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Gordon H.G. McDougall: Professor of Marketing, School of Business and Economics, Wilfrid Laurier University, Waterloo, Ontario, Canada
Terrence Levesque: Professor of Economics, School of Business and Economics, Wilfrid Laurier University, Waterloo, Ontario, Canada
Introduction
Long-term financial performance
Customer loyalty is a prime determinant of long-term financial performance of firms (Jones and Sasser, 1995). This is particularly true for service firms where increased loyalty can substantially increase profits (Reichheld and Sasser, 1990; Reichheld, 1996). Service firms focus on achieving customer satisfaction and loyalty by delivering superior value, an underlying source of competitive advantage (Woodruff, 1997). For service firms the challenge is identifying the critical factors that determine customer satisfaction and loyalty.
Considerable research has focused on service quality dimensions as the primary determinants of customer satisfaction (Parasuraman et al., 1988; Brown et al., 1993; Zeithaml et al., 1996). Typically, this research has not included perceived value as a determinant and this has been regarded as a shortcoming of the approach (Ravald and Gronroos, 1996; Anderson et al., 1994; Heskett et al., 1997). Interestingly, there has been limited empirical work conducted on perceived value and its relationship to customer satisfaction in service settings (Anderson et al., 1994). Given the considerable interest in perceived value from both service marketing practitioners and academics, it is appropriate to determine its contribution to customer satisfaction.
A comprehensive model
The objective of this research is to test a more comprehensive model of customer satisfaction in service settings; one that incorporates perceived value. The model proposes that perceived service quality and perceived value influence satisfaction which, in turn, influences future intentions (Figure 1). Perceived service quality is viewed as consisting of two primary dimensions: core, the basic service "contracted" for or promised, and relational, the way in which the service is delivered (Gronroos, 1985; Morgan and Piercy, 1992). Perceived value is viewed as benefits received relative to costs (Zeithaml, 1988). Customer satisfaction is viewed as the overall assessment of the service provider while future intentions are the stated likelihood of returning to the service provider. The model parallels the "tripartite model" where the antecedents of satisfaction are the observed variables leading to an inferred state, satisfaction, leading to observed variables, future intentions (Eagly and Chaiken, 1993).
An empirical investigation
To accomplish the research...