the effects of service quality and relationship benefits on relationship commitment and customer...

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The Effects of Service Quality and RelationshipBenefits on Relationship Commitment and CustomerLoyalty in Membership Fitness ClubSang Hyun Oh a , Hwa Suk Lee b & Su Jin Kim ca Gumi College , Republic of Korea Phone: +82 54 440 1265 Fax: +82 54 440 1265 E-mail:b College of Art, Dept. of Dance, Chonbuk National University , Republic of Korea Phone:+82 63 270 3747 E-mail:c College of Art, Dept. of Dance, Chonbuk National University , Republic of Korea Phone:+82 54 454 6895 E-mail:Published online: 03 Jan 2012.

To cite this article: Sang Hyun Oh , Hwa Suk Lee & Su Jin Kim (2011) The Effects of Service Quality and RelationshipBenefits on Relationship Commitment and Customer Loyalty in Membership Fitness Club, Journal of Global Scholars ofMarketing Science: Bridging Asia and the World, 21:3, 115-125, DOI: 10.1080/21639159.2011.9711018

To link to this article: http://dx.doi.org/10.1080/21639159.2011.9711018

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S H. Oh, H.s. Lee, s.J. Kim / Journal of Global Scholars of Marketing Science 21-3 (2011) 115-125 115

The Effects of Service Quality and Relationship Benefits on Relationship Commitment and Customer Loyalty in Membership Fitness Club

* JJ!i1*_x;j-r-*-i*f 6

Sang Hyun Oh1l, Hwa Suk Lee2l*, Su Jin Kim3)

Abstract

Relationship marketing is not a new phenomenon, but is now one of the most important topics in marketing academia and the business community. For marketing practitioners, great-er benefits may arise by perceiving relationship mar].ting as an underlying philosophy of caring for customers. ln the Academy, many scholars have suggested a new marketing paradigm based on relationship marketing. The rationale behind relationship marketing is to create, enhance, and maintain rela-tionships with customers. lncreasing and securing loyalty is central to many corporate strategies because obtaining new cus-tomer is costly and customer retention is connected to long-term profitabili Commitment is recognized as the key component in the relationship marketing paradigm and social exchange theory. The health care industry is one of the world's largest and fastest-growing industries. The modem health care sector is divided into many sub-sectors, and de-pends on interdisciplinary teams of trained professionals and paraprotissionals to meet health needs of individuals and populations

The objective of this paper is to establish a theoretical basis for evaluating a strategic increase in customers perceptions of service quality (technical quality and functional quality) and re-lationship benefits - specifically in terms of an increase in re-lationship commitment and customer loyalty in membership fit-ness club and to test this theoretical basis empirical. The present study focuses on relationship commitment. Also this study identifies antecedents and consequences of relationship commitment. ln so doing, the aim is to underline the effect that ser vice quality and relationship benefits have on relation-ship commitment and customer loyalty. The present study em-pirically tests the formulated model - to establish the effects of service quality and relationship benefits on relationship com-mitment and customer loyalty in membership fitness service

stting. Research model was tested sub-sector of health care

1) Prolessor , Gumi College , Rep blic 01 Korea , Tel.: +82 54 440 1265 , Fax.: +82544401217 , E-ma,/: [email protected]

2) * Corresponding author: Prolessor , College 01 Art , Dep t. 01 Dance , Chonbuk National University , Republic 01 Korea , Tel.: +82 63 270 3747 E-mail: harry09@chonb k.ac.kr

3) Graduate St dent College 01 t Dept. 01 Dance , Chonbuk National University , Republic 01 Korea , Tel.: +82 54 454 6895 , E-mail [email protected]

2011 KSMS. AII rights reserved

industry. The basic objective of the empirical pt is to test the model among users of the services of gym, health and fitness. More specifically we chose the users of two member-ship fitness clubs, located in Daegu (Korea). Research fitness clubs operate fitness and recreational sports facilities featuring exercise and other active physical fitness conditioning or rec-reational sports activities, such as swimming, racquet sports and golf. Firms are also involved in facilities management and fitness instruction. The selection of the sample was random, a random route in each fitness club being established for each of the interviewers. The average duration of the interviews was ten minutes. Finally, 254 usable responses were gained.

