Your SlideShare is downloading. ×
How quality, value, image, and satisfaction create loyalty at an iran telecom
Upcoming SlideShare
Loading in...5

Thanks for flagging this SlideShare!

Oops! An error has occurred.


Saving this for later?

Get the SlideShare app to save on your phone or tablet. Read anywhere, anytime - even offline.

Text the download link to your phone

Standard text messaging rates apply

How quality, value, image, and satisfaction create loyalty at an iran telecom


Published on

Published in: Education

  • Be the first to comment

  • Be the first to like this

No Downloads
Total Views
On Slideshare
From Embeds
Number of Embeds
Embeds 0
No embeds

Report content
Flagged as inappropriate Flag as inappropriate
Flag as inappropriate

Select your reason for flagging this presentation as inappropriate.

No notes for slide


  • 1. International Journal of Business and Management Vol. 6, No. 8; August 2011 How Quality, Value, Image, and Satisfaction Create Loyalty at an Iran Telecom Fazlzadeh Alireza (Corresponding author) Assistant professor, Tabriz University, Iran Tel: 98-914-404-2925 E-mail: Khoshmaram Ali Business management, Aras University, Tabriz, Iran E-mail: Feyzipour Aram Aras University, Tabriz, Iran E-mail: Received: November 26, 2010 Accepted: January 14, 2011 doi:10.5539/ijbm.v6n8p271 Abstract This study proposes and tests an integrative model to examine the relations among service quality, value, image, satisfaction, and loyalty in Iran. Analysis of survey data from 417 customers of an Iran mobile Communication Company reveals that service quality directly influences perceived value, image perceptions and customer satisfaction, that value and image influence satisfaction, that corporate image influences value, and that both customer satisfaction and corporate image are significant determinants of loyalty. Thus, image has both a direct and indirect (through value and satisfaction) impact on customer loyalty. Customer satisfactions mediate the impact of service quality, value, and corporate image on customer loyalty. Keywords: Value, Satisfaction, Loyalty, Image, Mobil communication 1. Introduction Telecommunication companies are advancing technology tremendously. As a result, they face intense competition, including competition from sources not previously existing. Over 30 million Iran consumers own and use a mobile phone. The Iran government's recent restructuring of state owned monopolistic telecommunication system and further deregulation has led to a more open and free market system. How does a firm survive under such turbulent conditions? Traditionally, mobile ad land phone providers competed fiercely for new customers. In the U.S., customers were provided with financial incentives to sign up or switch service from one provider to another. Over time, and with the increased saturation of the market, companies have come to realize their performance can improve by focusing more on retaining customers than constantly acting in a conquest mode. As the Iran market provides an increasing range of opportunities for consumers, how can telecommunication service providers maintain customer loyalty? The present study tests a model of customer loyalty among customers of a telecommunications firm in a collectivist society. The model examines the inter-connections among evaluation of service quality, customer perceived value, perceptions of corporate image, customer satisfaction, and loyalty. The research offers theoretical contributions and extends our understanding of consumer loyalty. Additionally, those providing technological services in collectivist cultures will find practical insight. 2. Background, theoretical development, and research hypotheses 2.1 The need for the study Although customer loyalty is increasingly seen as a prime determinant of long-term financial performance in competitive markets (Jones and Sasser, 1995; Reichheld, 1996), there are clear gaps in our knowledge of the antecedents of loyalty. First, and the primary purpose of this research, is to examine an integrated model of loyalty. While quality, consumer satisfaction, and value are viewed as key building blocks of customer loyalty (Babin and Attaway, 2000; Bolton and Drew, 1991; Zeithaml, 1988), research generally considers only the simple bivariate links between service evaluation (quality, satisfaction, and value), image, and loyalty which may mask true relations Published by Canadian Center of Science and Education 271
