Customer value and customer loyalty: Is competition a missing link?

Presenter: CaineChenInstructor: Dr. Pi-Ying Teresa HsuDate: Jan.5, 2015

research writing and publishing

Citation

❖ Chen, S.-C. (2015). Customer value and customer loyalty: Is competition a missing link? Journal of Retailing and Consumer Services, 22, 107–116. doi:10.1016/j.jretconser.2014.10.007

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Content

1. Introduction2. Theoretical Background 3. Method4. Result5. Suggestion6. Limitation7. Reflection

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Introduction

1. Background2. Purpose of the study

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IntroductionBackground

❖A loyal customer is regarded as a type of competitive asset for an organization.

(Dekimpe et al., 1997)

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❖Keeping a long-term customer relation is a challenge for business practitioners and remains to yet be researched by scholars.(Grönroos, 2009)

customer value

service encounter

IntroductionPurpose of the study

❖This study is aimed at providing an insight into the effects of competition on customer value delivery for customer loyalty.

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customer value

service encounter

(Chen, S.-C. 2015)

Theoretical backgroundcustomer loyalty

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❖is defined as a consumer’s loyal attitude and behavior toward a specific service firm, despite competitors providingcustomer value

service encounter

(Chen, S.-C. 2015)

Theoretical backgroundcustomer value

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❖ is defined as an object's overall evaluation of value … on a comparison of perceived benefits with perceived costs from both the rational and experiential perspective



customer value

service encounter

(Chen, S.-C. 2015)

Theoretical backgroundservice encounter

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service encounter

customer value

❖ human interactions(Solomon et al., 1985)

❖The interactions between service employees and consumers provide a basis for developing customer loyalty.

(Frow & Payne, 2007)

Theoretical backgroundcompetition

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❖…the rivalry among sellers trying to achieve such goals as increasing profits, market share, and sales volume by varying the elements of the marketing mix: price, product, distribution, and promotion



service encounter

customer value

(Chen, S.-C. 2015)

Hypotheses(1)

❖H1-8: Customer loyalty is positively influenced by the service employee ’s efforts to implement customer value.



customer value

service encounter

customeremployee

Hypotheses(2)

❖Hm1-7: The higher degree the competition, the stronger the relationship between customer loyalty and customer value.



customer value

service encounter

customeremployee

Hypotheses(3)

1. quality (H1);(Hm1)2. servicescape(H2);(Hm2)3. service episodes (H3); (Hm3)4. customized service (H4);(Hm4)5. service equity (H5); (Hm5)6. service risk avoidance (H6);(Hm6)7. social‐psychological interactions (H7);(Hm7)8. consideration of service alternatives(H8)



customer value

service encounter

customeremployee

MethodSample

❖The total number of valid responses was 96 from qualified service employees and 340 from qualified customers.

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❖…hairdressing sector of personal …have relatively high interaction between …

Instrument usedQuestionnaire

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MethodProcedures

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employeesfemale(90.1%

)7 years in the current company

12 years in the hairdressing sector

consumersfemale (93.7%)

in the range of 2–3 years (30.6%)

used the service once a week (28.7%)

❖96 valid matched sets of data formed by employees and consumers

MethodAnalysis(1/3)

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Findings(1/3)

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❖Hypothesis Hm1, which posits a significant interaction between service quality and competition, is supported (β＝ 0.12, t＝ 2.19, po<0.05).

MethodAnalysis(2/3)

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Findings(2/3)

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❖These results mirror those for service quality, and indicate that the relationship between servicescape and customer loyalty is strongest when competition is high.(Hm2)

MethodAnalysis(3/3)

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Findings(3/3)

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❖…the interaction term between service equity and competition is negative..indicates that the effect of competition on customer loyalty becomes similar at a high level of service equity…(Hm5)

Discussion and Suggestion(1/2)

❖This finding suggests that the factors driving customer loyalty are better captured from the consumer perspective.

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customer value

service encounter

customeremployee

Discussion and Suggestion(2/2)

❖These findings provide service employees with suggestions regarding the approach to ensure the maintenance of a service advantage to reach higher levels of service performance.

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customer value

service encounter

customeremployee

Limitations

❖ …a larger sample size could have made the findings more robust..the results may also apply to other service settings sharing some characteristics…

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customer value

service encounter

Reflections

❖ focus group interviews with both parties in order to examine the reasons behind their responses could produce further insights into the formation of customer loyalty..

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customer value

service encounter

Thank you

research writing and publishing

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