To test the hypotheses in this study, we estimated the fit and parameters of the models through covariance structural analysis. The parameters of the overall model used maximum likelihood estimation, and the fit of the model resulted as X2 (94 d. f)= 329.52(p=.OOO), GFI=.94, AGFI=.93, RMR=.022, NFI=.92, CFI=.94. Compared to general evaluation standards, this failed to meet the X2 value. But its enough to explain the relations among variables since GFI, NFI, CFI tumed out to be .95, .92, and .94, respectively. All hypotheses are supported by the data. They suggest that technical quality, functional quality, and relationship benefits significantly influence relation-ship commitment toward using fitness club. Relationship bene-fits directly influence relationship commitment and customer loyalty, and indirect influence customer loyalty through medi-ator of relationship commitment. Also, the empirical results confirmed that relationship commitment plays a strong, central role in determining customer loyalty.

Sound expertise performance (technical quality) is a neces-sary but not sucient condition to retain customer. Because of the general lack of knowledge among customers, the service provider needs to recognize that all service provider-customer interaction takes on ded significance and value to customer. For such services the traditional marketing functions can only operate at the strategic level - the people operating at the

boundy between the firm and the external environment aJ6 the ones who must re-mix the service in interaction with customer. Their technical capabilities and interpersonal skills are the source of service differentiation, satisfaction and ulti-mately, customer retention. Next, regular and effective commu-nications with customer is essential in order to reduce per-ceived risk and unceainty shape expectations, educate the customer, resolve any misunderstandings and explain the op-tions in a jargon-free way. Given the pivotal role of functional quality in impacting on relationship commitment, intensive training in interpersonal and communications skills would seem

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116 S H. Oh, H.s. Lee, s.J. Kim / Journal of Global Scholars of Marketing Science 21-3 (2011) 115-125

warranted. Finally, it needs to be appreciated that effective in-terpersonal communication has the potential to, over time, re-sult in strong social and emotional bonds between adviser and client, and thereby increase the switching barriers to exiting the relationship. A reciprocal influence may exist between rela-tionship strenh and relationship benefits. A long-term rela-tionship results in certain relationship benefits that strengthen the ties and results in a continued relationship.

There are some limitations of this research that should be considered when interpreting i findings. Our model does not take into account personal characteristics (e.g., attractiveness of altematives, length of patronage, skill level and experience) that also may have an impact. Thus, expanding the scope of antecedents is an important next step toward our understanding of the factors that enhance membership service area. Future re-search could also address the moderating role of the lenh of the relationship and how it influences the connection between relational benefits, service quality, and loyalty. Other moderator variables can also affect such relationships, such as income, age, gender, and customer experience.

Ke)vords: Service quality, Technical quality, Functional quality, Relationship benefits, Relationship commitment, Customer loyalty

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mutual respect and the acceptance of customers as partners and co-producers of value, not just passive recipients (Gummesson, 1998). One of the factors that contributed to the popularity of relationship marketing was the growth of the service economy. The awareness of a potentially continuing relationship between a seller and a buyer is important to service sector as is today evident in their prevalent use of customer relationship program, sophisticated data mining and market basket analysis techniques to target their customers (Grewal & Levy, 2007). The purpose of these efforts is to better serve and ful 11 customers de-mands in a friendly , trustworthy and timely manner (Grnroos

2000). Fournier (1998) argues that relationships both affect and are

affected by the contexts in which they are embedded. A myri-ad of potential practices is available to customize unique cus-tomer relationship-building practices (Claycomb and Martin, 2002). Despite the general acceptance of the relationship mar-keting concept, there is considerable evidence that shows that efforts to establish long-term customer relationships often fai l. Tn highly competitive markets, knowledge of why customers decide to maintain a relationship is key to achieving a strate-gic advantage. By understanding the determinants of long-term relationship, a firm can identifY the issues that must be ad-dressed in order to prevent future defections. Based on inter-

activi and individualization by the personalization techniques of service marketing, various marketing activities can definitely be declared such a relationship marl.ting tool (Meyer-Waarden, 2007), one of the most commonly used mar-keting tools, including in the health care service arena (Kelley et al., 1990, Meyer-\aarden 2007).

