a customer’s problem (Gro¨nroos, 1990). Without

complaints, organizations may remain oblivious to significant problems – the

chance of appeasing unhappy customers evaporates. Arguably, the greatest

barrier to effective service recovery and the potential of organizational learning in

this context is the fact that only between 5 and 10 per cent of dissatisfied

customers actually complain formally following a service failure (Ennew and

Schoefer, 2003; Tax and Brown, 1998). Nevertheless, what constitutes an effective


service recovery is subject to debate. Bell and Zemke (1987), for example, propose

five ingredients for recovery:

1. An apology: A first person apology rather than a corporate level apology (and

one that also acknowledges that a failure has occurred).

2 .An urgent reinstatement: Speed of action coupled with a ‘‘gallant attempt’’ to put

things right even if it is not possible to correct the situation.

3. Empathy: A sincere expression of feeling for the customer’s plight and particular

circumstances.

4. Symbolic atonement: A form of compensation that might include not charging for

the service or offering future services free or discounted.

5. Follow-up activities: An after-recovery call to ascertain if the consumer is

satisfied with the recovery process to date.

Simons (2004) stated that quality is typically complex, multi-dimensional notion

(Garvin, 1987).However; service quality has become widely accepted as a function

of five specific dimensions: reliability, responsiveness, assurance, empathy, and

tangibles (Berry et al., 1985, 1990; Parasuraman et al., 1985; Zeithaml et al.,

1990). Reliability is the ability to perform the promised service consistently,

dependably, and accurately. Reliability has often been cited as the most important

dimension in assessing the quality of service and is therefore a fundamental


requirement for businesses to compete in the marketplace (Cook et al., 2002).

However, many services are labor intensive and human service providers make

mistakes. Consequently, a high percentage of service failures are a result of

human error in the delivery process, which may take the form of either

inappropriate intentions or actions not proceeding as intended (Stewart and Chase,

1999; Stewart and Grout, 2001). Consequently, it is difficult for service managers

to achieve high quality, while also controlling costs (Soteriou and Chase, 2000). It

has been suggested that error prevention strategies must discourage the cognitive

mechanisms that generate errors, improve the detection and correction

capabilities, or find a means of increasing the likelihood that a negative outcome is

unimportant (Stewart and Grout, 2001). The latter two of these objectives have

come to be known as service recovery (Hart et al., 1990; Johnston and Hewa,

1997; Fitzsimmons and Fitzsimmons, 2001). Service recovery refers to steps that

are intended to identify and correct service failures or quality problems. While

service recovery was initially supported by numerous anecdotal claims, more

analytical subsequent studies have shown a positive linkage between service

recovery and customer satisfaction, loyalty, and future business (Spreng et al.,

1995; Miller et al., 2000). Empirical evidence suggests that service recovery is a

very effective way of enhancing service quality because although the vast majority

of customers will not express their dissatisfaction with a service encounter (making

active identification essential to detect problems), the majority of customers who

encounter problems will remain loyal to the service company if their problem is

resolved (Hart et al., 1990; Fitzsimmons and Fitzsimmons, 2001).


Effective service recovery is not just an after-thought, but is rather an intentionally

designed part of a service delivery system that has been planned into the service

design in support of the service concept. Goldstein et al. (2002) provide an

excellent review of the existing literature from this perspective. When accomplished

correctly, the return on investment in service recovery can exceed 100 percent

(Heskett et al., 1997). Miller et al. (2000) present a complete framework for service

recovery. Their framework includes pre-recovery, immediate recovery and follow-

up phases and identifies the various factors that determine what occurs in each of

these phases. Their empirical results showed 90 percent of customers whose

problem was solved via service recovery intended to return for further service,

while only 22 percent of those whose problems were not solved intended to return.

Simons (2004) stated that the framework proposed by Miller et al. (2000) illustrates

how complex the seemingly simple idea of service recovery may be. For the most

part, research on service quality and service recovery has been based on the idea

of meeting customer expectations, whatever those expectations may be (Zeithaml

et al., 1990). However, Parasuraman et al. (1991) introduced the idea that there

may actually be a “zone of tolerance”. This zone may be bounded by the minimal

level of acceptable service (adequate service) and what the customer believes

should be possible (desired service). Therefore, approaches that would be most

helpful to managers should be applicable to the achievement of any threshold


considered important to the customers of a particular service. Such will be the case

in the present research.

Furthermore, it may be that successful service recovery does not depend on when

the provider becomes aware of the problem, so much as how quickly it responds

once it does become aware (Miller et al., 2000). Stewart and Grout 2001) have

suggested that it may be important to prevent mistakes from influencing process

outcomes by decoupling tightly coupled processes or making them self-correcting.

This will obviously require analysis of systems on a step-by-step basis. While

Soteriou and Chase (2000) model service systems at this level of detail, their

method is primarily applicable to allocating existing operational resources for

(improving) an existing system under uncertain outcomes. They do not explicitly

incorporate service recovery. Consequently, the literature has offered managers

virtually no analytical help in determining how to make the resources tradeoffs

required to incorporate concepts like service recovery into the design of a high-

quality service system. In summary, then, the previous research shows that

reliability is a key component of service quality, that service recovery is very

important to a successful service encounter and long-term customer behavior, that

service recovery needs to be planned for in service delivery system design, that

customer satisfaction may vary at different stages of the service process, and that

rapid response is crucial to success. However, there has been almost no multi-

stage modeling of service recovery to facilitate system improvement.


Cranage (2004) stated that service recovery is now recognized as a significant

determinant of customer satisfaction and loyalty (Smith et al., 1998; Tax and

Brown, 1998). Service recovery includes all actions taken by a service provider in

order to try to resolve the problem that caused the service failure (Gronroos, 1990).

Service recovery strategies involve both what is done (tangible compensation) and

how it is done (employee interaction with the customer), and both influence

customer perceptions of the service recovery (Levesque and McDougall, 2000).

The most common and frequently used recovery strategies are apology,

assistance, or compensation, or some combination of these three (Bitner et al.,

1990; Hart et al., 1990; Smith et al., 1999). An important point discussed in many

of these studies deals with complaining, sometimes referred to as “voice”

(Hirschman, 1970). Some service providers look at complaining as negative.They

does not like to hear about the bad things.

Cranage (2004) stated that however, complaining creates the potential for the

customer, and the service provider, to resolve the service failure. It is important to

note that if a customer does not complain, then the service provider may not know

that a service failure has taken place. It is the complaint that institutes the service

recovery effort. Several studies show that only a minority of dissatisfied customers

complain (Agbonifoh and Edoreh, 1986; Andreasen and Best, 1977; Brown, 1987).

Service providers need to encourage customers to complain and set up

procedures that are simple for customers to complain when service does not meet


expectations. A study by Lewis and Sotiris (2001) showed that the main customer

focus in service recovery is on achieving what they were supposed to get in the

first place. So if you cannot get it right the first time, the most successful way of

recovering from a service failure is to make things right by eliminating the problem

with the initial service.

Buttle And Burton (2001) stated that firm's approach to dealing with consumer

dissatisfaction can be described as `defensive marketing' – the protection of the

existing customer base (Fornell and Wernerfelt, 1987).Service recovery methods

include any action necessary to return a customer who has experienced service

failure to state of satisfaction. Technology may be a useful tool (Hart et al., 1990;

Berkley and Gupta, 1994). It should be recognised that customers are not always

right (Bitner et al., 1994). Customers cause 30 per cent of service or product

problems (Zemke and Bell, 1990). Etzel and Silverman (1981) suggest four

possible courses of action for dealing with complaints. Spreng et al. (1995)

highlight the importance of adequate service recovery techniques. Token'

responses can be seen as unjust. Two studies they cite reveal that only 30±53 per

cent and 50±67 per cent of customers questioned were happy with experienced

service recovery.

Recovering from service failure(2006) stated that as consumers become

increasingly happy to complain about a product or service, so it has become more


important for service providers to deal efficiently with dissatisfied customers. As

David Bamford and Tatiana Xystouri argue in their article ‘‘A case study of service

failure and recovery within an international airline’’, there are strong and complex

links between customer satisfaction and profitability.

Boshoff (1997) stated that Zemke and Bell (1990) describe service recovery as a

process for returning aggrieved customers to a state of satisfaction with the

organization after a service or product has failed to live up to expectations.

Schweikart et al. (1993) view service recovery as part of quality management and

that the ultimate objective of it all is to maintain the business relationship with the

customer. This contention is based on the premiss that customer satisfaction

ensures customer loyalty, repeat sales and positive word-of-mouth communication

(Bearden and Teel, 1983). Effective service recovery, on the other hand, leads to

enhanced perceptions of the quality of products and services already bought,

enhanced perceptions of the firm’s competence and a favourable image in terms of

perceived quality and value (Technical Assistance Research Programs Institute,

1985; Zemke and Bell, 1990).


2.13. Service recovery: from potential defector to loyalist

Buttle and JBurton (2001) stated that more than half of all efforts to respond to

customer complaints actually reinforce negative reactions to service' Hart et al.

(1990) cited in Spreng et al. (1995). Complaint handling, when done properly,

offers an opportunity for developing customer loyalty. According to various studies,

the retention rate of customers whose problems have been resolved is 50 per cent

(Goodman and Ward, 1993), 95 per cent (Diamond, 1999), 70 per cent in Canada

rising to 95 per cent for swift resolution (Hepworth and Mateus, 1994). Smith et al.

