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ABSTRACT
This study examines the effects of service innovation and service quality in enhancing the loyalty of customers in small service enterprise by using case study of car care business in Bangkok. By applying American Customer Satisfaction Index (ACSI) model, theoretical framework is developed to examine the causal relationships among service innovation, service quality, perceived value, customer satisfaction and loyalty. Data were collected by questionnaire survey of car care customers in Bangkok and analyzed by using Structural Equation Model (SEM). The findings of this study support and confirm the framework. Accordingly, this implies that car care service providers should improve their service quality through the invention of service innovation in order to enhance customer loyalty, which can help to build up their sustainable competitive advantage to compete in today high competitive and aggressive market.
Keywords: Service innovation, Service quality, Customer satisfaction, Customer's loyalty, SERVPERF, The American Customer Satisfaction Index (ACSI), Structural Equation Model (SEM).
I. INTRODUCTION
The concept of service innovation is becoming more captivated when the world economic and the wealth of many countries are from the service sector. During the last decade, it is accepted that the world economic has turned to be the service based sector. It was found that the main economic value and employment rate are from the service sector Bessant, J. and J. Tidd, (2009). Furthermore, in every sectors of business both manufacturing and service sections now start to focus on the fresh and innovative service over the competitors to meet the customers' satisfaction which is always beyond their expectations Ida Gremyr et al. (2010) and Wayne A. Neu and Stephen W. Brown (2005).
Service innovation are widely studied and developed to be a component of administrative strategies for the nations, organizations and large companies due to the potential in operation and competitive business effectively Bessant, J. and J. Tidd, (2009). As a result, customers are satisfied, become repeating guests or recommend the service to others. Finally, this will bring an income and value added to the organization as well. J. J. Francis (2011) and T. Dotzel et al. (2013).
In the meantime, studies on the impact of service innovation on the operation i.e.; service quality, value, satisfaction, income, etc. of small enterprise has been less concerned...