The health care industry is one of the world's largest and fastest-growing industries. The modern health care sector is divided into many sub-sectors, and depends on interdisciplinary teams of trained protissionals and paraprofessionals to meet health needs of individuals and populations. This study aims to identity the service quality and relational benefits of customer relationships regarded as a central and important component of the relationship marketing success determination factor. The concept itself serves as an important indicator of long-term re-lationships and as a potent predictor variable for customer re-tention implying that managers need to consider the service quality and relational benefits of consumers long-term relation-ships with the firm as wel l. Therefore, the construct of rela-tionship marketing activitis in th health srvic arna is within our research interest since it is seen as an important determinant of the permanence and intensity of the relationship

The objective of this paper is to establish a theoretical basis for evaluating a strategic increase in customers perceptions of service quality (technical quality and functional quality) (Grnroos, 2000) and relationship benefits - specifically in terms of an increase in relationship commitment and customer loyalty in membership fitness club and to test this theoretical basis empirically (Crosby et al., 1990). The present study fo-cuses on relationship commitment. Also this study identifies

antecedents and consequences of relationship commitment. Tn so doing, the aim is to underline the effect that service quality and relationship benefits have on relationship commitment and customer loyalty. The present study empirically tests the for-mulated model - to establish the effects of service quality and relationship benefits on relationship commitment and customer loyalty in membership fitness service setting. The empirical re-sults, together with conclusions and managerial implications, are then presented.

2. Literature Review and Hypothesyes

2.1. Service Quality Service quality is one of the most researched topics in mar-

keting, starting with the service quality model introduced by Parasuraman, Zeithaml, and Berry in 1985. Service quality re-fers to the customers evaluation of the providers service based on their experiences and impressions (Hennig-Thurau et al., 2002). Delivering quality service is considered to be essential strategy for success in todays competitive environment (Parasuraman et al., 1985; Reichheld & Sasser, 1990; Zeithaml et al., 1990, 1996). Companies that offer superior service ach-ieve higherhan-normal growth in market share and increased profits (through higher market share and being able to offer premium prices) (Philips et al., 1983). The conceptualization and measurement of perceptions of service quality are among the most debated and controversial contempory topics in the services-marketing literature (Brady & Cronin, 2001 , Zeithaml et al., 2000). Because services are intangible, consumers assess quality suectively. Such perceived service/product quality has been referred to as elusive" (Parasuraman et al., 1985).

Early definitions of service quality were based on the so-called disconfirmation" paradigm. According to Parasuraman et al. (1985), a perception of service quality is a result of a comparison between what consumers consider the service should be and their perceptions about the actual performance offered by the service provider. Paras~aman et al. (1985) postulated five dimensions of the service experience in their well-known SERVQUAL model: reliability, responsiveness, em-pathy, assurance, and tangibility. Service quality has also been defined as the result of a comparison between the received service and the expected service (Grnroos, 1984). According to Grnroos, quality as experienced by a customer is based on two dimensions - technical and functional - moderated by the company image. The functional dimension takes into account the way a service is provided (courtesy, attention, promptness, professionalism, and so on), whereas the technical dimension refers to the result of the service.

ln the Grnroos (1984) model, image - on a company and/or local level - was introduced in the model as a filter between the two quality dimensions called functional (how the service process functions) and technical (what the service proc-

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ess leads to for the customer in a technical" sense), that in-fluences the quality perception either favorably , neutrally or unfavorably, depending on whether the customer considers the service good, neutral or bad. As image perceptions change over time depending on customers quality perceptions, it adds a dynamic aspect to the model, which in other respects is static.

In the present study, the authors argue that the different proposals with respect to the dimensions of service quality dif-fer mainly in their level of aggregion (in the same vein, see Brady & Cronin's (2001) hierarchical approach). Using this ap-proach, it is possible to identity many of the dimensions pro-posed by Parasuraman et al. (1985) in Gr1fOOS (1984) two-dimensional proposal. 11 is apparent that evaluations of service quality are complex processes that operate at various levels of abstraction (Carman, 1990; Brady & Cronin, 2001). Furthermore, some authors have argued that service/product quality is an industry-specific concept (Babakus & Boller, 1992). Taking these views into account, the present authors adopted the Grnroos proposition - with the technical and functional dimensions being taken as the dominant levels of service quality studied.

Some studies have investigated the relationship between service quality and relationship commitment, and although they have hilighted the antecedent role of relationship commit-ment in perceptions of service quality (Bolton & Drew, 1991; Boulding et al., 1993), most findings actually support a reverse cause-and-effect relationship (Cronin & Taylor, 1992). The first two hypotheses concern the predictors of relationship commitment. Technical quality (Hl) and functional quality (H2) aspects of fulfillment service quality are cognitive evalua-tions of customer.