(1999) concluded that customers prefer to be recovered in ways that `match' the

failure they experienced, both in the value and the form of recovery. They

investigated four attributes of perceived justice– compensation, response speed,

apology and recovery initiation–for the influence they exerted on customer

perceptions of `distributive', `procedural' and `interactional' justice. Zeithaml et al.

(1996) tested the conclusion of Bolton and Drew (1992) that service failure can

weaken customer marketer relationships even the problem is resolved

satisfactorily.

Their multi-company study of customer intention revealed that customers who had

experienced no service problems had the strongest loyalty intention, lowest switch

and external response intentions. Customers whose problems had been resolved

satisfactorily expressed greater loyalty intention, willingness to pay more and lower


switching intentions than those with unresolved problems, but these intentions

were not as great as those customers who had experienced no service problems.

Service consistency had a greater impact on customer satisfaction than service

recovery. The effectiveness of various service recovery techniques for customers

of retailers in the light of identified service failure issues. Customer preferences

were assessed on a ten- scale and retention rates were computed for each type of

recovery. The bottom five recoveries have ratings below the mid-point of the

recovery scale suggesting their inferiority (Buttle and JBurton 2001). Although

previous research has shown that service recovery can be beneficial compared to

having no service recovery, the timing, sequence (placement), and benefits of

service recovery steps within the broader context of the overall service delivery

system are still not well understood (Miller et al., 2000).

2.14. Benefiting from service recovery and addressing complaints and

solving problems

Bejou and Palmer (1998) stated that the authors of this article make clear that a

business’s recovery strategy can have dramatic ramifications for its revenue and

profitability. An example given is that of Hampton Inn, the US hotel chain, which

realized $11 million in additional revenue from the implementation of an effective

service guarantee, scoring the highest customer retention rate in the country. This

case helps to highlight the point made that, with the right research and subsequent


recovery planning regarding the delivery of services, the retention of a consumer

base (encouraging loyalty in their customers) impacts on the success of the

organization. Research by the Office of Fair Trading has demonstrated that when

consumers complain about an aspect of the service encounter, and the matter is

subsequently resolved satisfactorily, three quarters of those customers will return

to the brand. However, if the matter is not dealt with adequately, or is left

completely unresolved, less than half will return. From this, it is clear that there is

profit to be made from customer loyalty. An important factor in creating a system of

efficient service delivery is the gathering of information from dissatisfied customers.

Unfortunately, only 5-10 percent of unhappy consumers actually complain about

their experiences. There are thought to be several reasons for this, including the

following:

1. Customers believe that the organization will not respond;

2. They wish to avoid confrontation with the person responsible for the failure;

3. They are uncertain about their rights and the obligations of the organization;

4. They have concerns over the cost and time of complaining.

These factors are hindrances to gathering the information required in order to

structure a successful recovery plan. The customer is the primary resource for

collating this information, and it is important for businesses to understand that it is


not necessarily the initial service failure or incident which leads to dissatisfaction,

but the organization’s subsequent lack of response to the situation. For this reason,

a recovery program becomes crucial in maintaining consumer loyalty.

Atalik (2007) stated that several studies demonstrate that it is possible to recover

from service failure and quickly regain the confidence of customers (cf. Kelley et

al., 1993). Any successful recovery will have a positive influence on post-recovery

satisfaction levels, future purchasing intention (Spreng et al., 1995), customer

perceptions of fairness (Goodwin and Ross, 1992; Smith et al., 1999) and

customer loyalty towards the organization (Levesque and McDougall, 2000;

Webster and Sundaram, 1998). There is also evidence in the literature to suggest

that the following simple and generic guidelines are highly effective in the

successful resolution of complaints (cf. Lovelock et al., 2001). Briefly, these

guidelines include:

1. Acting expediently to resolve the issue.

2. Acknowledging that mistakes were made without being defensive.

3. Demonstrating that you understand the problem from the customer’s point of

view.

4. Not arguing with customers.

5. Acknowledging the feelings of customers.


6. Giving customers the benefit of the doubt.

7. Clarifying the steps need to solve the problem.

8. Keeping customers informed of the process/progress.

9 Considering the possibility of compensation.

10. Persevering in order to regain the goodwill of customers (McCole, 2004).

2.15. Recovery methods and Guidelines

Management likes universal truths. Unfortunately, the research has shown that

there is no one best method of management for every service or every situation.

This is also the case for service failures. The research presented above indicates

that different strategies apply in different situations with differing results. Some

strategies are more successful in one situation while other strategies are better in

other situations. The question is, “what should be done that will benefit a particular

operation the most?” It is not an easy question to answer. Each operation is

different, the services are different, and the customers’ wants, needs and

expectations are different. Therefore, the suggested steps to prevent service failure

are as follows:


1. Talk to the customers, Find out their wants, needs and expectations. What do

they expect from the operation in terms of products and services? Then find out

what they would expect if they did not receive these satisfactorily.

2. Truly analyze the operation. Look at the physical environment. Is it set up to

produce and deliver the products and services? It will also require a simultaneous

analysis of the products and services, and the processes and systems needed to

produce and deliver them. Look for the places in the physical environment,

processes and systems that can break down and cause service failure.

3. Analyze the staff. Are they the right people in the right jobs? Do they have the

skills? Have they been trained correctly and completely? Do they get the support,

direction, and incentives they need to do their job well?

4. Employees who have been empowered to deliver quality service, who have an

accommodating communication style, which are outgoing, agreeable and

responsive to needs and requests of the customer, are able to prevent service

failures. All of this is to try to get it right the first time. This forces management to

ensure prompt, consistent, quality service, by identifying failure points in the

service delivery (Table 2.6). Only then will it be possible to identify methods to

prevent these service failures. From this analysis it should be possible to determine

the characteristics of the services, of the customers, and of the staff. This

information is necessary to develop effective service recovery strategies.


Table 2.6. Getting it right the first time (Cranage, 2004)

Recovering from service failure (2006) stated that a happy customer, it would

seem, begins with a happy employee. Bamford and Xystouri make a connection

between the provision of quality service, and employee satisfaction. An employee

is more capable, and willing, to provide a higher quality of customer care if he or

she is happy with the work being undertaken. There are a number of factors which

will contribute to employee satisfaction in the workplace, such as training; salary;

advancement opportunities; respectful treatment; teamwork; and the worker’s own

perception of his ability to meet customer expectations. Certain structural practices

within the organization may also be employed to improve recovery-effectiveness,

such as:

1. Hiring, training and empowerment;

2. Establishing service-recovery guidelines and standards; and


3. Providing effective responsiveness and customer access through call centers

and maintaining customer and product databases.

For a more market-driven approach to service recovery, there are different tools

open besides identifying and negotiating individual complaints. These include

surveys; mystery shopping; focus groups; customer and employee advisory

panels; and service operating performance data. Such research will provide the

organization with the ability to identify those areas in customer relationships which

most urgently require a recovery strategy, thereby influencing its overall

profitability.

Cranage(2004) stated that other research using the critical incidents method has

looked at understanding the reasons for losing customers. When customers leave

or switch to competitors it may be for a number of reasons including price, quality,

selection, location and/or poor service. But the critical incidents method has

identified service failures (Bitner et al., 1990; Hoffman et al., 1995; Keaveney,

1995) as the major cause of customer defection. Defection analysis is a means for

companies to determine areas of service failure by identifying the lost customers,

and finding out from them why they had left. The concept is similar to exit

interviews of departing employees, conducted by the human resources

department, to identify problem areas in employee relations. When service failure

problem areas are identified, management can develop plans and procedures to


eliminate them. Getting it right the first time is the first and the best strategy in

dealing with service failure. To this point, we have provided an overview of several

service failure points and preventive actions that can help in getting it right the first

time. However, despite management’s best efforts to prevent them, service failures

still occur. That is why it is necessary to also plan service recovery strategies.

Boshoff (1997) stated that service recovery is of particular importance if one

considers that in many according to some studies, the majority of) instances

dissatisfied customers simply do not complain to the seller or service provider. The

few who do complain provide valuable information in terms of what can be done to

improve customer satisfaction. The unwillingness to air complaints results in

ignorance An among service firm decision makers and has a number of serious

consequences including a declining market share, more expensive defensive

marketing strategies (Fornell and Wernerfelt, 1987), the inability to correct faulty

systems and the undermining of the validity of customer complaint data as input to

decision making (Bearden and Teel, 1983). To avoid these negative outcomes

customers ought to be encouraged to complain while employees should be willing

and able to respond (Fornell and Wernerfelt, 1987). In other words, effective

service recovery is dependent on both customer and employee inputs.


2.16. Service failure recovery training

Magnini and Ford (2004) stated that service failures are defined as any service

related mishaps or problems (real or perceived) that transpire during a customer’s

experience with a firm (Maxham, 2001). In this context, service recovery is the

process by which a firm attempts to rectify a service delivery failure (Kelley and Davis,

1994). Service recovery training is crucial for hotel associates because it is

impossible to eliminate all mistakes. The hospitality industry is unable to control all

aspects of service delivery and unlike the manufacturing industry where quality

controls can allow for zero defects, hotels are dependent upon people to deal with

people. The important strategic rule is that it is far less expensive to keep an

existing customer than it is to bring in a new customer. Hotel management cannot

afford to lose good customers who have the potential to become important

marketers for the hotel via positive word-of-mouth referrals to friends and

associates while also increasing their spending at hotel properties as they advance

in their careers. As a result, hotel managers with Chinese properties should

carefully consider their service recovery training programs to ensure that training is

suitable for the Chinese situation. Adaptations are needed. First it is important to

examine present types of recovery training programs.