  • 2. International Journal of Business and Management Vol. 6, No. 8; August 2011 Second, research examining corporate image focuses mostly on goods producing firms and on retail stores (e.g. Bloemer and Ruyter, 1997; Donovan and Rossiter, 1982; Dowling, 1988; Mazursky and Jacoby, 1986; Nguyen and LeBlanc, 1998). Little work reports on customers' image assessments of service firms. Further, researchers have not integrated the role of corporate image into customer loyalty, especially among high-tech service firms or service firm consumers outside the U.S.A. Third, most previous service research examines a western cultural context. U.S. and European consumers participate in and are socialized within a predominantly capitalistic marketplace (Trompenaars, 1994). Applying western-developed theory and theoretical inter-connections between consumer service evaluations and true customer loyalty may not be universally appropriate. Researchers argue that cultural idiosyncratic characteristics may result in different relationship patterns and different strengths of relationships across cultures (Clark, 1990; Dabholkar, 1995). Limited evidence suggests that consumers do not become loyal the same way in different cultures. For example, one study of German mobile communication consumers finds service price, phone number portability, and benefit perception most affect loyalty (Gerpott et al., 2001). A study of Korean consumers, on the other hand, reports brand image, perceived service quality, and the perceptions of switching costs better determine loyalty (Kim et al., 2004). Research examining Turkish mobile communications consumers suggests service quality is necessary, but insufficient, to create loyalty (Aydin and Ozer, 2005). Lee et al. (2001) find that switching costs strongly affect the satisfaction →loyalty relationship for French mobile consumers. Finally, Lee and Ulgado (1997) find corporate image, low price, and consistent quality affect U.S. consumer loyalty. Generally, Asian cultures see the less tangible characteristics of service as more important (Mattila, 1999). Marketers face a challenge in applying western-derived theory in Iran where social transition, and a unique culture shape consumer behavior. Thus, Iran consumers' reactions to service providers and loyalty formation may be quite unique. On the other hand, the core constructs are likely universal and the relationship among them could remain reasonably consistent across cultural and structural contexts. To summarize, the current study simultaneously examines the relationship among service quality, perceived value, customer satisfaction, corporate image, and customer loyalty among Iran consumers. Fig. 1 displays the proposed model. 2.2 Service quality, value, and satisfaction Several researchers examine links between and among service quality, value, and satisfaction (e.g. Cronin et al., 2000; Garbarino and Johnson, 1999; Spreng et al., 1996). Not surprisingly, they find that high service quality and high value correlate with relatively high customer Satisfaction (e.g. Cronin et al., 2000). While some suggest that satisfaction drives quality, the preponderance of evidence indicates that quality drives satisfaction (Dabholkar, 1995). The basis of links from service quality and value to satisfaction is Bagozzi's (1992) and Lazarus' (1991) framework of appraisal → emotional response → coping. Adapting the framework to a service context suggests that the more cognitively-oriented service quality and value appraisals may lead to emotive satisfaction, which in turn drives loyalty (e.g. Chenet et al.,1999; Ennew and Binks, 1999;Woodruff, 1997). Overall the service quality→ satisfaction causal order receives considerable support and empirical validation (Brady and Robertson, 2001; Gotlieb et al., 1994). Further, the quality → satisfaction link holds up across different cultures and explains more variance in customer loyalty (Brady and Robertson, 2001). Therefore, the first hypothesis is: H1. Service quality has a significant, positive effect on customer satisfaction. In addition to the studies above, Fornell et al., (1996) report that the top two determinants of customer satisfaction are perceived quality and perceived value. Thus, the second hypothesis is: H2. Perceived value has a significant, positive effect on customer satisfaction. Value is at the heart of what consumers pursue from a marketing exchange. While value is operationalized in different ways, the general definition of value is a consumer's perception of the subjective worth of some activity or object considering all net benefits and costs of consumption (Babin et al., 1994). In the present study, the relevant consumption act is the overall service received from telecommunication provider. Perceived quality will positively influence value, while price/cost will negatively influence value (Chang and Wildt, 1994; Hellier et al., 2003). Logically, high quality is not a prerequisite for value because a reduction in quality can be offset by lower overall costs. However, research supports a positive relationship between quality and value (e.g. Andreassen and Lindestad, 1998; Choi et al., 2004; Cronin et al., 2000; Zins, 2001). Therefore, the third hypothesis is: H3. Service quality has a significant, positive effect on perceived value. 2.3 Corporate image Corporate image is another important factor in the overall service evaluation (Bitner, 1991; Grönroos, 1988; Gummesson and Grönroos, 1988). According to Grönroos (1988) and Keller (1993), corporate image is a perception of an organization held in consumer memory and works as a filter which influences the perception of the operation of the company. 272 ISSN 1833-3850 E-ISSN 1833-8119