Due to the so-called consumer expectation-management per-ception gap", careful thinking is needed when structuring service programs", since a lack of understanding of consumer needs can affect the quality perceptions of consumers (Parasuraman et al., 1985). Besides physical aspects, personal interaction, problem solving and policy, consners may also find other attributes to be important in service quality (Dabholkar et al., 1996). Technical service quality composed of the aforementioned elements impacting on the effectiveness of customer loyalty could certainly be one of them. By providing best and reliable service, important or potentially the best cus-tomrs tchnical srvic is dsignd to build customr long-term relationship.

Employees of any organization can be a powerful element in achieving differentiation d gaining a competitive advantage in delivering value to customers, since front-line service pro-viders represent the firm to the customer (Judd, 2003). The importance of functional quality in Grnrooss (1984) service quality model, the existence of the dimensions of responsive-ness, assurance and empathy in the SERVQUAL instrument, as well as behavioral aspects. Because relationships involve social dynamics and processes, we can conclude that relationships in business, as in other spheres of life, grow through emphatic

mutual interaction" (Jancic and Zabkar, 2002). Bearing this in mind, the following hypothesis is proposed in order to com-pare the influence of functional quality with the influence of personal interaction quality in membership fitness service context.

H1. The level of perceived technical quality positively influen-ces the level of perceived relationship commitrnent on the side of consumers.

H2. The level of perceived functional quali positively influ-ences the level of perceived relationship commitrnent on the side of consumers.

2.2. Relationship Benefits

When producers and consumers directly deal with each oth-er, ther e is a greater potential for emotional bonding that tran-scends economic exchange (Sheth & Parvatiyar, 1995). Since humans are predisposed toward relationships, this emotional bonding would probably be perceived by customers as some-thing that exceeds economic benefits. Relationship benefits are perceived as advantages that the regular customer receives over and above the core service (Gwinner, Gremler and Bitner, 1998). Hennig-Thurau t al., (2002) noted two types of rela-tional motives: the first covers benefits relating to the core product, and the second one includes those relating to the rela-tionship itself.

Many relational benefits have been identified by researchers. Economic benefits reflect discounts, price breaks and time sav-ing (Lacey, 2007). Social benefits reflect personal recognition by employees, customization, familiarity with employees, and friendships between the customer and the service provider (Gwinner et al., 1998; Lacey, 2007). Psychogical benefits re-fer to the comfort or feeling of sec~ity in dealing with the service provider. Confidence benefits refer to the feeling of trust in the service provider (Gwinner et al., 1998). Customization benefits refer to tailoring the product to each customer (Hennig-Thurau et al., 2002).

Gwinner et al. (1998) combined customization and economic benefits in one factor labeled preferential-treatrnent" benefits. Both social and preferential treatment benefits were considered least important for moderate contact and standardized services. Conversely, Lacey, Suha and Morgan (2007) found that higher levels of preferential treatment were shown to positively influ-ence relationship commitment," increased purchases, customer share, word-of-mouth, and customer feedback in their study of upscale department store customers.

Relational policies such as preferential treatment, communica-tion, and adaptation to customers needs are critical for cus-tomer retention, reducing complaints and conflicts, or improv-ing positioning. Such policies may be an antecedent to service quality. Hennig-Thurau et al. (2002) found that customer sat-isfaction, commitment, and trust affected customer loyalty both directly and indirectly. The special role of social benefits and

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the trivial role of preferential treatment benefits were also included.

Gwinner et al. (1998) examined a model where relationship marketing tactics (preferenti treatment, interpersonal communi-cation, and tangible rewards) affected the perceptions of rela-tionship investment in service setting. Relationship investment, in turn, atfected relationship commitment and eventually behav-ioral loyalty (Hennig-Thurau et al., 2002). Tnterpersonal com-munication proved to be the dominant factor in how customers perceived the providers' relationship investment. Some variables emerged that might affect the relationship among relationship benefits, relationship commitment and customer loyalty.

On the basis of these finding, we expect that the general causalities found in relationship benefits are also applicable to membership fitness service context.

ln this regards, we suggest the following hypotheses:

H3. The level of perceived relationship benefits positively in-fluences the Ivel of perceived relationship commitment on the side of consumers.