Magnini and Ford (2004) stated that many hoteliers now utilize service recovery

training programs (Brown, 2000). For example, Ritz-Carlton trains a core value set


called “the gold standards”, which encompass the “20 basics” that serve as

guideposts for employees’ recovery actions (Brown, 2000). Also, numerous hotel

companies train the LEARN process (listen; empathize; apologize; react; notify).

One company stated that its objectives for training were to “encourage and enable

trainees to provide ‘exceptional’ and ‘personalized’ service consistently and, even,

‘to leave here anxious for the next customer complaint’ (Sturdy, 2000)” The

concern here is to instill a mindset in the employees to seek continuous service

delivery improvements. Recovery training programs require performance

measurement against benchmark standards. Without effective measurement, there

is no mechanism to assess actual performance. So, how can effectiveness of

service recovery training programs be gauged? First, guest satisfaction survey

results (particularly items addressing problem resolution) can serve as a barometer

of training effectiveness. Correlating satisfaction scores with training initiatives over

a period of time can serve as a relatively reliable means of measuring training

effectiveness. Secondly, training effectiveness can also be assessed at the

individual associate level. An interesting training perspective is suggested by

Peccei and Rosenthal (2000) in their view of the possible outcomes of service

training (Figure 2.2).


Figure 2.2. A typology of employee reactions to customer orientation training (Magnini and Ford ,2004)

Magnini and Ford (2004) stated that the vertical axis represents the attitudes of

trainees and the horizontal axis reflects their actions. Those associates in the

“committed” quadrant have internalized and exhibit the trained skills. Those in the

“lip service” section claim high levels of support for service quality, but do little to

actually engage in the implementation of the skills. The associates that fall into the

“behavioral complaints” quadrant show positive behavior toward guests, but their

actions are not underpinned with a true internalization of customer service. Lastly,

the “rejecters” have neither internalized or practice the service skills. These

movements can then be utilized to assess the associate’s progress, performance,

and developmental needs. Service recovery training has been shown to be

effective and is a strategic necessity for guest retention and hotel profitability, but

western training programs do not take into consideration cultural differences and


sensitivities. Hoteliers with properties in China must consider adapting their

programs to reflect Chinese cultural issues and requirements.

Bhandari et al. (2007) stated that Dasu and Rao (1999) also examined this issue in

terms of health care services to determine what activities the provider actually

undertakes after service failure in contrast to what recovery activities customers

believe that service providers should undertake. Their findings suggest that a

range of factors determine customer expectations in relation to the recovery

actions undertaken, including industry reputation and personal experiences. Their

research suggests that when developing expectations of the recovery activities that

should be undertaken, consumers tend to rely on norms, perceptions of fairness,

social contracts, and hospitality theories. As such, there is sometimes a significant

gap between what consumers expect firms will actually do in recovery situations

compared to what consumers expect firms should do in regards to service

recovery, which is a feature generally identified within nonfailed encounters as well

(Colgate, 2001; Gro¨nroos, 1988; Keaveney, 1995).

Bhandari et al. (2007) stated that research into service recovery suggests that

customer expectations of a recovery encounter translate into an evaluation of

recovery performance (Gilly and Gelb, 1982; Hart et al., 1990). In the framework

adopted here, we propose that evaluation will vary on a continuum ranging from a

zone of satisfaction, through a zone of acceptance to a zone of dissatisfaction,


which is similar to that which occurs in no failed encounters (Bitner et al., 1990). As

discussed earlier, it is possible that the zone of satisfaction will be very small or

non-existent in recovery processes related to extreme or no recoverable failure. Of

course, as with all service encounters, consumer evaluations of the actual recovery

process in comparison to their expectations will determine the level of satisfaction

with the recovery process.

2.17. Organizational actions

Bhandari et al. (2007) stated that a study by Wiersema (1991) showed that

changes in organizational structure, where the customer service task is divided to

make it more manageable, can reduce service failures significantly. Many

customer service tasks have already been broken down to what is thought to be

manageable. But most tasks in hospitality operations have remained the same for

decades. Few, if any companies have truly re-evaluated the process for each

customer service they provide to analyze the best way to deliver the service

promptly, consistently, with quality, and with a focus to identify and eliminate

service failures. Many organizations define recovery actions in terms of a set of

formalized policies. As stated earlier, these generally cover two main service

recovery activities:


1. Compensation; and

2. Empowerment.

Compensation is designed to overcome negative consumer outcomes regarding

the experience by providing tangible evidence that the service provider is fair

(Kivela et al., 1999).For example, compensation in any failed experience is

considered an important tool to overcome negative disconfirmation (Deutsch,

1975). It can restore equity to an exchange relationship (Berscheid et al., 1973) or

connote associations with distributive justice (Smith et al., 1999). Compensation

can comprise a range of actions including, refund, replacement or both (Boshoff

and Leong, 1998, Lewis and Spyrakopoulos, 2001) and some suggest that it is the

most important tool for dealing with service failure (Tax et al., 1998).

Bhandari et al. (2007) stated that a second organizational recovery action is

employee empowerment, which is the authority for an employee to present a

solution that meets the needs and expectations of the individual customer (Eccles

and Durand, 1998). Empowering staff to deal with customer dissatisfaction is an

important service recovery strategy (Boshoff and Leong, 1998). “Empowerment

means giving frontline employees the desire, skills, tools, and authority to serve the

customer” (Zeithaml and Bitner, 2000). The need to empower employees is

commensurate with the need for service failure recovery (Hart et al., 1990;


Parasuraman et al., 1991). However, the empowerment of employees also

requires that they are able to understand and manage failure, as well as customer

expectations of appropriate recovery actions. As such, empowerment (an

organizational activity) is clearly linked to employee actions.

2.18. Employee actions

Organizations sometimes set goals in order to manage recovery expectations

through employee actions, which involve moving beyond simply developing

“policies” to deal with service recovery. The various recovery actions that

employees can undertake serve as “a valuable reward that redistributes esteem (a

social resource) in an exchange relationship” (Smith et al., 1999). An apology is an

important recovery action available to an employee to rectify a failed encounter.

Apologies are important for at least three reasons:

1. They can provide an instantaneous response and thus minimize customer

anxiety

2. They convey a willingness to attend to the problem and that the firm cares about

the customer’s wellbeing

3. An apology can diffuse customer anger


2.19. Service recovery options: the technology of service

Boshoff (1997) stataed that once a service provider has acknowledged service

failure and has decided to provide redress through service recovery, the obvious

question is, what options are available to repair the damage to secure maximum

benefit from these efforts? (Goodwin and Ross, 1992). Gnoth (1994), based on the

earlier work of Heidegger (1978) argues that a service, like any piece of work,

consists of four causal elements:

1. An idea of what the final product is;

2. The means necessary to produce it;

3. The shape, form or order these means are to take;

4. The person (or machine) who responds to a demand, chooses adequate means,

organizes them and delivers the service.

This “technology-of-service” approach provides an operational framework for

designing a service (Gnoth, 1994). If service recovery is seen as a service, the

framework can be applied as follows:

1. The final product: In this case, the final product is redress, in other words, a

service as part of the quality management process with the ultimate objective being

to maintain the business relationship with the customer. This objective will only be

realized if the customer’s level of dissatisfaction, which is presumed to decline


following a disconfirmation experience, can be improved, at least to a level where

defection is no longer a consideration. Service recovery should ensure a (more)

positive attitude towards the service provider resulting in the favorable outcomes.

2. The means used: “The means used” in Gnoth’s (1994) configuration considers

the question of how the service provider will go about addressing the

dissatisfaction of the customer. Equity theory suggests three broad approaches

(Gilly and Hansen, 1985). An under-benefiting (indifference and neglect) approach

implies that the service firm does not really care much about their customer’s loss

due to the service failure and largely ignores the complaint. Others may simply

pursue an equitable resolution of the problem to avoid any negative consequences

such as negative word-of-mouth, switching or even legal action. Over-benefiting,

on the other hand, means bending over backwards for the customer giving them

something extra beyond a mere refund or redo of the service. Such a strategy

means a firm views service recovery as an investment which will generate a return

in the future.

3. Order: Order implies a time dimension and addresses the question of how

quickly recovery should take place. It was operational zed as: immediately; soon

(three days after disconfirmation); and later (a month after disconfirmation). There

is considerable evidence to suggest that time delays may be important in service

recovery (Hart et al., 1990; Taylor, 1994; Zemke and Bell, 1990).

4. The person responding to the demand: The person responding to the demand

considers who should recover. It refers to designating responsibilities for recovery


(Mitchell, 1993). Attribution theory, which has found considerable empirical support

(Bitner, 1990; Richins, 1987), posits that the involvement of specific people plays

an important role in consumer complaint behaviour. Dissatisfied customers, Zemke

and Bell (1990) suggest, expect some personal attention. In this study, it was

operationalized as who should provide the personal attention: it could have been

the frontline employee, his/her supervisor or the marketing manager. Hart et al.

(1990) are adamant that the best person to recover is the frontline employee.

2.20. Attribution Theory and Justice Theory

Wirtz & Mattila (2004) stated that attribution theory assumes that people are

rational information processors whose actions are influenced by causal inferences

(Folkes, 1984). Prior research shows that consumer attributions for product or

service-related problems influence their post-consumption behaviors, including

word-of-mouth referrals (Richins, 1983).Weiner (1980) developed a categorization

scheme that classifies causes of product failures by three dimensions: locus of

control, stability and controllability. Locus of control captures whether the failure

was firm-related, consumer-related, or caused by external factors (Folkes, 1984).

