Literature Review: Customer Expectations

The literature review is about customer expectations, customer perceptions and customer satisfaction and their association with the services they receive. The literature describes customer satisfaction as a problem which has become a major issue for the service providers. Customer satisfaction is found to be based upon the customer’s comparison between prior expectation and actual service performance. Park, Robertson and Wu (2004) found that the expectation of a customer is an important factor in the analysis of customer satisfaction and perception and has this factor has been found to be neglected in the airline industry. Focusing on customer satisfaction is the vital key to improve the service quality of an airline.

There are ways by which service providers can reduce the risk of losing their customers. It happens when the customers who complain about service poor quality enable the companies to improve their quality of services, by enhancing the quality of services companies gets the opportunity to minimize the costs of negative word- of- mouth, switching behavior providers and lost turnover (Stauss, 1999).

Airline industry is also a service provider industry that has been continuously working on improving services and adopting ways to satisfy their customers. Airlines play a significant role as a medium and as a service provider to transport passengers from one destination to the other across the globe (Rhoades & Waguespack, 2008). Hanlon (1999) suggest that there are three main factors that make customers to avoid traveling through some airline. These three factors are incomes, fares and service levels.

Although many factors can play a key role in the success of an airline but customers do not compromise on services and hence it has become the critical factor behind the success of airline industry (Bamford & Xystouri, 2005; Rhoades &Waguespack, 2005; 2008). The study on services has revealed that Zagat, an aviation research firm, rates services in airlines according to overall performance of airline, the extent to which it provides comfort to the passengers, services, type and quality of food and the website through which customers get the know how about airlines and services and use it as a communication medium (Rhoades, 2006).Also,The US department of Transportation (DOT) states that service in the airline industry can be seen from various dimensions which includes delays in takeoffs and landings, mishandling of baggage oversold flights and the management and response to customer complaints (Saha & Theingi, 2009).

It is quite evident from the viewpoints mentioned above that service is a broad term which includes elements or dimensions like performance, food, lingering of flights and, the way customer queries and issues are entertained and safety of their luggage. Hence these services not only play a key role in success of airlines but also shape up the expectations of customers.

Quality of services has become an extremely important issue for service providers, but delivery of such service becomes difficult because of four characteristics namely, intangibility, inseparability, variability, and perishability. The SERVQUAL model helps the service providers when they fail to satisfy their customers and when their expectations are not filled according to their perceptions (Bebko, 2001).

Out of all the gaps, Gap 5 is more appropriate with the research objective as it describes customer perceptions and expectations regarding services they get from the service providers. There are some variations in the Gap 5 which leads to customer satisfaction (when perception of the customers meet their expectations) or sometimes they are highly pleased and delighted (when perceptions exceed from the expectation of customers) and the worst condition is when a customer is totally disappointed, in fact outraged (when perception do not meet the expectations at all) (Andreassen, 2001; Schneider and Bowen, 1999).All these aspects mentioned above have been described in detail throughout the literature review.

2.2 Customer Importance in service industry

The trends of the buisness have consdderably drifted fron product oriebted trend to the customer oriented. The most valuable asset in the buisness today is the strength of the relationships of the organisation with its customers.

Long term relations are the bottomline or we can say are the basis of enhanced profitability.It is true that such relationships between a customer and an organisation only exist as long as the customer percieves goodbenefits and quality service from the organisation.Quality links directly to customer, what customer suggest is the dimension of the quality. Elearn (2005) defined and linked quality with the customers point of view.

“Quality is consistent of conformance to customer’s expectations”.(Elearn 2005,p.02)

In todays market the customer has become more demanding as the expectations of the sevices and the expectation of the performanance of the product continue to increase.The brand power or the image of a corporate has immensely decresed as the customers now know that there is an alternative and wide choice is available (Gerson.1992).

In the airline service industry customer experience service after they have already paid or purchased the service, on the other hand tangible or manufacturing industries advertise and promote their products with unique features like cool colors,nice taste, pleasant smell etc.

Christopher & Peck (2003) suggest that to retain a customer requires an understanding of what those customers value and a focus on the processes whereby that value can consistently be delivered.Clearly there is an equation between the value that customer percieve they are getting and the price they are prepared to pay.

