Why Kings Leave Their Kingdom- A Study on Switching Behavior of Customers and Factors Influencing This Behavioural Trait

Transcription

1 9 Why Kings Leave Their Kingdom- A Study on Switching Behavior of Customers and Factors Influencing This Behavioural Trait Deepak Babu, Assistant Professor, Rajagiri Centre For Business Studies, Rajagiri valley, Ernakulam Kerala INTRODUCTION In present scenario of market especially in emerging economies which have established themselves as major destination for different multinational companies and products. Now because of this globalization these developing markets are facing a flood of products in any segment which not only provide options to customer also increases the tendency of customer to try out new products to satisfy their wants. This growing trend will induce behavior of switching in customer due to lowered level of switching barriers. Switching intention is termed as tendency of the customer to change the existing product and service due to different tangible and intangible reasons. Customer always looks for better values for the cost they incur to avail that facility which can be combination of different activities among process delivery. In service industries switching intention will be more if service fails to provide the service to the expectation of customer. This study tries to find the influence of moderating effect of price sensitivity on different relationship between service quality and switching intention. In this study hospitality industries are taken as canvas for study as Indian customers are considered as highly price sensitive because it influences rational decision making of the customer. Hospitality industries are now growing in present context where India not only depicts itself as one of the favorite spot for financial gain but a place you should visit during your life time. So always hospitality sector should come up with new and innovative techniques for retaining customer which will be considered as lifeline of any organization, this will help them to increase the loyalty among the customer to increase profit. But this competition and pricing strategies has played an important influence on switching intention of customers. This paper tries to find influence of price sensitivity on switching intention of customer in the backdrop of service providing industries. OBJECTIVES 1. To examine the influence of different antecedents on switching intention of customers 2. To examine the moderating influence of price sensitivity on relationship established between switching cost and its antecedents. REVIEW OF LITERATURE Switching intention of the customer are seen as starting signals for the organization specially service sector, that indicates that service provided by the organization are not up to the mark of customer expectation. So switching of the customer and intention for making choice of alternate service provider will influence the profit margins of organization. So organizations are diagnosing into the factors which influence switching intention of customer. Service switching is defined as the act of replacing and exchanging the current service provider with another that is available to the consumer in the market. In modern research switching intention of customers are considered as self explanatory but these are not explicated properly. As per different researchers (Carmen et al 2007, Burham et al 2003) different product and service direct the type of switching intention as partial or full, as when we consider insurance for purchase we will try to stick with one provider but that is not the case with banking where customer will be handling more than one provider at a time. Switching intention of the customer is largely influenced by customer satisfaction towards service provided by organization. Satisfaction is a reflection of post purchase evaluation. It is well-documented that customer satisfaction influences repurchase intentions, loyalty and post-purchase behaviors, such as word of- mouth advertising, switching and complaining (Anderson & Sullivan, 1993; Galdwell, 2000; Jones & Sasser Jr., 1995; Kim, Park, &Jeong, 2004; Szymanski & Henard, 2001). Satisfied customers are more likely to repurchase, engaging in positive word-of-mouth advertising and become loyal customers, whereas dissatisfied customers are more likely to engage in negative word-of-mouth advertising, make complaints to others or third parties and switch to competitors (Galdwell, 2000). Customer satisfaction is also considered an indicator of switching intentions (Jones, Mothersbaugh, & Beatty, 2000; Ping Jr., 1993). Customer satisfaction increases the customer retention rate (Ranaweera & Prabhu, 2003; Rene, Art, &