The stability dimension assesses the degree to which a cause is seen as relatively

permanent (Folkes, 1988), while controllability refers to the degree to which a

cause was perceived to be under the firm’s or the service provider’s volitional

control (Taylor, 1994). This study focuses on the stability and controllability


dimensions, as these two dimensions seem more pertinent to mundane service

encounters than locus of control.

Wirtz & Mattila (2004) stated that Prior research suggests that consumers typically

believe that product or service failures are stable and controllable. For instance in

Folkes’ (1984) study, stable and restaurant controlled causes were rated as the

most common cause for unpalatable food. Prior studies indicate that perception of

controllability leads to enhanced anger; lower repurchase intentions and higher

likelihood of complaining (Folkes et al., 1987). Moreover, research in social

transgressions shows that confessions decrease conflict while enhancing

controllability attributions (Weiner, 2000). In a service recovery context,

compensation can be perceived as a form of confession (Weiner, 2000). Bitner

(1990), for example, suggested that offering compensation implies an admission of

guilt on the part of the service provider, thus increasing the perception that the

service provider had control over the service failure. In addition to compensation,

the speed of recovery might influence consumer attributions. In this paper, we

argue that the speed of recovery is perceived as an efficiency cue, thus affecting

customers’ stability attributions. Weiner (1980) suggests that perceived effort is

linked to stability inferences. Stability is related to uncertainty, thus influencing

consumers’ future expectations of service performance (Oliver, 1997). Attributions

to stable causes lead the consumer to expect similar outcomes in the future

(Folkes, 1984; Maxham and Netemeyer, 2002). We postulate that an immediate


recovery on the service provider’s part implies efficiency, which in turn suggests

that the failure was unstable. In other words, a fast recovery would be seen by

consumers as a cue for a service provider being efficient and generally offering

good quality service. Consumers who perceive that the service provider is

competent are less likely to think that the service failure will reoccur in the future

(Blodgett et al., 1995).

Wirtz & Mattila (2004) stated that Prior work demonstrates that consumer

attributions are strongly linked to customer satisfaction (e.g. Mohr and Bitner,

1995). Recent work in service recovery suggests that consumer attributions might

also influence their service recovery perceptions (e.g. Smith et al., 1999; Swanson

and Kelley, 2001). Smith and Bolton (1998) reported mixed support for the effect of

stability attributions on satisfaction. The negative effect of stability was found in a

restaurant setting but not in a hotel context. Au et al. (2001) studied the impact of

responsibility attributions on post-complaint behaviors in a cross-cultural setting. In

that investigation, attribution processes mediated the role of culture on post-

complaint responses. In this paper, we empirically test the mediating role of

stability and controllability attributions on post-recovery satisfaction.

Cranage(2004) stated that Justice theory has also been used to study service

recovery (Tax and Brown, 2000) and may help explain the findings present above.


Studies show that customers evaluate service recovery on their perception of

fairness using three factors:

1. Outcomes such as apologies, discounts and compensation – distributive justice;

2. Speed and ease of recovery procedures – procedural justice; and

3. Treatment during the service recovery interaction with employees – interactional

justice (Blodgett et al., 1997; Clemmer and Schneider, 1993; Goodwin and Ross,

1992;Mattila, 2001; Smith et al., 1999; Tax et al., 1998).

In fact, Smith et al. (1999) found that the three justices together explained a high

percentage of customer satisfaction after the service recovery. Hoffman and Kelley

(2000) propose that the evaluation of service failure and service recovery depends

on six contingencies in relation to interactional and distributive justice:

1. Depth of the relationship;

2. Proximity of the relationship;

3. Duration of the encounter;

4. Degree of customization;

5. Criticality of consumption; and

6. Switching costs.


2.21. Service recovery strategies

1. Develop ways to encourage customers to complain. Make it easy for them to

complain, and give them outlets to complain. Remember, complaining creates the

potential for customers and the service provider to resolve the service failure, and

the opportunity to implement service recovery.

2. Serious failures require more substantial recoveries, sometimes a combination

of recoveries.

3. Core services are services that have been contracted, either directly or implied,

and are basic to the whole service experience. They not only need to be corrected,

they must be corrected.

4. It is important to identify the depth of the relationship, proximity of the

relationship, duration of the encounter, and the degree of customization of each

service (Table 2.7).

5. Consider some additional strategies that may help either to eliminate service

failures, or help mitigate the negative effects of service failures. If you have

successfully analyzed the service environment, systems and staff, and have made

the necessary adjustments to ensure prompt, high quality service now may be the

time to communicate this by offering a service guarantee. A service guarantee

communicates reliability. Customers buy a service that has a guarantee because

they are primarily interested in service reliability and only secondarily interested in


the compensation. However, a service guarantee is only economical if the service

is consistently delivered satisfactorily.

6. The importance of service personnel in the success of the service encounter and

in the service recovery effort has constantly been cited in the literature. Good

selection, training and support are essential. In addition, however, is the need for

internal service recovery? To reduce stress, frustration, and feelings of

helplessness, front line employees need empathy, encouragement and social

support. Satisfied internal customers increasingly satisfy external customers.

7. Finally, management should consider some pre-emptive strategies to mitigate

the negative effects of service failure. When analyzing the services offered,

management should identify those areas within the service encounters where the

customer can be empowered. Customers can be empowered by giving them

choices and information to make good choices, which will improve their service

experience. This will reduce the chance of service failures and if failure occurs, it

will reduce customers’ negative feelings toward the service provider through self-

attribution and respect for disclosure (Cranage2004).


Table 2.7. Contingencies to service recovery(Cranage2004)

Cranage(2004) stated that There are other strategies that have been investigated

that truly are not service recovery strategies, but may help reduce service failure

and/ or increase the effectiveness of service recovery strategies and they are listed

below: Internal service recovery: One such strategy is “internal service recovery”

(Bowen and Johnston, 1999). Internal service recovery is defined as, “What the

organization does to make internal customers (front line employees), who have

recovered external customers from serious failure, feel less frustrated and more

confident in their future interactions with customers” (Bowen and Johnston, 1999).


Front line employees who constantly have to handle customers upset by service

failures that were either not the fault of the employee, or who feel they have no

discretion to implement recoveries to satisfy the customer, often feel stressed, and

experience the perception that they cannot control the outcomes of their work

helplessness. For internal service recovery, Bowen and Johnston (1999) suggest

several activities to address the needs and expectations of the internal customer.

These recoveries are not unlike those suggested for external customers. First,

management should display empathy and provide social support to employees.

Second, management should gather input on how service failures came about and

how to improve the processes or procedures for resolving them, assuring

employees that these situations will not re-occur. Finally, steps should be taken to

implement the changes necessary to improve the service delivery process to

ensure that they do not re-occur. They suggest that empowerment of front line

employees fits well into this framework. The purpose is to increase internal

customer satisfaction. Front line employees who do not feel stressed, frustrated, or

helpless provide higher quality and friendlier service, with less service failure.

Satisfied internal customers translate into satisfied external customers (Bowen and

Johnston, 1999; Schneider and Bowen, 1985, 1993; Wiley, 1996).

Tax and Brown (1998) view service failure as a learning opportunity, to develop

better service systems, and to develop a comprehensive service recovery system.

They suggest that a comprehensive service recovery system:


1. Encourages customers to complain;

2. Trains customers how to complain;

3. Sets performance standards;

4. Uses service guarantees; and

5. Communicates the importance of recovery to employees.

Complaint management system and service guarantees: This agrees in part with

Rust et al. (1992) who also suggest that a service company should put a complaint

management system in place to reduce customer defection. Customers who are

afforded the means to “voice” their dissatisfaction are less likely to “exit”

(Hirschman, 1970). They assert that the system should make complaint filing easy

and hassle free, and that customers should have multiple channels to

communicate their concerns. A service guarantee could be offered to let customers

know what to expect and to encourage customers to complain when they are

dissatisfied (Ahmad, 2002). Customers are primarily interested in service reliability

and only secondarily in compensation for service failures (Marmorstein et al.,

2001). A service guarantee also forces a company to only make promises it can

keep. A service guarantee should be planned, the costs calculated, and only

offered after the service system is running well (Ahmad, 2002). After careful

planning, Hampton Inns implemented a service guarantee and realized $11 million


in additional revenues as well as obtaining the highest customer retention rate in

the industry (Tax and Brown, 1998).

Pre-emptive strategies: Finally, research shows that there are pre-emptive

strategies which management can implement during service encounters that

mitigate the negative effects should a service failure occur. Cranage and Sujan

(2003) found that by giving customers choices, and information by which to make

the choices (empowerment), customers have a sense of perceived control and

self-determination over the service experience. From this, customers make self-

attributions, take partial responsibility for a service failure, blame the service

provider less, and stay more loyal(Tax and Brown, 1998).

2.22. The service recovery plan

Kloppenborg and Gourdin (1992) have produced evidence that recovery-related

dimensions feature prominently in service quality/customer satisfaction

evaluations, at least for the airline industry. Responses from a sample of airline

passengers suggested that, of the ten most important dimensions listed, five

related to service recovery: the airline is responsible for lost baggage (the most

important); timely information should be available on delayed flights (second); the

airline is responsible for delayed passengers (fourth); on-board comforts during


delays (eighth); and, airlines should take care of delayed passengers (tenth). The

dominant influence of service failure-related dimensions can be attributed to the

fact that services, because of their largely intangible nature, are perceived as more

risky to buy than, for instance, physical products. Much of this risk can be attributed

to “how the service will perform”, that is, a reliability failure risk or quality risk.

