Evaluating the Perceived Value of Service Delivered by Taiwanese Airlines in the Domestic Market Jin-Ru Yen Dawna L. Rhoades Ger-Yuan Hsu The 12 th International Conference on ISO 9000 & TQM April 9-11, ICIT: 06-04

2contents  Motivation, research scope, and objectives  Methodology  Empirical study  Conclusion

3 Evolution in Marketing Concepts PhasesFocus Product quality Provide products with predefined qualities (defined by manufactures) Sales technique Apply sales promotion to increase revenues in short run Customer satisfaction Provide products and services with high customer satisfaction Perceived quality and customer value Provide products with higher customer values than competitors Customer value managementRelate CVM to profitsMotivation

4  PZB (Parasuramsan, Zeithaml, Beery) model has been applied in a lot of research relating to service quality.  Little research includes the concept of ‘value.’  Little research measures customers’ perceptions toward both the organization of interest and its competitors. Works in the Literature Motivation

5 Taiwan Domestic Air Market & Research Scope  Routes within the main island (business traveler) Taipei-Kaohsiung  Routes between the main islands and offshore islands (tourist and local resident) Taipei-Kinmen Taipei-Makung

6  To apply the concept of value and measure customers’ perceptions of values delivered by different airlines that compete each other  To apply the structural equation model to investigate factors that affect customer values  To develop customer value map from the point of each airline Research Objectives

7 Conceptual Framework Methodology Service quality Brand image Perceived cost Customer value Willingness to buy

8 Structural Equation Model Methodology

9 Questionnaire Design Methodology  Characteristics of passengers  Characteristics of trips  Perceptional questions

10 Perceptional Questions numbe r category contents 1 Service quality Seats are comfortable. 2 Food is delicious. 3 Aircraft are new. 4 Schedule is on time. 5 Flight attendants provide needed services. 6 Ground staffs provide needed services. 7 The airline has a good record of flight safety. 8 The check-in service is efficient. 9 Flight attendants quickly respond to requested services. 10 Ground staffs quickly respond to requested services. 11 Flight attendants are courtesy and professional. 12 Ground staffs are courtesy and professional. 13 Have confidences in the flight attendants. 14 Have confidences in the ground staffs. 15 Flight schedules are convenient for your itinerary. 16 It is convenient to purchase flight tickets. 17 It is easy to change or return flight tickets. 18 The frequent flight program is attractive. 19 It is easy to obtain fare information. 20 It is easy to obtain flight schedules.

11 Perceptional Questions 21 Brand image The airline is innovative. 22 The airline has good reputation. 23 The airline is the brand leader in domestic air market. 24 Perceived costs The fare of the flight ticket is inexpensive. 25 The waiting time in the check-in counter is short. 26 Perceived value The airline is more valuable than others. 27 The service is more valuable than the cost for it.

12  Exploratory analysis  Structural equation model  Customer value analysis (Bradley T. Gale, 1994)Methodology

13 Sample Distribution by Route (survey conducted in April and May, 2005) Empirical study Taipei-KaohsiungTaipei-KinmenTaipei-Makung airlines number of respondents (%) airlines number of respondents (%) airlines number of respondents (%) Far Eastern Air Transport 158(36.3) Far Eastern Air Transport 47(37.9) Far Eastern Air Transport 17(17.4) TranAsia Airways 45(10.3) TranAsia Airways 29(23.4) TranAsia Airways 43(43.4) Uni Airways 87(20.0) Uni Airways 29(23.4) Uni Airways 38(38.9) Mandarin Airlines 145(33.3) Mandarin Airlines 19(15.3) total435(100)total124(100)total98(100)

14 Estimation Results : Taipei-Kaohsiung GFI=0.90 CFI=0.98 ECVI=1.90 NFI=0.97 Measures of brand image 0.76 (17.15*) (-9.38*) 0.51 (9.87*) Quality of service Perceived cost Brand image Perceived value Measures of perceived value Measures of service quality Measures of perceived cost

15 Estimation Results : Taipei-Offshore GFI=0.91 CFI=0.99 ECVI=2.12 NFI=0.98 Measures of brand image 0.79 (13.72*) (-7.25*) 0.51 (7.16*) Quality of service Perceived cost Brand image Perceived value Measures of perceived value Measures of service quality Measures of perceived cost

16 Estimation Results (SEM): Offshore Routes Path Taipei-Kaohsiung routeTaipei-offshore route Standardized coefficient (t value) Brand image → perceived value(β 21 )0.51 (9.87)0.51 (7.16) Perceived costs → perceived value(γ 22 ) -0.49(-9.38)-0.53(-7.25) Service quality → brand image(γ 11 )0.76 (17.15)0.79 (13.72)

17 Customer Value Analysis (Taipei-Kaohsiung) Items Airlines FTUM Relative value of brand image Relative value of perceived cost Relative value of perceived customer value

18 Customer Value Analysis (Taipei-Kinmen) Items Airlines FTUM Relative value of brand image Relative value of perceived cost Relative value of perceived customer value

19 Customer Value Analysis (Taipei-Makung) Items Airlines FTU Relative value of brand image Relative value of perceived cost Relative value of perceived customer value

20  Brand image and perceived price have equal influence on perceived customer value.  The key factor in customer value was low perceived costs.  Premium branding effects were not observed.Conclusions

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