H4. The level of perceived relationship benefits positively in-fluences the level of customer loyalty.

2.3. Relationship Commitment and Customer Loyalty

Relationship commitment is recognized as the key compo-nent in the relationship marketing paradigm and social ex-change theory (Hennig-Thurau et al., 2002; Morgan & Hunt, 1994). Relationship commitment exists when a ptner believes the relationship is important enough to warrant maximum ef-forts at maintaining that relationship in the long-term. Many authors define commitment as a multidimensional construct composed of affective, calculative and normative component (Gruen et al., 2000). However, in consumer markets it is less common as a general case that consumers feel an obligation and a moral-based attachment towards service provider, as im-plied by normative commitment (Meyer and Allen, 1997). Yet a high level of commitment is given when there is both a ra-tional and an affective bond to the relationship, suggesting a two-dimensional perception at the level of emotional and con-scious calculation.

Moorman et al. (1992) defined relationship commitment as an nduring dsire to maintain a valued rlationship. Commitment is of critical importance in organizational buying behavior and can lead to important outcomes such as de-creased customer turnover and higher motivation. Commitment is positively related to loyalty and repeated purchase and, be-cause relationship performance is critical to repurchase deci-sions in a relational exchange, business loyalty is similar to re-

lationsl commitment (Morgan & Hunt, 1994). lncreasing and securing customer loyalty is central to many

corporate strategies because obtaining new customer is costly and customer retention is connected to long-term profitability. Loyalty is the single most important indicator of long-term fi-

nancial performance (Jones & Ssers 1995). Loyal customers can create value for the firm through positive word of mouth, voluntary customer-citizenship behaviors, coproduction assis-tance, social relationships, and mentoring other customers. The antecedents of loyalty include customer satisfaction (Cronin & Taylor, 1992), some relationship marketing variables such as commitment (Evanschitzky et al., 2006), emotional ties to serv-ice providers (Shemwell et al., 1994) and relational benefits (Hennig-Thurau et al., 2002).

Loyalty was defined as a deeply held commitment to pa-tronize or purchase a preferred good or service consistently in the future, despite situational influences and marketing etforts with the potential to cause switching behavior. Consequently, loyalty includes behavioral, as well as cognitive and attitudinal elements (Jones & Taylor, 2007). The behavioral perspective appears to be a more short-term and sales-directed perspective. Conversely, the combined attitudinal-cognitive loyalty can be characterized as a more defensive alternative that presupposes the efficacy of customer-relationship management initiatives. Anderson and Weitz (1992) saw manufacturer-distributor com-mitment as the adoption of a long-term orientation towards the relationship. They proposed that mutual commitment results in channel members" working together to serve the needs of end-customers more effectively - thus increasing mutual profit-ability beyond what either member could achieve by operating independently.

A number of researchers in diverse fields have argued that commitment best describes the emotional components of loy-alty, and that increases in affect should lead to increases in behavioral intention and ultimately behavior. Commitment strongly influences the intention to continue, customer referrals and behavioral intentions (Chiou & Droge, 2006; Garbarino & Johnson, 1999).

Tn this regards, we suggest the following hypotheses:

H5. The level of perceived relationship commitment positively influences the level of customer loyalty

3. Research Methoddlogy

3.1. Research Setting and Samples

Rsarch modI was tstd sub-sctor of halth car industry. The basic objective of the empirical pt is to test the model among users of the services of gym, health and fitness. More specifically we chose the users of two member-ship fitness clubs, located in Daegu (Korea). Research fitness clubs operate fitness and recreational sports facilities featuring exercise and other active physical fitness conditioning or rec-reational sports activities, such as swimming, racquet sports and golf. Firms are also involved in facilities management and fitness instruction.

Bowen s (1990) classification scheme was chosen to guide the choice of service providers in the current study since this

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Technical quality

1;, III

Functional quality

H2 Rclationship C U StOTllCl loyalty

2 S2

II3

H4

1;3

Fig. 1. Proposed research model

scheme was developed based on all of the previously devel-oped classification scheme and represents the only empirically tested classification scheme provided in the services literature. Bowen explained three general clusters of service providers: High-Contact, Customized, Personal Services," 'Moderate con-tact, Semi-Customized, Non-Personal Services," and Moderate Contact, Standardized Services." ln the first group, High-Contact, Customized, Personal Services," customers view

mployees as important and perceive high customization and customer contact. This group includes beauticians, restaurants, hotels, health care sector. Membership fitness club was chosen for consideration in the current study is seems to represent high customized service sector.