2 10 Russell, 2009), while negatively influencing switching intentions (Ganesh, Arnold, & Reynolds, 2000). It is expected that after experiencing a service failure, dissatisfied customers are more likely to generate higher switching intentions than satisfied customers. Parasuraman, Zeithaml and Berry (1985) define service quality as the overall evaluation of a specific service determined by comparing the firm's performance with the customer's general expectations of how firms in that industry should perform. Perceived service quality is viewed as an overall appraisal of service (Bitner and Hubbert 1994) and as an attitude based on the customer's perception of performance (Cronin and Taylor 1992, Boulding et a ). Parasuraman, Zeithaml and Berry (1985)found service quality to be strongly correlated with business performance. Perceived service quality is showing a great influence on the global strategy also as it is culmination of cognitive approach of customers towards a service which is provided by the organisation (Bitner and Hubbert 1994). So this culmination of facts will also consist of transaction-specific level which can be seen on the global front also (Oliver, 1993; Ranaweera & Prabhu, 2003). As global perception of service quality of organization is sum total of perception of customer specific experience during service is provided to them which will frame overall service quality (Galdwell, 2000). Transaction-specific quality is customers evaluations of various aspects of a service during a service encounter. It can provide specific diagnostic information about the service encounter. In this study, researcher is focusing on specific experiences which customers have to go through the process of service delivery. This specific experience during transaction will get influenced by certain parameters such as service failure, inconvenience, and failure during service encounter between customer and point of contact. There are many numbers of variables which are influencing service quality. Along with this we are also trying to find the influence of brand credibility and brand perception on relationship of all antecedents on service quality (Jones & Sasser Jr., 1995). According to Berry et al (2002) service convenience has 5 different dimensions which plays a important role in framing of perception of customers these are Decision Convenience which is effort taken by customer for making decision regarding that service in this dimension time also create a important aspect of decision convenience (Bitner and Hubbert 1994). Access convenience reflects how easy it is for the consumer to contact or reach the service provider s location. Transaction convenience involves the time and effort the consumers spend to complete a transaction. Benefit convenience refers to the benefits the consumers perceive that they receive due to the time and effort invested in the service. Lastly, post-benefit convenience refers to the customer s perceived time and effort expenditure when they try to maintain contact with a firm after consuming the main service (Jones &Sasser Jr., 1995). Further we can deduce from different literature that outcome and service process efficiency will indirectly determines the perceived service quality and satisfaction of the customer. So we can conclude that if service providers are able to provide highest levels of convenience to customer which will facilitate the process of decision making by customers. Service convenience, to that extent, will moderate or facilitate the outcome quality more than the environment and interaction quality(bitner and Hubbert 1994). The service staff might not be as friendly as they could be, and the store might not have the best layout, as long as nothing goes wrong, the consumer would prefer to get the product they come to buy, and exit the store as soon as possible. The purchasing decision of service by customers not only depended on service convenience but also on encounters which are bound to happen with customer and point of contact. The dimensions of service encounter failure are delayed recompense, slow rejoinder, lack of defense strategies and tardy recovery initiation(bitner and Hubbert 1994). Recompense is based on the social theory of distributive justice where allocation of rewards is done by the organization to the customer for failure of service. The delayed approach of organization for making the recompense than it will influence service quality perception of customer. Service providers in any sector should be prompt to provide service to customer according to the requirement of customer if organization is failing to maintain response influence perception of customer (Jones & Sasser Jr., 1995). If service provider fails to adopt defense strategies in moment of encounter failure by providing apology to customer which will create a negative image mind of customer which will play important part on response of customer perception. Then the process of recovery starts if organizations are not focused for recovery of encounter failure then process will influence on service quality perception (Bitner and Hubbert 1994). The most important aspects which will influence positively switching intention are core service failure if service providers are not able to provide services which are normally there. These kinds of failures are termed as core service failure (Cronin and Taylor 1992). Once core service failures are happening then organizations are providing incidents which will adversely affect customer retention. Some of core service failures are slow rate of service provided, inept way of representation of order, basic flaws in ambience and facilities provided for customer. Price sensitivity is the characteristic which is developed by customer during the changes which are introduced by service providers (Cronin and Taylor 1992). Theservice will decide the price sensitivity which is displayed by customer based on nature of service and importance of service to customer. If customer is price conscious then it