  • 3. International Journal of Business and Management Vol. 6, No. 8; August 2011 Attitude theory suggests that service evaluations are the leading cause of corporate image and that these attitudes increase in predictive value as they become more accessible in memory (Fazio, 1989; Fazio and Zanna, 1978). Direct experience makes attitudes more accessible and more predictive of future behaviors. Oliver (1980) claims that a consumer's attitude towards a product/service choice is a function of the consumer's initial attitude at the time of purchase/encounter and his or her satisfaction with a particular consumption experience. Selnes (1993) posits that performance quality affects a global, more general, evaluation of the brand. Along the same line, Ostrowski et al. (1993) examine airline service and arguing that “positive experience over time (following several good experiences) will ultimately lead to positive image” (p.23). Corporate image stems from all of a customer's consumption experiences, and service quality is representative of these consumption experiences. Hence, the perception of service quality directly affects the perception of corporate image (Aydin and Ozer, 2005): H4. Service quality has a significant, positive effect on corporate image. Andreassen and Lindestad (1998) posit that corporate image, through a filtering effect, impacts a customer's evaluation of service quality, value, and satisfaction. In other words, corporate image creates a halo effect on customer satisfaction. In this study, a cumulative or relational level measure reflecting a customer's overall impression and mental picture of the firm represents corporate image (Bloemer et al., 1998; Zimmer and Golden, 1988). Consumers who develop a positive mental schema of a brand will tend toward high customer satisfaction through a halo effect where all things associated with the brand are similarly valenced. As such: H5. Corporate image has a significant, positive effect on customer satisfaction. Value extends in its conception beyond the functional aspect to include the more hedonic, social, emotional, and experiential components (Babin et al., 1994; Holbrook, 1994). A positive image makes a consumption experience more gratifying, thus helping customers experience pleasurable social and emotional benefits. Therefore: H6. Corporate image has a significant, positive effect on perceived value. 2.4 Loyalty Although ample evidence suggests significant, bivariate relationships between service evaluations and their outcomes such as word of -month, referral, and retention, the links between these three service evaluation variables (i.e. quality, value, and satisfaction) and outcome measures are still unclear. Cronin et al.'s (2000) review reveals little uniformity concerning which of the three variables of service evaluation, or their combinations, directly affect outcome measures. The model structure appears highly dependent on the nature of the study and the time period of the paper. The extant studies are categorized into one of three model structure types (Cronin et al., 2000): a satisfaction model, a value model, or an indirect model. In satisfaction models, the primary and direct link is from customer satisfaction to consumption outcome (consequences like behavioral intentions) measures (e.g. Ennew and Binks, 1999; Fornell et al., 1996; Hallowell, 1996). Value models feature perceived value, rather than satisfaction, as the primary and direct mechanism linking service perceptions to consumption outcomes (e.g. Chang and Wildt, 1994; Cronin et al., 1997). Indirect models posit that service quality influences customer loyalty only through value and satisfaction (e.g. Gotlieb et al., 1994; Patterson and Spreng, 1997; Roset and Pieters, 1997). Partial examination of the simple bivariate links between any of the three constructs and loyalty may either mask or overstate the true relationship due to omitted variable bias. To address this issue, Cronin et al. (2000) propose a model in which all three variables (quality, value, and satisfaction) directly lead to loyalty simultaneously: H7. Customer satisfaction has a significant, positive effect on loyalty. H8. Perceived value has a significant, positive effect on loyalty. H9. Service quality has a significant, positive effect on loyalty. Corporate/brand image can also affect customer loyalty. Andreassen and Lindestad (1998) examine the role of corporate image in the formation of customer loyalty in the service sector and find both an indirect and direct influence of image on loyalty. Hart and Rosenberger (2004) replicate the Andreassen and Lindestad study in Australia. In their paper, Hart and Rosenberger report that image has a “marginally significant” direct effect on customer loyalty, but a substantial effect mediated by customer satisfaction. Therefore, a positive corporate image appears to stimulate loyalty for a company. While the indirect effects may be greater, a direct relationship between image and loyalty remains even in their presence: H10. Corporate image has a significant, positive effect on customer loyalty. 3. Methodology 3.1 Sampling and data collection The survey sample is from customers of one of Iran largest telecommunications providers. Due to research budget constraints, 1000 customers were randomly selected from the company's database. A questionnaire, cover Published by Canadian Center of Science and Education 273