The selection of the sample was random, a random route in each fitness club being established for each of the interviewers The average duration of the interviews was ten minutes. Finally, 254 usable responses were gained. The demographic features of the subjects are presented in Table 1. Tn the ag-gregate sample, 52% of respondents were male and 48% were female. Age was approximately equally divided (25.2% 21-30

Tlle 1. Selected demographic attributes of the respondents

FrequnY Percent(%) Gender

Male 122 52.0 Female 132 48.0

Age Less than 20 20 7.9 21-30 64 25.2 31-40 67 26.3 41-50 54 213 Over 50 49 19.3 :penence

1 year or less 24 9.5 1-2 years or less 65 25.6 2-3 years or less 73 28.7 3-5 Yars or less 58 22.8 5 years or more 34 13.4

age, 26.3% 31-40 age, 21.3% 41-50 age, 19.3% over 50). A large poion of experience was 2-3 years(28.7%).

3.2. Operational Definitions of Variables and Measures

The scale items were developed from previously suggested and validated masures in many researches and carefully re-stated to reflect the characteristics of fitness service context. The variables of this study were measured using a five-point Likert scale (1 =strongly disagree, 5=strongly ree).

Service quality comprises two fundamental components -technical quality (the core service or what" is delivered) and functional quality (how" the service is delivered) (Grnroos, 1984; Parasuraman et al., 1985). Technical quality relates to actual outcomes or the core service as perceived by the customer. Functional quality, is concerned not with what" is delivered , but rather processes of how" the core or technical service is delivered. Grnroos (1984; 2000) asses that func-tional quality is concerned with the interaction between the provider and recipient of service and is assessed in a highly subjective manner. The scale used for measuring the three rela-tionship benefits (social benefits, special treatment, and eco-nomic savings) was developed by Hennig-Thurau et al. (2002).

The measure of relationship commitrnent was developed by modifYing the commitment scales of Anderson and Weitz (1 992) and Morgan and Hunt (1994). The commitment con-struct was designed tp capture identification with the company (proud to belong"), psychogical attachment ( sense of be-long'), concem with long-term welfare ( care about the long-term success"). Customer loyalty was measured using the following three dimensions: switching if another company of-fers a better price (Zeithaml et al., 1996); recommendations to others; and repurchase intentions (Cronin and Taylor, 1992). Taylor et al. (2007) noted that for services extending for long priods measuring loyalty in terms of actual buying behavior may be inadequate. Hence, future purchase intent is a com-monly usd surrogate measur (Lacey, 2007).

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4. Analysis

4.1. R eliability and Validity

Cronbachs measure reliability coefficient was first calculated for the items of each constructs. As a result, Cronbachs a on this study turned out to be .75 at the minimum and .81 at the maximum, which indicated vety high reliability. Thus, the reli-ability of research constructs was considered to be fair.

Tn addition, exploratoty factor analysis was caied out to analyze the validity of the measurement variables. Using prin-cipal component analysis, the varimax rotation method, one of the orthogonal rotations, kept independency among the factors. No constructs were exempted as a result of the analysis, and the factor loadings for each concept were all above .69, so convergent validi was confirmed and, due to the use of or-thogonal rotation, the discriminant validity for each factor was attained.

4.2. Correlation nong Constructs

According to the factor analysis results, Pearson correlation analysis was carried out to verifY the mutual relationships among the constructs and their unidimensional characteristics. As a result, the relationships of all constructs had a positive relationship, as shown in Table 2. The results are in accord-

Table 2. Construct intercorrelations matrix

Construct Mean SD' Inter-construct correlations 2 3 4 5 Technical qlity 2.67 79 1.00 FWlctional qlity 2.73 70 54* 1.00 Relationship benefits 2.87 45 43* 73* 100 Relationship commit 2.93 50 49* 58* 57* 100 Customer loyalty 3.08 75 25* 38* 39* 67* 100 Notes < .001 a Standard Deviation