Gerson (1992),explained “why customer buy?”,The author explained Customers basically buy for the four reasons:to make or save money, to save time,to feel secure (have peace of mind) or boost their ego. Thus if a company promises that their product or the service will do one or more of these four things,it will have better productivity and performance .If it doesn’t then a company implement their service recovery programme to ensure the satisfaction and the loyalty of a customer are maintained.

2.3 The Issues of Customer Satisfaction

The heading states customer satisfaction as a problem which suggests that it should be given a lot of importance by the companies that are dealing with customers. The importance of customer satisfaction can be understood by statements from various writers.

The companies while making business strategies, incorporates a strategy to achieve Customer satisfaction (Reichheld & Sasser, 1990; Rust & Zahorik, 1993). Drucker (1973) states it as the reason of successful business, and according to Claycomb & Martin (2002) customer satisfaction is a basic principle of relationship marketing and management. Anderson et al (1994) think that customer satisfaction is a helpful factor in giving organizations an edge over their customers.

It is evident from some research works that concepts of corporate profitability, customer satisfaction and customer loyalty, and customer retention are interlinked. There is a strong and positive relationship between customer satisfaction and corporate profitability (Reichheld & Sasser, 1990; Rust and Zahorik 1993; Anderon et al., 1997). It has been seen in many industries that the companies who achieve greater customer satisfaction, rare are the chances of losing their customers which means customer satisfaction leads to customer retention and they flourish economically (Hogan et al ., 2003; Reichheld & Sasser, 1990). Another study states that the satisfied customers become the loyal customers (Anderson & Sullivan, 1993; Fornell, 1992; Bolton & Drew, 1991; Oliver & Swan, 1989) .The more the loyalty of the customer would be the better would be the profit gain (Reichheld & Teal, 1996).

2.3 i. Perspective of the Airlines Industry

The Airline Industry is comprised of both small and large airlines. The competition between these airlines not only creates opportunity for each to perform better but this can result in the decline of airlines too. Privatization, liberalization, globalization and cooperation are the visible trends in this sector (Wirtz & Johnston, 2003; Chan, 2000a; Driver, 1999; Chidambaram, 1999). Thus, they are threatened by mega airlines in this clustered industry and they can only survive, if they provide service of quality.

In comparison to small airlines, mega airlines are surviving through strategic alliances. If small airlines want to survive they need to collaborate with mega airlines. The concepts of competition and collaboration will be considered vital in order to deliver a standardized service (Chan, 2000a; Hanlon, 2003).

Many airlines have been focusing on providing quality service through service personalization, quality meals, and variety of in-flight entertainment, modern aircraft, and sound frequent flyer programmes (Zaid, 1994; Sultan & Simpson, 2000; Wirtz and Johnston, 2003).

The airlines these days seem to follow either of the two strategies: lower cost strategy or excel in providing enhanced quality services (Johnson and Scholes, 1999). Singapore Airlines, for instance have trained their staff in order to give customer better in-flight services (Wirtz & Johnston, 2003).

Tsikrisktsis and Heineke (2004) have found that customer’s experience with a firm is an important determinant of its expectation in the future. Therefore, inconsistency or variation in the process may lead to customer dissatisfaction. However, such an impact is contingent upon the average service quality of an airline. Thus, good and consistent service is what customers expect from an airline.

An and Noh (2009) found that customer seat class also impacts their service quality’s perception and expectation. Therefore an airline should plan different service strategy for different seat classes.

2.3 ii. Customer Expectations & Gratification

Customer expectations if not fulfilled leads to three states and then customer complains. This complaining is the post-purchase behavior. These three states are delight, satisfaction and dissatisfaction. If the customer is pleased, satisfied and delighted, he/she admires the services (Leventhal, 2006). When the customer is not satisfied he/she expresses disappointment and complains about the quality of service (Santos & Boote, 2003).

The customer expectations lie in three categories that are fuzzy, precise, implicit, explicit, and unrealistic and realistic expectations.

Fuzzy expectations are those that are formed when customers are uncertain about the things they are expecting, they want something but they fail to comprehend what they want actually. If these expectations are not met, customers are dissatisfied but they do not understand why it happened and what they wanted. Such customers are more prone towards switching behavior and switch to other service provider without realizing the reason and benefits. The opposite of this concept is precise expectations (Ojasalo, 2001).

