MEASURING AND MANAGING CUSTOMERS’

EXPECTATIONS IN THE AIRLINE INDUSTRY

Introduction

The airline industry was confronted with a crisis at the early years of 1990s due to world economy stagnation and gulf war. In 1991, the number of passengers was diminished for the first time. The members of the International Air Transport Association (IATA) declared approximately US$20.4 billion loss between 1990 and 1994 as pointed out in USA Today of July 2002 by De Lollis in the article by entitled “Airlines Continue Revenue Search” ¹ . After this bitter experience, a great deal of airlines realizes the need of a radical change in order to survive and to insure sustainable success. Thus, they make huge investments to fill the gap between passenger needs and expectations and airline performance ² . It is in that perspective that the current essay intends to discuss about ‘measuring expectations’ and ‘managing expectations’ of customers in the context of Services Marketing and relevance of these concepts in the airline industry. Measuring customers’ expectations in Service Marketing According to Philip Kotler-one of the monument of Marketing Management-, service refers to “any act or performance that one party can offer to another that is essentially intangible and does not result in the ownership of anything. Its production may or may not be tied to a physical production.” ³ Quality was defined by American Society for Quality (ASQ) as “the totality of features and characteristics of a product or service that bears on its ability to satisfy given needs.” 4

According to Bureau of Transport and Communications Economics, empirical studies in the past pointed out that both business and leisure choose the specific airline based on its service quality. ⁵ Thus, as pointed out by Butler and Keller ⁶ in their topic entitled “The cost-constrained global airline industry environment: what is quality?”, service quality is the cornerstone feature of each airline company’s carrying out business and customers can define it definitely. In order to survive and have long-term relationships with customers, understanding them, meeting adequately their expectations and differentiate their service from competitors’ are critical factors to be taken into consideration. It is that perspective that the concept of customer expectations and perceptions has captured high attention both from researchers and practitioners.

According to Gronroos ⁷ in his topic entitled “A service quality model and its marketing implications”, customer perceptions of service quality are divided

2 Measuring and Managing Customers’ Expectations in the Airline Industry

into two categories: technical quality and functional quality. Technical quality can be perceived from the evaluation of the buyer based on its service quality whereas functional quality whereas functional quality is perceived from evaluation of the service delivery process which is based on the customer’s experiences.

As explained by Jin and Julie ⁸ in their topic entitled “An exploratory study of a multi-expectation framework for services”, expectations are a kind of standards or rules which are boarders for buyer in order to limit their choices on their previous experiences and as a result provide a judgment of each organization’s performance. The SERVQUAL is one of the methods used for measuring the gaps between customers’ expectations and perceptions in service marketing.

SERVQUAL was developed by Parasuraman, Zeithaml and Berry as a conceptual model in 1985. This group of authors of the gaps model developed in-depth measurement scales for service quality in a later year ⁹ . The figure below highlights the conceptual framework of SERVQUAL.

3 Measuring and Managing Customers’ Expectations in the Airline Industry

The gap model positions key concepts, strategies and decisions in services marketing in a customer-oriented perspective in a way which begins with the customer and builds the organization’s tasks around what is needed to close the gap between customer expectations and perceptions ¹⁰ . According to that model, service quality can be defined as the difference between customers’ expectations and perceptions which eventually depend on the size and direction of the four gaps related to the delivery of service quality on the company’s side. As highlighted in the figure above, these four gaps are:

ƒ Gap 1: Not knowing what customers expect; ƒ Gap 2: Not selecting the right service designs and standards; ƒ Gap 3: Not delivering to service standards ƒ Gap 4: Not matching performance to promises These four gaps are underlying causes behind the customer gap which is Gap 5. If we put that in a mathematical perspective, we would say that:

Thus, the magnitude and the direction of each gap will have an impact on the service quality. To increase customer satisfaction, companies need adequate measurement techniques for measuring and evaluating the gap between expectations and perceptions. According to Fitzsimmons J. and Fitzsimmons M.J in their book entitled “Service Management for Competitive Advantage” ¹¹ , the assessment of quality is made during the service delivery process which usually takes place with an encounter between a customer and a service contact person.

Customer satisfaction with service quality can be defined by comparing perceptions of services with expectations of service required. This is highlighted in the figure below.

4 Measuring and Managing Customers’ Expectations in the Airline Industry

After receiving a service, customers compare the performance of the service provider with their expectations which are mainly influenced by: word of mouth communication, personal needs and past experience. But in most of the service marketing situations, customers may not get the service level they expected before the service experience. Thus, the performance of the service provider can either fall below or above customers’ expectations. As the figure above shows,

ƒ When expectations are exceeded, the service is perceived to be of exceptional quality and also to be a pleasant surprise; ƒ When expectations are not met, service quality is perceived as unacceptable;

ƒ When expectations are confirmed by perceived service, quality is satisfactory.

According to Zeithaml, Parasuraman and Berry, the SERVQUAL is used for measuring 10 segments of service quality: responsiveness, access, reliability, competence, communication, courtesy, security, and credibility, tangible and knowing the customer. But as the Figure 2 shows, the model was redefined and the segments of service quality were reduced to five items:

ƒ Reliability: the ability to perform the promised service dependably and accurately.(e.g. an airline flight departing and arriving on time) ƒ Responsiveness: the willingness to help customers and to provide prompt service.(e.g. an ambulance arriving within 5 minutes) 5 Measuring and Managing Customers’ Expectations in the Airline Industry