Effective service recovery can go a long way towards projecting a “our service is

guaranteed” image, providing a safety net and, in this way, reduce perceived risk.

There are many suggestions in the literature on how to reduce service failures.

Bitner (1990) conducted a controlled experiment to assess the effects of physical

surroundings. The results suggest that the more organized the service

environment, the less the likelihood of service failure. Sparks et al. (1997) studied

the impact of staff empowerment and communication style on service failure. They

found that customers perceived that when employees were fully empowered and

had accommodating communication styles, fewer service failures occurred. In a

similar study, Tehrani (1995) found that training techniques that include customer

retention strategies termed relationship marketing and loyalty marketing that

include empowerment and communication styles reduce service failures.


2.23 Quality function deployment

Shahin (2005) stated that Quality Function Deployment (QFD) is derived from six

Chinese characters with Japanese Kanji pronunciation: Hin Shitsu (quality), Ki Nou

(function), Ten Kai (deployment). The Japanese characters for Hin Shitsu

represent quality, features or attributes, Ki and No represent function or

mechanization and Ten and Kai deployment, diffusion, development or evolution.

Taken together, the Japanese characters mean “how do we understand the quality

that our customers expect and make it happen in a dynamic way” (Cohen, 1995;

Tottie and Lager, 1995; Martins and Aspinwall, 2001; Chow-Chua and Komaran,

2002). Emphasis on quality plans is also the reason why it was named Quality

Function Deployment by the Japanese (Akao, 1990; Leo Lo et al., 1994; Prasad,

2000). The translation is not exact or descriptive (e.g. hin shitsu is synonymous

with qualities, not quality). It was therefore, just a matter of translation, but instead

of using Attributes Function Development, say, the term Quality function

Deployment evolved. However, the message is the same.

Shahin (2005) stated that QFD has been defined in many different ways. QFD is a

structured process, a visual language, and a set of inter-linked engineering and

management charts, which uses the seven management (new) tools. It establishes

customer value using the voice of the customer and transforms that value to

design, production, and manufacturing process characteristics. The result is a


systems engineering process, which prioritizes and links the product development

process so that it assures product quality as defined by the customer/user (Dean,

1998). That is why the QFD process is often referred to as listening to the voice of

the customer (Sower et al., 1999). QFD is also referred to as “house of quality

(HOQ)”. The reason for this is that matrixes in QFD fit together to form a house-

shaped diagram (Bicheno, 1994; Kutucuoglu et al., 2001). QFD is oriented toward

involving a team of people representing the various functional departments that

have involvement in product development: marketing, design engineering, quality

assurance, manufacturing/ manufacturing engineering, test engineering, finance,

product support, etc. (Crow, 1996).

Shahin (2005) stated that QFD is based on the concept of company wide quality

control (CWQC). The CWQC philosophy is characterized by customer orientation,

cross functional management and process rather than product orientation. It refers

to quality of management and the quality of work being done (Japan Industrial

Standard Z8101, 1981). From that point of view, QFD becomes a management tool

to model the dynamics of the design process (Govers, 2001). QFD is also known

by the terms “Customer - driven engineering “and “Matrix product planning “. The

whole concept is based on a sequence of operations to translate the voice of the

customer into the final product or service (Smith and Angeli, 1995). Mallon and

Mulligan (1993) defined QFD as a cross functional tool that assists technically

oriented people, such as architects and engineers, to understand CR sufficiently, to

develop priorities for these requirements that are customer oriented and technically


correct. Mazur (1993), defined QFD as “a system and procedures to aid the plan

and development of services and assure that they will meet or exceed customer

expectations”. Also, Akao (1990) defined it as “a method for developing a design

quality aims at satisfying the customer and then translating the customer’s

demands into design targets and major quality assurance points to be used

through out the production stage”. The term Quality Function Deployment is a poor

translation of the original Japanese and rather than dwell on the meaning behind

these particular words. In the light of the definitions, I describe QFD as: “Customer

driven product development”.

2.23.1 QFD and the House of quality (HoQ)

Shahin (2005) stated that a four phases approach is accomplished by using a

series of matrixes that guide the product team’s activities by providing standard

documentation during product and process development (Figure 2.3). Each phase

has a matrix consisting of a vertical column of “Whats” and a horizontal row of

“Hows”. “Whats” are CR; “Hows” are ways of achieving them. At each stage, the

“Hows” are carried to the next phase as “Whats”.


Figure 2.3. The four phases of traditional QFD (Shahin, 2005)

As a result, the House of Quality can be built in many shapes and forms. The

general purpose of QFD model includes the components addressed in Figure 2.4.

Customers requirements (CR) - Also known as "Voice of Customer" or VoC, they

are the "whats" the customers want from the product to be developed. They

contain customers’ wishes, expectations and requirements for the product.

Customer importance ratings - Once these "whats" are in place, the customer

needs to provide numerical ratings to these "whats" items in terms of their

importance to the customer. A numerical rating of 1 to 5 is often used, in which the

number 5 represents the most important and 1 the least.

Customer market competitive evaluations - In this block, a comparison is made

between a company's product/service and similar competitive products/services on

the market by the customer. The comparison results will help the developer

position the product on the market as well as find out how the customer is satisfied


now. For each product, the customer gives 1 to 5 ratings against each CR, 5 being

best satisfied and 1 the worst.

Shahin (2005) stated that technical specifications - They are the technical

specifications that are to be built into a product with the intention to satisfy the CR.

They are sometimes referred as "hows" because they are the answers to CR: how

can the requirements be addressed or satisfied. They are the engineers'

understanding in technical terms what customers really want. The technical

specifications must be quantifiable or measurable so that they can be used for

design.

Relationship matrix - Relationship matrix is used to maintain the relationship

between CR and design requirements. In other words, the matrix corresponds to

the "whats" vs. "hows". It is the center part of HoQ and must be completed by

technical team. A weight of 1-3-9 or 1-3-5 is often used for internal representation

of relationship, 1 being the weak and the biggest number being the strong

relationship.

Correlation matrix - It is the triangular part in the HoQ (the "roof"). The correlation

matrix is used to identify which "hows" items support one another and which are in

conflict. Positive correlation help identify "hows" items that are closely related and

avoid duplication of efforts. Negative correlation represents conditions that will

probably require trade-offs. The positive and negative ratings are usually quantified


using 2, 1, -1, and -2 ratings, with 2 being the two "hows" items are strongly

supportive to each other and -2 being the conflicting. Sometimes only 1 and -1 are

used.

Target goals - Completed by technical team, these are the "how muchs" of the

technical "hows" items. They provide designers with specific technical guidance for

what have to be achieved as well as objectively measuring the progress. The goals

have to be quantified in order to be specific and measurable.

Technical difficulty assessment - Technical team conducts the assessment. It helps

to establish the feasibility and reliability of each "hows" item. A 1 to 5 ratings are

used to quantify technical difficulty with 5 being the most difficult and 1 being the

easiest.

Technical competitive evaluation - It is used for comparing the new product with

competitor's products to find out if these technical requirements are better or worse

than competitors. Again, 1 to 5 ratings are used with 5 being the fully realized each

particular "hows" item and 1 being the worst realized.

Shahin (2005) stated that overall importance ratings - This is the final step of

finishing HoQ for phase 1. For each column, sum all the row numbers each of

which is equal to the production of relationship rating and customer's important


rating. The results help identify critical product requirements and assist in the

trade-off decision making process.

Figure 2.4. House of Quality (HoQ) in QFD (Shahin, 2005)

2.23.2. Some of the important objectives of QFD

1. To drive long-term improvements in the way new products are developed in

order to create value for customers Vonderembse and Raghunathan (1997)


2. Identify the customer; determine what the customer wants; provide a way to

meet the customer’s desires (Kathawala and Motwani, 1994).

3. Definition of the product characteristics, which meet the real needs of the

customers; Gathering of all necessary information to set up the design of a product

or a service, without neglecting any point of view; Supplying a support to

competitive benchmarking; Preservation of coherence between the planning and

manufacturing processes of a product; Provision of an audit trail from the

manufacturing floor back to customer demands; Auto documenting the project

during its evolution Zairi (1995).

Identify current performance measures that are closely linked to CR; Identify

current performance measures that are redundant; Identify new customer oriented

performance measures that are required; Identify conflicts associated with different

performance measures; Identify target values for customer oriented performance

measures; Assess the degree of difficulty of achieving the target value(s) for

specific performance.

2.24. QFD Applications to Services

Stauss (1993) stated that QFD was originally introduced as a means of developing

new industrial products, and even today it is used primarily for this purpose.

Applications of QFD for service-oriented tasks have not been common, although

some interesting case studies have been published.


Stauss (1993) stated that Using the example of a specialized dealer, Ohfuji et al.

prove that "even when a company is dealing with such intangibles as services,

quality function deployment makes it possible to clarify, plan, and design the

services to be offered and to conduct quality control activities". Orsini recommends

the application of QFD in a bank and briefly outlines the procedure with regard to

the quality attribute, "convenient banking hours". Saatweber reports on the use of

QFD for the improvement of communications between customers and suppliers in

the computer industry.

Stauss (1993) stated that the latter case from the computer industry is interesting

in so far as it shows the application of QFID in analyzing customer problems and

developing measures for future problem prevention. This aspect is discussed more

thoroughly in the innovative publication by Behara and Lemmink. As this aspect is

of great interest here, their line of reasoning is described in more detail.