  • 4. International Journal of Business and Management Vol. 6, No. 8; August 2011 letter, and postage paid return envelope were mailed to these 1000 individuals. In total, the mailings yielded 500 responses. There were 83 unusable questionnaires due to relatively high portions of missing data within these cases. Subsequent data analyses were conducted on the 417 usable questionnaires, representing a 41.7% response rate. Table 1 shows key demographic characteristics of the customers. 3.2 Measures To enhance the content validity of the measures, a number of steps were taken. Wherever possible, existing measures were adopted. To assist with translation, the measures were first discussed with a panel of 15 managers. Managers were interviewed individually and asked to review the questionnaire and assess the suitability, readability, and ambiguity. The questionnaire was iteratively revised based on feedback received from the managers. The revised questionnaire was then pilot tested. Questionnaires were mailed to 100 randomly selected customers and 45 useable responses were received. The questionnaire was further revised according to the preliminary analysis based on the pilot data. The final version of the questionnaire is discussed below. Perceived service quality was determined using 22 items from SERVQUAL scale. Although there is much debate regarding the measurement of perceived quality, SERVQUAL of parasuraman, et al. (1988) is appropriate to examine perceived service quality in the mobile communication industry and is used in many studies in spite of its limitations of validity and reliability. In this study, SERVQUAL measurement was composed of 22 service perception items representing, five dimensions of service quality: tangibles (four items), reliability (five items), responsiveness (four items), assurance (four items), and empathy (five items). These items are on a 5-point Likert scale. (kim & lee, 2010). Perceived value is an overall tradeoff of “get” versus “give-up” (Zeithaml, 1988). Two items measure value – “Overall, the service I receive from company X is valuable” (VA1) and “The service quality I receive from company X is worth my time, energy, and efforts” (VA2) – adapted from Choi et al. (2004). Both items are on a five-point Likert scale, ranging from “Strongly Disagree” to “Strongly Agree.” Customer satisfaction is an overall global reaction to the consumption experience (Stank et al., 1999). The present study uses two items, “How satisfied are you with the services you receive from company X” (SA1) and “Overall, how satisfied are you with company X” (SA2). Both items are on a five-point scale from “Very Dissatisfied” to “Very Satisfied.” Corporate image has four indicators. Three reflect the company's overall reputation, prestige, and brand reputation (Zeithaml, 1988; Selnes, 1993)–“Please rate Company X's reputation” (IM1), “Please rate Company X's prestige” (IM2), and “Please rate the reputation of Company X's products and services” (IM3). A fourth item compares reputation of the target firm vis-à-vis the competitors (IM4; Selnes, 1993). All items are on a five-point scale, with the first three items anchored with “Very Low” and “Very High” and the fourth item with “Much Worse” and “Much Better.” Customer loyalty is measured with two items, one assessing intention to repurchase and the other the willingness to recommend to others (Zeithaml et al., 1996). The items asked “How probable is it that you will switch to another mobile communication company in the future” (LO1) and “How probable is it that you will recommend company X's service to your friends and relatives” (LO2). In essence, these items capture behavioral intentions or continuance commitment. Both items are assessed on a five- point scale ranging from ˜ Very Unlikely ˝ to ˜ Very Likely. ˝ 4. Data analysis and results 4.1 Measurement model Results of the measurement analysis are shown in Table 2. The χ2 statistic (1080.76, 396 DF; p=0.00018) indicates the overall fit. Thus, the measurement model fits well enough to suggest adequate validity and warrant a closer look. Item reliability and composite reliability estimates both assess reliability. Factor loading estimates assess item reliability. Generally, items with loadings of 0.7 or more have adequate item reliability (Hair et al., 2006).The composite reliabilities for each dimension range from 0.76 to 0.90. Confirmatory factor analysis (CFA) establishes the construct validity of the proposed measurement model (Gerbing and Anderson, 1988; Hair et al., 2006). The indexes suggest a reasonable fit, as would be expected given the model χ2 (NFI=0.95; CFI=0.97; RMSEA=0.066). Overall, the results support the theoretical measurement model. Comparing the variance extracted (AVE) estimates for each construct with the squared inter- construct correlations between the relevant constructs gives an indication of discriminant validity (see table 3). The results in table 3 show that the AVE is greater than the squared correlation estimate for each construct pair, providing additional support of discriminant validity (Fornell and larcker, 1981). Overall, the results indicate that the study measures possess adequate fit, reliability, and validity. Thus, the 274 ISSN 1833-3850 E-ISSN 1833-8119