Table 3. Composite reliability, AVE and nfirrnatory factor analysis

Variables Ttems Standized loading techquall 84

Technical quality techqual2 68 techqual3 64 fW1C1311 68

Functional quality ftncqual2 80 funcqua13 71 benefit1 80

Relationship benefits benefit2 71 benefit3 75 conunitl 90

Relationship commit commit2 90 commit3 86 loyaltyl 69

Customer loyalty loyalty2 74 loyalty3 78

ance with the relative direction among the presented variables. ln addition, all measures had higher correlation among similar concepts than dissimilar concepts, showing both convergent and discriminant validity

4.3. Measurement Model

The data obtained were tsted for reliability and validity us-ing confirmatory factor analysis (CF A). The measurement mod-l includes 15 items describing five latent constructs: technical quality, functional quality, relationship benefits, relationship commitment and customer loyalty. The parameters of the measurement model used maximum likelihood estimation, and the fit of the model resulted as l (94 d.t)= 329.52(p=.000), GFT=.94, AGFT=.93, RMR=.022, NFT=.92, CFT=.94

ln addition to the global measures of fit, several other as-sessment criteria were considered. The internal consistency of the measurement model was assessed by computing the compo-site reliability. All constructs had a higher composite reliability than the benchmark of 0.5 recommended by Bagoi and Yi (1988). This sugges that a high internal reliability of the data existed. Along with the coefficients of composite reliability, the coefficients of average variance extracted are also displayed. The average variance extracted indicates what percentage of the variance of the construct is eXplained by any individual item. The great majority of the constructs have average var-iance extracted higher than the benchmark of 0.5 recommended by Bagozzi and Yi; therefore, it was concluded that the items adequately eXplained the variance. Table 3 displays the factor loadings of the retained items on the constructs that they were designed to measure.

4.4. Structural Model

To test the hypotheses in this study, we estimated the fit and parameters of the models through covariance structural analysis. The parameters of the overall model used maximum

t - Value Composite rIiability Average variance extracted 15.05 12.42 75 61 1190 15.33 15.58 80 60 14.76 13.83 13.03 83 56 13.52 9.51 10.14 78 54 9.24 13.84 14.68 70 52 13.68

Goodness of fit ;('(94)=329.52, RMR=22, Gfl=.94, AGfl=.93, CFI=.94, Nfl=.92 (measurement model)

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likelihood estimation, and the fit of the model resulted as t (94 d.f)=329.52(p=.000), GFI=.94, AGFI=.93, RMR=.022, NFT=.92, CFT=.94. Compared to general evaluation standards, this failed to meet the value. But it s enough to explain the relations among variables since GFT, NFT, CFT turned out to be .95, .92, and .94, respectively. The results for the path analysis on the structural model are shown in Table 4.

4.5. Discussion

Results from the empirical analysis of the research hypoth-eses are as follows (Table 3). All hypotheses are supported by

th data. They suggest that technical quality, functional quality, and rlationship benefits significantly influence relationship commitment toward using fitness club. Relationship benefits di-rectly influence relationship commitment and customer loyalty, and indirectly influence customer loyalty through mediator of relationship commitment. Also, the empirical results confirmed that relationship commitment plays a strong, central role in de-termining customer loyalty.

Hypothesis 1 is strongly supported by the significant positive relationship between technical quality and relationship commit-ment (=.29, t=5.75). Also Hypothesis 2 is strongly supported by the significant positive relationship between functional qual-ity and relationship commitment (.26 t4.90). Hypothesis 3 ld 4 are supported by the evidence. They suggest that rela-tionship benfits of fitness service context significantly intlu-ence relationship commitment =.40 t=5.81) and customer loyalty (=.32, t=5.25) toward using fitness club. The next set of relationships exarnined the antecedent of customer loyalty. As predicted by H5, relationship commitment was a significant determinant of customer loyalty in health and fitness service context .66 t=4.18).

5. Conclusions

This research has extended our understanding of relationship marketing for consumer, membership health and fitness service providers by exarnining the relative impact of five key variables. The results show, not surprisingly, that technical quality, functional quality and relationship benefits have the most significant direct impact on relationship commitmnt.