The implicit expectations are associated with situations when the services are meant to be delivered just according to the expectations of customers and customer’s donot want to even think about it what will happen if the services will not be delivered the way they are expecting. If these expectations are not met, they become prominent and are felt by the customers.

Explicit expectations, on the other hand are well defined in customer’s mind. Customers are conscious about these expectations and about whether they are met or not (Ojasalo, 2001).

Unrealistic expectations are those that cannot be fulfilled by the service provider and even the customers themselves. Realistic expectations are exactly the opposite of unrealistic expectations (Ojasalo, 2001). All these types of expectations are likely to be expected by the customers at the same time.

There are some ways of managing these expectations. Firstly by focusing on fuzzy expectations, the service providers can make these fuzzy experiences more precise, and this can be achieved when service providers interact with the customers. This communications enable the service providers to shape their service according to the customer needs, and customer finds easy to understand what kind of service they desire. In, short the problem is identified and then a solution is provided. By focusing fuzzy expectations, service providers can avoid providing short-term satisfaction at the expense of long-term satisfaction (Ojasalo, 2001).

Implicit expectations can turn into explicit expectations firstly when service providers purposely reveals them, and secondly, if they are not matched by experiences. When Implicit expectations are revealed, it increases the likeliness of achieving higher customer satisfaction or in other words of high quality in the long term (Ojasalo, 2001).

The unrealistic expectations, as mentioned earlier, do not usually exist or in other words nobody can meet these expectations. When these expectations are not fulfilled this leads to dissatisfaction and disappointment of customers. If these expectations can be made realistic, it is possible to achieve customer satisfaction. The need is to calibrate these unrealistic expectations and make them realistic in order to avoid disappointment of customers in the future. It is better to calibrate these unrealistic expectations because when customers realize that their expectations cannot be met practically, they are disappointed and if they realize this at the later stage, the disappointment is even higher. Calibrating unrealistic expectations lead to high-long term quality.

All of these expectations have been discussed in the short-term as well as in the long-term context. In short term the customer satisfaction is achieved immediately but it does not last for a long time while in long term, the satisfaction doesn’t come immediately but lasts over a longer period. Of these two, long-term quality holds significance in order to have long lasting relationship with the customers (Ojasalo, 1999).

The following figure shows expectation management model.

(Source: Ojasalo, 2001, p.206)

All these expectations management methods increase the possibility of achieving long-term quality and the customer satisfaction.

2.3.iii The Attributes Of Customer Satisfaction

As this research is based on services and customer expectations, perceptions and their satisfaction of the Pakistan International Airline, it is important to discuss those factors and attributes that lead to customer satisfaction in the Airline Industry. Kano model describes these attributes (Kano et al, 1984).

These attributes are basic needs, performance needs and exciting factors to the customers. Their basic needs are safety and those products and services that are not hazardous. If a service or product doesn’t fulfill any of these basic needs it results in customer dissatisfaction.

The second attribute revolves around the particular performance of airlines, the extent to which they fulfill or are able to meet the requirements of customers as this helps them in achieving competitive edge in the market place. Customers get satisfied when these needs are fulfilled.

The last and third attribute which is the exciting factor includes those factors that are generally not expected by the customers but they are meant to please them and attract them but this attribute has least or no effect on customer satisfaction.

The time dimension in the model tells that as the time passes the exciting attribute becomes a performance factor and with more time lapses it becomes the basic requirement thus customers give least importance to these exciting attributes therefore with the passage of time they concentrate on the performance factors and the basic needs.It thus becomes importance for an airline to concentrate on the performance and basic attributes to be sucessful.

Fig 2b. Kano Model (Source: Create Superior Customer Values: New Direction for Middle Eastern Airlines, 2008)

2.4 Strategies followed by Pakistan International Airlines

Pakistan International Airlines ensures that they give safety a priority and want to strengthen the conviction of all interested parties to trust PIA as the safest airline of the world. For this purpose PIA has made safety management standards which are implied from top management to the employees of PIA in order to maintain a positive safety culture. Their aim is to determine the risk factor in their operations and to take initiatives to manage these risks and comply with international safety standards, corporate policy and procedures, national legislations and regulatory requirements. Pakistan International Airline wants to train their employees about handling safety hazards and risk. Auditors will check the implementation of these safety standards and management systems on a regular basis and employees will cooperate with internal and external auditors to improve their systems and efforts that comply with changing environment. All representatives will contribute in making safety related decisions and good performance will be acknowledged. The employees will work with responsibility and safety strategy will be followed (Horoon, 2008).

