Evaluating the Perceived Value of Service Delivered by Taiwanese Airlines in the Domestic Market Jin-Ru Yen Dawna L. Rhoades Ger-Yuan HsuThe 12th International Conference on ISO 9000 & TQMApril 9-11, 200712-ICIT: 06-041contentsQMotivation, research scope, and objectivesQMethodologyQEmpirical studyQConclusion2Evolution in Marketing ConceptsPhasesFocusProduct qualityProvide products with predefined qualities (defined by manufactures)Sales techniqueApply sales promotion to increase revenues in short run Customer satisfactionProvide products and services with high customer satisfaction Perceived quality and customer valueProvide products with higher customer values than competitorsCustomer value managementRelate CVM to profitsMotivationMotivation3QPZB (Parasuramsan, Zeithaml, Beery) model has been applied in a lot of research relating to service quality.QLittle research includes the concept of value.QLittle research measures customers perceptions toward both the organization of interest and its competitors. Works in the LiteratureMotivationMotivation4Taiwan Domestic Air Market & Research ScopeQRoutes within the main island (business traveler) Taipei-KaohsiungQRoutes between the main islands and offshore islands (tourist and local resident)Taipei-Kinmen Taipei-Makung5QTo apply the concept of value and measure customers perceptions of values delivered by different airlines that compete each otherQTo apply the structural equation model to investigate factors that affect customer valuesQTo develop customer value map from the point of each airlineResearch Objectives6Conceptual FrameworkMethodologyMethodologyService qualityBrand imagePerceived costCustomer valueWillingness to buy7Structural Equation ModelMethodologyMethodology8Questionnaire DesignMethodologyMethodologyQCharacteristics of passengersQCharacteristics of tripsQPerceptional questions9Perceptional Perceptional QuestionsQuestionsnumbercategorycontents1Service qualitySeats are comfortable. 2Food is delicious.3Aircraft are new.4Schedule is on time.5Flight attendants provide needed services.6Ground staffs provide needed services.7The airline has a good record of flight safety.8The check-in service is efficient.9Flight attendants quickly respond to requested services. 10Ground staffs quickly respond to requested services.11Flight attendants are courtesy and professional.12Ground staffs are courtesy and professional.13Have confidences in the flight attendants.14Have confidences in the ground staffs.15Flight schedules are convenient for your itinerary.16It is convenient to purchase flight tickets.17It is easy to change or return flight tickets.18The frequent flight program is attractive.19It is easy to obtain fare information.20It is easy to obtain flight schedules.10Perceptional Perceptional QuestionsQuestions21Brand imageThe airline is innovative.22The airline has good reputation.23The airline is the brand leader in domestic air market.24Perceived costsThe fare of the flight ticket is inexpensive.25The waiting time in the check-in counter is short.26Perceived valueThe airline is more valuable than others.27The service is more valuable than the cost for it.11QExploratory analysisQStructural equation modelQCustomer value analysis (Bradley T. Gale, 1994)Methodology12Sample Distribution by Route(survey conducted in April and May, 2005)(survey conducted in April and May, 2005)Empirical studyEmpirical studyTaipei-KaohsiungTaipei-KinmenTaipei-Makungairlinesnumber of respondents (%)airlinesnumber of respondents (%)airlinesnumber of respondents (%)Far Eastern Air Transport 158(36.3)Far Eastern Air Transport47(37.9)Far Eastern Air Transport17(17.4)TranAsia Airways45(10.3)TranAsia Airways29(23.4)TranAsia Airways43(43.4)Uni Airways87(20.0)Uni Airways29(23.4)Uni Airways38(38.9)Mandarin Airlines145(33.3)Mandarin Airlines19(15.3)total435(100)total124(100)total98(100)13Estimation Results : Taipei-KaohsiungGFI=0.90 CFI=0.98 ECVI=1.90 NFI=0.97Measures of brand image0. 76( 17. 15*)- 0. 49( - 9. 38*)0. 51( 9. 87*)Quality of servicePerceivedcostBrand imagePerceivedvalueMeasures of perceived valueMeasures of service qualityMeasures of perceived cost14Estimation Results : Taipei-OffshoreGFI=0.91 CFI=0.99 ECVI=2.12 NFI=0.98Measures of brand image0. 79( 13. 72*)- 0. 53( - 7. 25*)0. 51( 7. 16*)Quality of servicePerceivedcostBrand imagePerceivedvalueMeasures of perceived valueMeasures of service qualityMeasures of perceived cost15Estimation Results (SEM): Offshore Routes PathTaipei-Kaohsiung routeTaipei-offshore routeStandardized coefficient (t value)Standardized coefficient (t value)Brand image perceived value(21)0.51 (9.87) 0.51 (7.16) Perceived costs perceived value(22)-0.49(-9.38) -0.53(-7.25) Service quality brand image(11)0.76 (17.15) 0.79 (13.72) 16Customer Value Analysis (Taipei-Kaohsiung) ItemsAirlinesFTUMRelative value of brand image1.0000.9930.9790.951Relative value of perceived cost1.0000.9541.0190.898Relative value of perceived customer value1.0001.0400.9611.06017Customer Value Analysis (Taipei-Kinmen)ItemsAirlinesFTUMRelative value of brand image1.0001.013 0.990 0.926 Relative value of perceived cost1.0001.053 1.038 1.086Relative value of perceived customer value1.0000.9630.954 0.853 18Customer Value Analysis (Taipei-Makung)ItemsAirlinesFTURelative value of brand image1.0000.984 1.016 Relative value of perceived cost1.0000.846 0.964 Relative value of perceived customer value1.0001.165 1.044 19QBrand image and perceived price have equal influence on perceived customer value. QThe key factor in customer value was low perceived costs. QPremium branding effects were not observed.Conclusions20Questions and Comments21