3 11 is not likely that customer will avail service at higher prices which will lead to different degrees of price sensitivity(galdwell, 2000). This concept further depicted by low price seeking behavior of customer when availing the service. THEORY BUILDING The influence of service quality on switching intention of consumer is being established in prior research. Various factors which are established as influencers on switching intention are switching cost, switching barrier, perceived value and perceived expectation. The concept of service quality is most important in context of hospitality industries. The study consider switching intention as second order construct where service quality is influencing switching intention and factors like perceived convenience, perceived core service failure and perceived service encounter failure. Further to increase the scope of research price sensitivity is considered as moderating effect on relationship service quality and switching intention. HYPOTHESES Fig. Conceptual Model H1: perceived convenience significantly influences service quality in hospitality industry H2: Perceived core service failure significantly influences perceived service quality in hospitality industry H3: Perceived service encounter failure significantly influences perceived service quality in hospitality industry H4: Perceived service quality influences switching intention of consumer in hospitality industry H5: Price perception of customer significantly moderates antecedents of service quality H6: Price perception significantly moderates relationship between perceived service quality and switching intention MEASUREMENT STRATEGY The measurement of latent variables under study can be completed by two approaches reflective measures and formative measures. In prior research it is established that reflective measures are used for measurement when these cannot be measured directly and these are manifest of perception by the respondent. As in this study all the measurement are used for as perceived by the respondent after the experience to specific scenarios. So in this study all the items are conceptualized as reflective and detailed information is provided in table below. RESEARCH METHODOLOGY The study was conducted with 330 respondents within the state of Kerala which was divided into 3 zones based on location. Structured questionnaire was used for research which was divided into two parts. The first part is about the demographic details of respondents and second part of questionnaire contains all the indicators under specific heading. A closed questionnaire was designed for research with 5- point scale from strongly disagree to strongly agree. The study was conducted during the period of March 2013 to September 2013 among the customers visiting different restaurants in Kerala region. A stratified random probability sampling was conducted where population was divided based on criteria of zones or location. And equal responses of 110 respondents were selected for the study. In the study for testing conceptual model which was proposed by researcher was tested with help of variance based partial least square approach. This approach is used for the research because its tolerance for the limitation of size and distributive assumptions is far better than compared to other methods for analysis. Further using WAR pls will help to handle both formative and reflective measures differently hence forming different algorithms to measure reliability and validity. RESULTS AND ANALYSIS The sample contains 66 percent male and 34% female respondents with equal number of respondents from all three zones. Based on age of the respondents 36 % were in age group of years, 38 % in the age group of years and 26% from age group above 40 years. In this study three stages of testing design was done for data enhancement through missing values, outliers and normality. The first attempt is to identify the influence of different factors on service quality later in second half attempts were made for determine the influence of service quality on switching intention. Third level of analysis is focused for finding moderating influence of price sensitivity on different relationship. The result from test shows that all the p values are less than 0.05 so it shows that all relationship are significant in nature. The entire

4 12 hypothesis is accepted as mentioned I the table below. On diagnoses of loading factor we can found out that perceived core service failure is most influencing followed by perceived encounter failure and perceived convenience. The details are given below: Regression analysis further shows that there is high correlation between the variables and dependent variable with r value is equal to the explanatory power of variables on variations is also high which is shown by coefficient of determination as FINDINGS From the analysis it has been found that Perceived Service Quality is greatly affected by Perceived Service Failure followed by Perceived Service Encounter Failure then Perceived Pricing and at last Perceived Convenience. Perceived Service Quality has a Positive relationship over Switching Intentions.Convenience factors such as