Pakistan International Airline has been working to deliver quality service to their customers and for that purpose they have formulated a strategy for quality as well which pertains taking care of people, their lives and their properties. PIA’s quality strategy includes shaping up the processes in a way that it delivers services that are custom defined. These processes will take place according to the environmental demands. Effectiveness of PIA’s service quality Health, Safety and Environment (HSE) management system will be improved with time (Horoon, 2008).

Quality Management Approaches has been adopted by the service firms to ensure customer satisfaction by fulfilling their expectation. A lot of scholarly work has been written on the positive relation between service quality and customer satisfaction (e.g. Faché 2000; Cronin and Taylor 1992; Barrier 1991; Eisenhar 1990; Erickson 1992). Park, Robertson and Wu (2004) have found that customer expectation defines customer satisfaction and therefore, the researcher has decided to use service quality as a measure of customer expectation fulfillment.

The literature work done by scholars also suggest that service quality is a multi-dimensional concept which was proposed by Parasuraman, Zeithaml and Berry (1985) in their very famous service-quality measuring instrument called SERVQUAL.

This instrument which measures service quality in terms of five dimensions (reliability, tangibility, assurance, responsiveness and empathy) is based on a proposition that customers’ opinions about services can be determined by the “gap” between their expectations and perceptions when services are performed. This SERVQUAL instrument has been used by many researchers to measure airline service quality (Fick & Ritchie, 1991; Sultan and Simpson, 2000).

Several studies that investigated service quality and customer satisfaction have used SERVQUAL model (e.g. Brooks, Lings and Botschen, 1999; Chaston, 1994; Edvardsson, Larsson and Setterlind, 1997; Lings and Brooks, 1998; Reynosso and Moore, 1995; Sahney, Banwet, and Karunes, 2004). However, this study has used this model in a much different way, that is to

identify the gaps between the customer expectation and the perception of the service offered.

SERVQUAL model measures service quality and customer’s expectations, thus it is important to understand the concept of service quality and its connection with customer expectation and satisfaction. Scholars like Lewis and Mitchell (1990); Dotchin and Oakland (1994); Asubonteng, McCleary and Swan (1996); Capon and Mills (2002) and Wisniewski and Donnelly (1996) define service quality as a degree to which the service fulfill customers’ needs or expectation.

Hence, service quality is a measurement of difference between customer’s expectations before experience and perceptions after experience regarding a service (Capon and Mills 2002). Expectations higher than performance lead to customer’s dissatisfaction and customer perception of lower quality (Parasuraman, Zeithaml, and Berry 1985; Lewis and Mitchell, 1990).

Thus by benchmarking customer perception about service quality, it enables the researcher to differentiate perception of customer about the service quality before and after the customer’s experience and it also helps in establishing standards for the services delivered. Measurement and analysis is the first step in developing quality in services (Edvardsen et al., 1994) and for this purpose SERVQUAL serves the best.

Some scholars like Van Dyke, Prybutok and Keppelman (1997) and Buttle (1996) have criticized this model for being subjective and have raised questions about its validity and reliability in measuring service quality (cited in Capon and Mills 2002). They held that model measures customer perception about the service quality not the actual service quality. However as this study is on the customer expectation and perception, measurement of actual service quality is not needed. Instead, the researcher is more interested in measuring the customer’s perceived service quality and the criticism on SERVQUAL model as invalid and unreliable, is irrelevant in this study.

As discussed above the importance of use of SERVQUAL model to measure the service quality of the organization, Pakistan International Airline being the service provider needs to use SERVQUAL model in order to fill or overcome those gaps which are resulting in the decline of this airline and the dissatisfaction of customers. With the use of SERVQUAL model as it is described above in the literature review, Pakistan International Airline can cover the GAP 5 if they can deliver what they promise (Daily times, 2010b).

Thus in short we can say that the Gap 5 can be filled by maintaining the services and properly managing the customer requirements.