Stauss (1993) stated that Behara and Lemmink provide a framework which helps

to link survey results on the perceived service quality of car dealers with quality

improvement actions. As a starting point for the determination of customer

requirements, the authors choose the five service-oriented measurement of

perceived quality (SERVQUAL) determinants (tangibles, reliability, responsiveness,

assurance, and empathy). By means of the systematic diagram method, they


develop a hierarchical system of goals and mean which, at are most concrete level,

contain a comprehensive set of quality attributes. The customer expectations and

perceptions of these attributes are then determined by a survey modeled on the

SERVQUAL, instrument.

Stauss (1993) stated that in the next step, the quality attributes are linked by

means of the so-called "Q-matrix" with the operational and human resource factors

which affect them. To indicate the strength of the relationship between customer

requirements and management activities, Behara and Lemmink use the "mean gap

scores", i.e. the calculated discrepancies between customer perceptions and

expectations. Specific areas for improvement are those with particular negative

total gap values.

Stauss (1993) stated that with their "Q-matrix", Behara and Lemmink enable QFD

to be applied for the first time as a tool for combined service quality measurement

and improvement activities. To this extent, they provide a theory-based and

practicable approach. But the method cannot be used unmodified as a means of

translating customer problem information to service design and activity

requirements, for it has certain weaknesses in the following areas: the

measurement of perceived quality, the degree of differentiation describing the

quality management activities;, and the way of linking customer perceptions with

measures. The authors use the SERVQUA type of multi-attribute method to

measure customer perceptions and expectations. This is quite plausible; bearing in


mind that SERVQUAL is theoretically well founded and approved in many

applications. But the suitability of this instrument as a means of problem detection

is limited. On the one hand, all limitations mentioned above with regard to multi-

attribute measurements apply. On the other hand, there are some limitations

resulting from specific methodological problems pertaining to the SERVQUAL

instrument. Here we need mention only the doubts about the validity of the scale

which is used to measure quality as the difference between the separately

collected data on expected and perceived service.

Stauss (1993) stated that using the Q-matrix links the service quality attributes with

different management activities, especially important aspects of procurement,

process planning, and personnel policy. In this way, an internal discussion can be

initiated on the questions of which quality improvements are necessary and what

implications improvements have for planning and realization activities. But for

concrete quality Management measures, this single Q-matrix seems to be

insufficient. A differentiation of the matrix tool would be desirable for several

reasons. First, global problem solutions and concrete specifications of solutions

should be developed with respect to the customer problems. Second, a link

between these specified service elements and process activities should be

developed. Third, it should be considered which department or which person in the

company is responsible for the realization and control of these activities.


As an indicator of the relationship strength between quality attributes and

management activities, Behara and Lemmink se the SERVQUAL "gap scores".

Indeed, the differences between desired and perceived quality can be interpreted

in the sense of perceived problem severity. But the strength of the relationship

between quality attributes and management activities does primarily depend on

objective necessities and not on the perceived quality gap which, at most, can be

considered only as a weighting factor. Moreover, difficulties arise from the fact that

there are also positive and negative gaps. So, in calculating the total gaps,

compensatory effects can appear and may lead to misinterpretations.

According to this evaluation, it would seem to be beneficial to develop the Q-matrix

approach further. The Service Problem Deployment is one example of this.

M.Toghian, M.Sc., Thesis, Chapter 3, 2007

98

CHAPTER 3

RESEARCH

METHODOLOGY


99

3.1. Introduction

In this chapter, the theoretical and executive frameworks of the study are proposed.

Also, the tools and techniques of statistical analysis are introduced and the reliability of

the data is computed.

3.2. New theoretical methodology

The new methodology is based on the traditional SPD which was addressed briefly in

Chapter 2. In fact, only the first phase of SPD is used for further analysis. However,

the difference between the framework of this study and the traditional one is that in the

this thesis, two comprehensive list of service failures and service recovery solutions

are proposed, based on the deep literature review done in chapter 2. Therefore, in the

following, the SPD technique is demonstrated first and then, the new approach is

developed.

3.2.1. Service Problem Deployment

The fundamental idea of the service problem deployment is to form a planning and

communication system which leads from customer problems to long-term problem

solutions and problem prevention. Such a system consists of the following six tasks:

1. Detecting and collecting customer problems.


100

2. Evaluating the customer problems.

3. Developing and evaluating general problem solutions in order to set priorities.

4. Selecting priority-based general solutions and deducing more concrete performance

specifications and both objective and subjective target values which can be compared

with the actual performance values.

5. Considering which process activities have to be conducted in order to meet

performance specifications and target values.

6. Determining which departments or persons has to take responsibility for the

implementation and control of the specified process activities.

These tasks are tackled by application of matrices known from the QFD-tool. Figure

3.1 reviews the general planning scheme, consisting of four matrices: the Problem-

Priority Matrix (for tasks 1 to 3), the Solution-Performance Matrix (for task 4), the

Performance-Process Matrix (for task 5), and the Process-Responsibility Matrix (for

task 6). These four matrices are presented in Figure 3.1 and the Problem Priority

Matrix is illustrated in Figure 3.2 by figures produced by commercial QFD software.

These figures show the application of the proposed tool in a fictitious example from the

car maintenance and repair industry.

3.2.2. The Problem Priority Matrix

The Problem Priority Matrix (Figure 3.2) consists of five parts. The starting point on the

left-hand side is the list of customer problems established on the basis of one or more


101

of the above-mentioned methods of problem detection, the right-hand part of the

matrix serves to evaluate the problem from the customer's point of view. Figure 3.2

shows the application of the Frequency-Relevance Analysis of problems proposed

earlier. Of course, different evaluations and completions are possible, e.g. an

additional complaint factor could be taken into consideration.

The next step after problem evaluation is the development of general problem

solutions. This development is not a mechanical or technical process, but a creative

one which has to be carried out in Service Problem Deployment teams. On the one

hand, it is necessary to conduct a comprehensive analysis of each problem, e.g. by

means of application tools such as Cause-and-Effect or Ishikawa diagrams. On

the other hand, all existing references to problem solutions have to be analyzed

systematically and the field of alternatives has to be extended by applying creativity

techniques such as brainstorming or brain writing. Then, in the core matrix positioned

in the middle of Figure 3.2, the extent to which the general solutions make a

contribution to the reduction of customer problems can be expressed by symbols or

values. Thus, the most promising solutions have to be selected by using the problem

evaluations male by customers as a weighting factor.


102

Figure 3.1. ..Service Problem Deployment (Stauss, 1993)


103

Figure 3.2. . Problem-Priority Matrix (Stauss, 1993)

3.2.3. A comprehensive HoQ for SPD

As it was mentioned above, only the first phase of SPD is used for analysis, in which

the relationships between service failures and service recovery solutions are

determined and finally, service recovery solutions are prioritized (Figure 3.3).


104

Figure 3.3. A comprehensive HoQ for SPD

3.2.4. A comprehensive set of service failures in the air line industry

Considering all those subjects rewired and discussed in chapter 2, a comprehensive

set of service failures are proposed for the airline industry. These items are defined as

Table 3.1

Service recovery solutions

Im

portance rating

Interrelationship matrix

Service failures

Total Values Priorities


105

Table3.1. Comprehensive set of service failures in the airline industry

1. Personnel Failures

2. Pricing (high price, price increases, unfair pricing and/or deceptive pricing)

3. Ethical problems (cheating, and/or conflict of interest)

4. Disruption/Cancellation/Delay to flights

5. Baggage handling

6. Ticketing matters

7. Billing Errors

8. Safety issues

9. Unaccompanied Minors

10. Over sales

11. Lack of credit and downgraded

12. Double check of boarding card

13. Overbooking 14. Lack of free tickets and upgrades of the flight class

15. Nature and level of priority services offered within the program e.g. Inconvenience

16. Lack of fares

17. Doing work too slowly (On ground)

18. Doing work too slowly (In-flight)

19. Failure to acknowledge the customer (Advertising)

20. Failure to acknowledge the customer (Tours)

21. Employee responses to customer needs and requests

22. Responses to service failure

23. Failure to clean facilities

24. Failure to provide clean uniforms

25. Failure to control environmental factors (Smoking)

26. Failure to control environmental factors (Landscape)

27. Failure to control environmental factors (Parking area)

28. Failure to control environmental factors (Food and Drink)


106

3.2.5. A comprehensive set of service recovery solutions

Considering all those subjects rewired and discussed in chapter 2 a comprehensive

set of service recovery solutions are proposed for the airline industry. These items are

defined as Table 3.2

Table3.2. Comprehensive set of service recovery solutions in the airline industry

1. Complaint behavior responses 2. Facilitation 3. Empathy: A sincere expression of feeling for the customer’s plight 4. Follow-up activities 5. Acting expediently to resolve the issue 6. Acknowledging that mistakes were made without being defensive 7. Demonstrating that you understand the problem from the customer’s point of view 8. Clarifying the steps need to solve the problem 9. Keeping customers informed of the process/progress 10. Considering the possibility of compensation 11. Persevering in order to regain the goodwill of customers 12. Talk and Find out customers’ wants, needs and expectations 13. Truly analyze the operation 14. Analyze the staff’s position in the right job 15. Hiring, training and empowerment 16. An apology 17. Treatment during the service recovery interaction with employees 18. Encourage customers to complain 19. Train customers how to complain 20. Use service guarantees 21. Communicate the importance of recovery to employees 22. Log compliments and complaints 23. Continuously training and motivate the front-line staff 24. Provide dedicated resources for communication and motivation 25. Manage the organization with an eye for the detail in everything 26. Managerial intervention


107

3.2.6. Questionnaire design

As it was shown in the Figure 3.3 a column should be filled in which is called

importance ratings. For this purpose all of those items proposed in Table 3.1 are used

in questionnaire design. In the questionnaire, all the items are asked from Iran air

domestic travelers (Appendix A). The customers are asked to fill questionnaire and

rate the importance of the items based on five-point Likert scale. In addition, to

answer the major questions of this research, some further analysis are conduced, for

which a questionnaire is designed to ask the airline managers to prioritize service

recovery solutions. A sample of the questionnaire is given in (Appendix B),

considering the 5 point Likert scale, 1 denotes not important and 5 denotes very

important.