Table 4. Structural model estimates

Hypothesized relationship HI Technical quality Relationship commitment H2 Functional quality - Relationship commitment H3 Relationship benetits - Relationship commitment H4 Relationship benefits Custner loyalty H5 Relationship commitment Rustomer loyalty

Goodness of fit :x,'(97)=33821, RMR=.04, GFl=95, AGFl=.93, CFl=.94, NFl=.92 Notes < .001

Also relationship commitment has the strong significant direct impact on customer loyalty.

Sound expertise performance (technical quality) is a ncessary but not sufficient condition to retain customer. Because of the general lack of knowledge among customers, the service provider needs to recognize that al1 service provider-customer interaction takes on added significance and value to customer. For such services the traditional marketing functions can only operate at the strategic level - the people operating at the boundary between the firm and the external environment are the ones who must re-mix the service in interaction with customer. Their technical capabilities and interpersonal skills are the source of service differentiation, satisfaction and ulti-mately, customer retention. Next, regular and effective commu-nications with customer is essential in order to reduce per-ceived risk and uncertainty, shape expectations, educate the customer, resolve any misunderstandings and explain the op-tions in a jargon-free way. Given the pivotal role of functional quality in impacting on relationship commitment, intnsive training in interpersonal and communications skills would seem warranted. Final1y, it needs to be appreciated that effective in-terpersonal communication has the potential to, over time, re-sult in strong social and emotional bonds between adviser and client, and thereby increase the switching barriers to exiting the relationship. A reciprocal influence may exist between rela-tionship strength and relationship benefits. A long-term rela-tionship rsults in certain relationship benefits that strengthen the ties and results in a continued relationship.

From a strategic point of view this study shows potential areas of competitive advantage and relationship strategies development. Rlationship commitment is of particular interest as it can help firms achieve competitive advantage but it seems that they should not emphasize solely on the relation-ship aspect itself as there is an important commercial issue as-sociated that influences buying centres satisfaction and loyalty levels. Tn this service continuum, managers need to clearly de-fine relationship development strategies, service provision poli-cies and develop homogeneous service provision. Towards this direction, it is essential that firms communicate th service quality standards to partners so that differences in service pro-vision can be avoided.

This study identifies service quality (technical and functional quality) and relationship benefits are strong predictors of long-term relationship. Suprior core service is ssential to re-

Estimate t-value Conclusion 29 5.75* Supported 26 4.90* Supported 40 5.81 * Suipported 32 525* Supported 66 4.18* Supported

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maining competitive in the long r1. ln fact, in most service industries, there is a tendency to build marketing strategies around these core service attributes. However, our research suggests that customers in long-term relationships receive other important relationship benefits besides core service attributes. Our study suggests that various activities of relationship mar-keting are instrumental in cultivating customer loyalty. From resource allocation viewpoint, service providers best option may be to use marketing costs effectively at the firm level. For example, one might expect firrns enacting first strategies to provide customers perceptions of high core service quali given knowledge and expertise are elements of core service benefits. Pursuing next relationship strategies should anticipate that well-communicated channel between buyer and seller is prepared. Furtherrnore, if structural ties increase performance levels, then confidence relational benefits may be positively affected. Focus of many businesses as they see the tremendous bottom-line value of doing so. Yet, for a strong relationship to exist, both parties must experience relationship benefits. Assuming each party can choose whether to remain in the relationship

Most fundamentally, the study provides strong evidence that service managers that ignore relationship commitrnent are vul-nerable when service failures do occur. Tt is suggested that pri-ority should be given for building strategies based on relation-ship commitment leveraging these relationships to forestall det-rimental customer reactions. Practitioners should be aware of the danger of ignoring relationship exchage. ln order to avoid overestimating how effective their relationship building efforts have been managers should be deliberate in seeking relation-ship commitment feedback from customer on an ongoing ef-fort" basis, using existing well established scales such as mar-ket orientation as well as more specific scales for measuring commltment.

There are some limitations of this research that should be considered when interpreting its findings. Our model does not take into account personal characteristics (e.g., attractiveness of altematives, lenh of patronage, skill level and experience) that also may have an impact. Thus, expanding the scope of antecedents is an important next step toward our understanding of the factors that enhance membership service area. Future re-search could also address the moderating role of the length of the relationship and how it influences the connection between relational benefits, service quality, and loyalty. Other moderator variables can also affect such relationships, such as income, age, gender, and customer experience.

(Received: March 21 , 2011) (Revised: April 14, 2011) (Accepted: Augest 31 , 2011)

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