accessibility and timing doesn t have much effect ondetermining the service centre, as there is a feeling in the minds of the customers thateven if how much accessible is the service centre if the service they get is not genuinethen they go and find a centre where they think they get good service.so invariably, if Service Failure and Service Encounter failure can be reduced it couldbring down the switching intentions in the minds of the customers. The Hypothesis proposed is acceptable.people are not ready to let go of their vehicle even it has some issues, if it could be repaired andused without any problem then people will stick with their vehicle this is because since they havea vehicle for their needs.people think of selling of their vehicle and switch to another brand when the maintenanceexpenses really go beyond their control. CONCLUSION AND SUGGESTIONS We can see that for almost 80% of the people a two wheeler is an integral part of life, some havegood memories associated with it, some don t have money to afford to switch to another brandfor whatever reasons. Customers often react strongly to service failures, so it is critical that anorganization s recovery efforts be equally strong and effective. Since a customer has brought avehicle, the person to be loyal to the company, the company has to take care of him properly.nowadays competition has become so strong that without retaining the existing customers it isdifficult to move front.so doing the work properly by implementing error free service,everlasting good encounters in the minds of customers and fair pricing would help the companyand the customers to be happy throughout their entire usage. People want to have a value for their money, so when they give a vehicle for service it should beproperly serviced to the satisfaction of the customer, if there is any amount of failure he willsurely not use the service next time.so maximum probabilities of Service failure should be avoided. The service personnel should behave with customers with at most care, because the service centre is one main part of income for the organization, so if the customer at some point of time feel that he has been ignored or when he come to report an issue which they overlooked and the personnel didn t acknowledge that properly then it would be the last time may be he would bevisiting the service centre. No matter how angry is the customer the service personnel should beable to cool him down and listen to his grievances and do the needful as soon as possible? Pricing is also one of the main factors where if you have not provided the service properly andcharged him a price, then the customer will be dissatisfied. So the pricing should be made fairand all issues of hidden pricing being removed and making the process quick.convenience plays a lesser role, because if a service centre is near to the customer, but he has afeeling that he does not get proper service from there, then surely he will go in search of othercenters. So proper service without any failure will make people come to them even if it is noteasily accessible to them.

5 13 If the people at the service centre are able to behave with customers the same way when theycame to buy the vehicle, could propel the whole experience to next level and there would nointentions to switch to another brand. REFERENCES [1] Anderson, E. & Sullivan, M.W. (1993). The Antecedents and Consequences of Customer Satisfaction for Firms. Marketing Science, 12, Spring, [2] Bitner, M.J., Booms, B.H., & Mohr, L.A. (1994). Critical service encounter: The employee s viewpoint. Journal of Marketing, 58(5), [3] Boulding, W. A., Kalra, A., Staeling, R., &. Zeithaml V. A. (1993). A Dynamic Process Model of Service Quality: From Expectations to Behavioral Intentions.xJournal of Marketing Research, 15(1), [4] Burnham, T.A., Frels, J.K. & Mahajan, V. (2003). Consumer Switching Costs: A Typology, Antecedents, and Consequences. Journal of the Academy of Marketing Science, 31, (2), [5] Cronin J. J., & Taylor S. A. (1992). Measuring Service Quality: A Reexamination and Extension. Journal of Marketing, 56(3), [6] Ganesh, J., Arnold, M.J., & Reynolds, K.E. (2000). Understanding the customer base of service providers: An examination of the differences between switchers and stayers. Journal of Marketing, 64(3), [7] Jones, M.A., Reynolds, K.E., Mothersbaugh, D.L. & Beatty, S.E. (2007). The Positive and Negative Effects of Switching Costs on Relational Outcomes. Journal of Service Research, 9, (4), [8] Oliver, R.L. (1999). Whence Consumer Loyalty? Journal of Marketing, 63, [9] Parasuraman, A., Zeithaml, V.A. & Berry, L.L. (1985). A Conceptual Model of Service Quality and Its Implications For Future Research. Journal of Marketing, 49, (4), [10] Ping, Robert A., Jr., 1993, The Effects of Satisfaction and Structural Constraints on Retailing Exiting, Voice, Loyalty, Opportunism, and Neglect, Journal of Retailing, 69(3): [11] Ranaweera, C. and Prabhu, J. (2003), The Influence of Satisfaction, Trust, and Switching Barriers on Customer Retention in a Continuous Purchasing Setting, International Journal of Service Industry Management, Vol. 14, No. 3/4, pp [12] Rene, T., Art, W., & Russell, A. (2009). Value, satisfaction, loyalty and retention in professional services. Marketing Intelligence and Planning, 27(5),