3.3. Validity of the questionnaire

The designed questionnaire in Figure 3.4 is finalized before asking the respondents to

fill it. A number of experts such as academic scholars in the field of tourism and

hospitality management, as well as the airline managers are asked to confirm the

validity of the questionnaire.


108

3.4. Reliability analysis

For analyzing the reliability of the data gathered from the questionnaires, Cronbakh’s

Alpha is used, which should have a value equal or greater than 0.7.

3.5. Research population and sample

3.5.1. Research population

1. Top managers of IranAir in Isfahan

2. Domestic travelers of IranAir, departure from and arrive in Isfahan

3.5.2. Research sample

For top managers, the data gathered for the population is analyzed.

For travelers, a pilot study is undertaken, and the number of samples needed is

calculated as: 2

24eSn =

,In which, ‘4’ denotes the approximate value of 2

αz considering

95% level of confidence; ‘ ’ denotes the variance of data and ‘e’ denotes the error

value, which is assumed to be equal to 5 percent of the mean value in this research.

2S


109

3.6. Data analysis/technique

Matrix analysis (SPD), Statistical analysis including: one-sample t-test, two sample t-

test, correlation analysis and analysis of variance.

3.7. Research executive framework

To provide a roadmap for implementing the new methodology, a flowchart is

presented in Figure 3.4, which addresses the pros and cons of each of the activities


110

Start

Problem Definition

Litreture Review

Defining a comprehensive set of service failures

Defining a comprehensive set of service recovery solutions

Desining a questionnaire Desining a questionnaire

Sample selecting and data gathering

Data analysis

Importance rating

HoQ matrix analysis

Prioritization of service recovery solutions

Compare the results

data gathering

Importance rating

Any difference?

If yesIf no

That it seems the prioritization of SRS from customres point of view is different from the IranAir

manager point of view

If the managers want that their strategies be customer oriented, they should use the outcomes of

the new methodolgy as a bases for providing and arranging SRS

It seems there is no difference between the manager and customer point of view and the

company should continuous their current strategies

End

Figure 3.4. Research executive framework


111

CHAPTER 4

RESEARCH ANALYSIS


112

4.1. Introduction

In this chapter new methodology is applied on a case study. The case study

include the IranAir Company which is one the airlines in the Isfahan. In the

following, the IranAir is introduced briefly and then the outcome of the statistical

analysis are presented, discussed and used in further stages of the study.

4.2. IranAir Company

IranAir by having almost half a century experience as the major aviation corporate

has been serving Iranians and is discharging of duty by transporting passengers,

cargo and mails in domestic and international routes according to universal

standards. For a national corporate there is no privilege higher than serving the

people who have been always cooperative, collaborative and supportive.

"Iranian Airways" was first established in May 1944 and commenced its first

passenger flight right after the World War II from Tehran to holy city of Mashhad.

Within a period of 17 years (1945-1962), this airline developed into a major

domestic Route with a few international flights per week. In 1954 another private

airline as "Pars Airways" was established. Initially "Pars Airways" only undertook

freight services to Europe


113

The geographical situation of Iran, expanding its spacious levels, relative

remoteness of crowded areas from each other, lack of means of transportations

either railways or roads, the need to initiate safe and fast connections to survey

and governmental organizations, and the last but not the least, lack of an ordered

equipment with high capacity to revive mutual aviation rights with other countries

and also securing more welfare and comfort for Iranians, provided the conditions

for the board of ministers to ratify a proposal suggested by road minister to

establish a national Airline corporate on February 10th, 1961. Following this

decision, on February 24th, 1961 both "Iranian Airways" and "Pars Airways"

merged to form a new airline as" IranAir" with the acronyms and the symbol of

"HOMA" bird and this new airline commenced its activities in April 1962.

Today, in spite of many restrictions due to sanction, IranAir with a 42-year history,

57 years of experience by using the present potentialities has taken successful

steps in the field of qualitative improvements of flight services and fulfilling the

customers' needs in order to expand its operation system. In a short span with a

fleet of 17 aircrafts which were mostly DC3s, IranAir had managed to cover many

domestic and international routes including the major cities of the Middle East

In 2002, IranAir flew to 36 international and 21 domestic routes (including Tehran).

In the same year, IranAir and its subsidiary company, IranAir Tours, transported 6


114

million and 48 thousand passengers on domestic routes ( with the passenger load

factor of 84.9%), while 1.5 million passengers were transported by international

flights (The passenger load factor was 61.7%).In 2002, IranAir staffs were 8887 of

which 1198 were cabin crews, 1732 were engineers and maintenance experts, 885

were working in commercial departments and the remaining 1900 personals were

at Airport or other flight services.

Covering the domestic aviation transportation needs accompanied by observing

the safety principles and forming transportation services with neighboring and far-

fetched countries, and also considering simultaneous communal contracts on

commercial grounds and interests of the country were among the reasons to

establish IranAir.

4.3. Data gathering

For gathering data and filling questionnaire a pilot study is conducted and the

number of respondents needed is calculated. For this purpose, 30 customers were

asked. Considering 95% confidence level, 5% percent error, the total needed

numbers were computed as 60. Therefore; 30 more questionnaire were asked to

be filled. Consequently; date gathered from 60 questionnaires were considered for

the further analysis. As demographic characteristic, age, gender, monthly earning,


115

job, education, purpose of trip were considered on top of questionnaire as

illustrated in Figure 3.3.

4.4. Reliability analysis

As it was mentioned in chapter 3, the Cronbach’s alpha is used for reliability

analysis. At this stage, 7 alphas are computed. Considering the sub categories in

the questionnaire as 0.765, 0.786, 0.876, 0770, 0.845, 0.789, 0.823, which are all

satisfactory (>0.7).

4.4.1. Mean and standard deviation of the data

The mean and the standard values of the data are presented in the Table 4.1.

Apparently, all the mean values are grater than moderate (i.e. 3.00) that means all

the items are relatively important to the customers.

4.4.2. One-sample t-test

At this stage, one sample t-test with t-value of 3.00 is used for analyzing all items in

the questionnaire. The results are presented in Table 4.2. According to the

significant test values, it seems only 1 item out of the 28 items has a value equal to

3, which is item no. 19 (Failure in advertising).


116

Table 4.1. Descriptive statistics’


117

Table 4.2. One sample t-test’


118

4.4.3. Mean comparisons

In order to analyze the potential differences between the groups of respondents,

five 2-t sample t-test and one analysis of variance are used. In fact, seems the

purpose of trip has 3 sub categories, analysis of variance is used for it and two-

sample t-test is used for the rest which have only two sub categories. The results

are presented in Table 4.3, 4.4, 4.5, 4.6, 4.7 and 4.8.

According to Table 4.3, there seems that for most of the items, there is not

considerable difference between groups of respondents in case of gender due to

the significance values of the tests which are not less than 0.05. However, there

are 5 items, which have significant values less than 0.05; they include Items no.7,

9, 11, 20 and 25.


119

Table 4.3. Means comparisons in case of gender


120

Table 4.3. Continued


121



122

According to Table 4.4. , there seems that for all of the items., there is not

considerable difference between groups of respondents in case of age due to the

significance values of the tests which are not less than 0.05

Table 4.4. Means comparisons in case of age


123



124



125

According to Tables 4.5, there seems that for near most of the items, there is not

considerable difference between groups of respondents in case of education due

to the significance values of the tests which are not less than 0.05. However, there

Are 11 items, which have significant values less than 0.05; they include Items no.2,

7, 8, 10, 14, 15, 20, 21, 25, 26 and 27.

Table 4.5. Means comparisons in case of education


126



127



128

According to Tables 4.6, there seems that for all of the items, there is not

considerable difference between groups of respondents in case of monthly earning

due to the significance values of the tests which are not less than 0.05.

Table 4.6. Means comparisons in case of monthly earning


129



130



131

According to Tables 4.7, there seems that for most of the items, there is not

considerable difference between groups of respondents in case of job due to the

significance values of the tests which are not less than 0.05. However, there is 1

item, which has significant values less than 0.05; it includes Items no.4.

Table 4.7. Means comparisons in case of job


132



133



134

According to Tables 4.8, there seems that for most of the items, there is not

considerable difference between groups of respondents in case of purpose of trip

due to the significance values of the tests which are not less than 0.05. However,

there is 1 item, which has significant values less than 0.05; it includes Items no.15

Table 4.8. Means comparisons in case of purpose of trip


135



136



137

4.4.4 Correlation analysis

In this section, the correlations between each of the items in the questionnaires are

computed an addressed. The results are presented in Table 4.9. For the ease of

analysis, only correlation values more than 0.5 are assumed to be important for

further analysis. Therefore, for instance, the correlation value of 0.971 between

items.of.7 and.5 implies that as much as the importance of failure-free Baggage

handling is higher, then the importance of error free-Billing could be higher either.

Considering all values in the table 4.9, it is argued that there seems not to be

considerable negative correlation between any of the items. However, this

discussion and analysis provides valuable insights to the manager and process

designers of the IranAir Company in order to improve the quality of their services

more strategically and more effectively.


138

Table 4.9. Correlation analysis


139



140



141



142



143



144



145



146



147



148



149



150



151



152



153



154



155



156



157



158

4.5. Prioritizing SRS using HoQ of SPD

At this stage, the comprehensive set of service failures proposed in chapter 3 is

entered into the left side of the HoQ. Also, the comprehensive set of service

recovery solutions, which was also proposed in the previous chapter, is entered

into the top of the HoQ. The mean values of the importance ratings of the service

failures are all placed in the corresponding column. In order to fill the

interrelationship matrix, a team is formed including the researcher, supervisor and

the airline top managers. The team assumed 4 different possibilities for the

relationship between each of the service failures and service recovery solutions as:

blank (no relationship), 1 (weak relationship), 3 (moderate relationship) and 9

(Strong relationship). As it is illustrated in Figure 4.1, three different signs are used

to denote the weak, moderate and strong interrelationships as ∆ , and ,

respectively. In order to prioritize service recovery solutions, the importance rating

value of each of the service failures is multiplied by the corresponding

interrelationship weight the team determined. Then, all the multiplied values in

each column belonging to each of the service recovery solutions are added up and

a total value is calculated for each column, i.e. each of the service recovery

solutions.


159

Figure 4.1. Prioritizing SRS using HoQ of SPD


160

Figuer 4.1. Continued


161

Figure 4.1. Continued


162

The total values on the bottom of the matrix are prioritized and are listed in Table

4.10 (left side). As it is addressed, “Acting expediently to resolve the issues” with

total value of 738.1 is targeted as the first priority and “facilitation” with total value

of 162.3 is targeted as the last priority. Therefore, it is concluded that if the airline

wants to select a service recovery solution with a high impact on service failures as

a whole, it is greatly recommended to the airline to act expediently to resolve the

issues.

In order to find out the extent of potential difference between the computed

priorities and the priorities in minds of the top managers, three of the airline

managers are asked to prioritize the service recovery solutions. After computing

the mean values, the items are prioritized and the final results are presented on the

right side of Table 4.10. As it is highlighted, there is a considerable different

between the results of employing the new methodology and the traditional

approach, i.e. managers’ point of view. In other words, if the airline strategy is to

listen to the voice of the passengers and select the most effective recovery

solutions, then using the new approach is highly recommended.


163

Table 4.10. Comparison of the priorities of SRS according to the HoQ and the managers’ point of view

Priorities of the SRS according to the HoQ Priorities of the SRS according to the managers point of view

Acting expediently to resolve the issue Analyze the staff’s position in the right job

An apology Truly analyze the operation

Follow-up activities Acting expediently to resolve the issue

Empathy An apology

Hiring, training and empowerment[ Hiring, training and empowerment

Acknowledging that mistakes were made

without being defensive

Communicate the importance of recovery to

employees

Continuously training and motivate the front-

line staff

Manage the organization with an eye for the

detail in everything

Demonstrating that you understand the

problem from the customer’s point of view

Acknowledging that mistakes were made

without being defensive

Keeping customers informed of the

process/progress

Facilitation

Encourage customers to complain Empathy

Considering the possibility of compensation Considering the possibility of compensation

Truly analyze the operation Treatment during the service recovery

interaction with employees

Train customers how to complain Managerial intervention

Communicate the importance of recovery to

employees

Follow-up activities

Talk and Find out customers’ wants, needs and

expectations

Persevering in order to regain the goodwill of

customers

Provide dedicated resources for

communication and motivation

Talk and Find out customers’ wants, needs and

expectations

Persevering in order to regain the goodwill of

customers

Continuously training and motivate the front-

line staff

Analyze the staff’s position in the right job Encourage customers to complain

Clarifying the steps need to solve the problem Use service guarantees

Managerial intervention Provide dedicated resources for

communication and motivation


164

Priorities of the SRS according to the HoQ Priorities of the SRS according to the managers point of view

Log compliments and complaints Complaint behavior responses

Use service guarantees Clarifying the steps need to solve the problem

Complaint behavior responses Keeping customers informed of the

process/progress

Manage the organization with an eye for the

detail in everything

Train customers how to complain

Treatment during the service recovery

interaction with employees

Log compliments and complaints

Facilitation Demonstrating that you understand the

problem from the customer’s point of view


165

CHAPTER 5

CONCLUSIONS &

RECOMMENDATIONS


166

5.1. Introduction

In this thesis, a new methodology was proposed to prioritize service recovery

solutions, based on service failures. For this purpose, literature has been reviewed

and classified, considering its contribution to different parts of the methodology.

Two comprehensive sets of service failures and service recovery solutions have

been developed, which in turn supported the house of quality (HoQ) analysis. The

proposed methodology has been examined in IranAir as the major airline in Iran.

Data has been gathered from designed questionnaires and statistically analyzed.

After computing the matrix in HoQ, the total values of the service recovery

solutions have been found and prioritized. Then, they have been compared with

the priorities from managers’ point of view and the differences were finally

highlighted. In the following, major conclusions and recommendations are

presented.


167

5.2. Conclusions

1. An advanced technique, called service problem deployment was further

developed, in which a comprehensive set of service failures could be compared

with a comprehensive set of service recovery solutions in airlines in general and

service recovery solutions could be prioritized, accordingly. It was found that the

new methodology has the capability to be specialized for particular airlines, such

as IranAir.

2. The outcomes imply that if the managers want to listen to the voice of the

customers and select their service recovery solutions, accordingly, the new

methodology is much more effective than the traditional approaches, in which, the

service recovery solutions are prioritized based on mangers point of view. This

conclusion was made, based on the differences between the results of the

proposed methodology and the managers points of view in the case study.

According to the results of the new methodology, “Acting expediently to resolve the

issues” with total value of 738.1 is targeted as the first priority and “facilitation” with

total value of 162.3 is targeted as the last priority. As it was found, there was a

different order in priorities of the traditional approach.

3. The results of the one-sample t-test imply that almost all of the service failures

are relatively important to the customers.


168

4. The results of the variance analysis and independent sample t-tests outlines that

there might be some differences between groups of respondents.

5. The outcomes of the correlation analysis imply that there exist some high

correlation values between each of the service failure items in case of importance.


169

5.3. Limitations

1. Although the new methodology sounds valuable and effective, it seems that

including all items in the questionnaire and data gathering and analysis might be

time consuming.

2. Although the new methodology is customer oriented and involves great

advantages, it seems in cases that there are too many items in each side of the

matrix; the matrix might become large and hard to manage.

3. The proposed methodology was only conducted in a particular airline. From this

point of view the generality of the investigation is questionable.

4. Data gathered from the questionnaires are subjective and due to the probable

ambiguity in the voice of customers, data analysis might be affected and hard to

interpret. This is also true for the weights determined by the team of experts in the

interrelationship matrix and also for the priorities determined by the managers for

the service recovery solutions, traditionally.


170

5.4. Recommendations and suggestions for future studies

1. Considering the literature review on quality function deployment (QFD) and its

evolution, it is believed that the technique is flexible enough to be integrated with

other quality improvement tools and techniques therefore similar developments to

the QFD approach could be considered in the proposed methodology in order to

further develop its capabilities and applicabilities

2. Although there was considerable difference between the first and the last

priorities derived from the matrix, it seems that the middle values are somehow

close to each other and therefore it is recommended to use other scales rather

than 1-3-9 for the interrelationship analysis with wider distances in between.

Similarly, a different scale instead of the 5 point Likert scale could be used for

questionnaire design.

3. In cases like this thesis in which all importance ratings are higher than the

median (3.00) performance rating could also be computed and other valuable

techniques such as importance – performance analysis (IPA) could be use for

differentiating items and providing more logical bases to the managers and service

designers to decide on quality initiatives.


171

4. The differences found between the groups of respondents in answering the

questionnaire is useful in segmenting customers and therefore, the airline would be

able to better determine its target group(s) of customers.

5. Some high correlation values were found between service failures important

ratings. However, it is important to note that the correlation analysis of the

importance ratings might seem less useful comparing to the performance

correlations by which service designers are able to find which set of the failures

could be improved, simultaneously. If the analysts consider a further weight

including such cases and multiply it by the ordinary importance ratings, then the

outcomes will become more effective.

6. It is recommended to reduce the items in the questionnaire as much as possible

in order to save time in analysis. It does not, necessarily means having trade off

between items, rather it is recommended to work on those items which might have

been addressed by other related studies and more critical.

7. In order to better manage the matrix, it is recommended to classify the items on

each sides of the matrix and cut down the major matrixes in to sub matrixes, based

on the classified items. Also it is important to note that the recommended action in

the above (no. 6) would also lead to the same objectives.


172

8. In order to adopt the generality of the proposed methodology, it is highly

recommended to implement it in other different areas, i.e. other country or

international airlines.

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Appendix A: Research questionnaire (Service failure questionnaire)

Appendix A: Continued

Appendix B: Research questionnaire (Service recovery questionnaire)

Appendix B: Continued

2008:074 master's thesis prioritizing of airline service...

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