  • 5. International Journal of Business and Management Vol. 6, No. 8; August 2011 following section presents the structural results. 4.2 Structural model testing Estimating a structural model corresponding to the hypothesized relationships assesses the research model (Fig. 1). The χ2 goodness of- fit statistic is 1080.76 with 396 DF. Estimates are shown in Fig. 2 with other fit indexes in table 4, all indicating an acceptable fit. 4.3 Individual hypothesis testing Individual path estimates and the variance explained in the endogenous constructs (R2) provide a test of the research hypotheses. As shown in Fig. 2, our model has high predictive power. For value, satisfaction, image, and loyalty, 68%, 80.6%, 57.9% and 39.4% of variance is explained, respectively. The research model proposes that service quality has a direct, positive relationship with perceived value, customer satisfaction, and corporate image. The path estimates in Fig. 2 show service quality is a significant predictor of value (H3; β=0.60, p<0.05), corporate image (H4; β=0.761, p<0.05) and customer satisfaction (H1; β=0.221, p<0.05). As both perceived value (H2; β=0.425, p<0.05) and corporate image (H5; β=0.292, p<0.05) are significant predictors of customer satisfaction. The model also proposes that corporate image influences perceived value directly (H6). The data support this relationship (β=0.30, p<0.05). Four factors (quality, value, image, and satisfaction) are proposed to simultaneously influence customer loyalty. However, only the coefficients from satisfaction (H7) and corporate image (H10) to loyalty are significant (β=0.413 and 0.354; p<0.05, respectively). The path coefficients from value (H8) and quality (H9) to loyalty are not significant (β= 0.119 and 0.008; p>0.05 and, respectively). Thus, the data support H7 and H10, but do not support H8 and H9. The total effect of service quality on loyalty can be broken down into an indirect component, working through image, and a direct component, represented by H9. In this case, the indirect component is 0.581(p<0.05) and the direct component is 0.008 (ns). 4.4 Loyalty drivers Satisfaction and corporate image are the two significant, direct determinants of loyalty (β=0.413 and 0.354, respectively—see Fig. 2). A comparison of total effects indicates that corporate image affects loyalty more strongly than does satisfaction (0.561 vs. 0.413). 5. Discussion The key objective of the study is to simultaneously examine the relationship among service quality, perceived value, customer satisfaction, corporate image, and customer loyalty. In addition, the study (1) tests the applicability of the model among Iran Consumers and (2) extends the loyalty model into the service sector. Overall, results generally support the model. Further, the model appears both applicable in Iran and in a service setting. 5.1 Satisfaction In this study, examining the mediating role of customer satisfaction between other service evaluations and customer loyalty is a key issue. Results reveal customer satisfaction has significant mediation effects for relationships from service quality, perceived value and corporate image to loyalty. Thus, the majority of the effect of both value and quality on loyalty is indirect (see Table 5). The mediating power of satisfaction may be based on recency. Customers feeling highly satisfied with an exchange may overemphasize the influence of service quality, value, and image on loyalty (Peterson and Wilson, 1992). These results are also consistent with empirical studies showing that satisfaction has a mediating effect on customer loyalty behavior (Caruana, 2002; Lu and Tang, 2001; Stank et al., 1999; Zins, 2001). Like other affect variables, satisfaction helps link more cognitively oriented constructs to behavioral outcomes. 5.2 Value Service quality and corporate image both have significant, direct effects on perceived value. Value then predicts customer satisfaction, directly. Thus, perceived value plays both a mediating role between service quality and satisfaction and corporate image and satisfaction. Here, perceived value only indirectly influences loyalty through satisfaction. 5.3 Image Service quality explains 57.9% of the variance in corporate image. Higher service quality significantly enhances corporate image, which in turn improves customer satisfaction and perceived value. Image has an indirect effect on satisfaction through value. Corporate image also predicts customer loyalty directly. Overall, image plays a critical role in enhancing customer value, satisfaction and loyalty. 6. Implications, limitations, and conclusions 6.1 Implications for practitioners The study should help marketing practitioners better understand the inter-relationship among service quality, Published by Canadian Center of Science and Education 275
  • 6. International Journal of Business and Management Vol. 6, No. 8; August 2011 customer satisfaction, perceived value, corporate image, and loyalty, as well as the mechanism for enhancing loyalty. While the context of the study is limited to a single Iran mobile communications company, the results generally reinforce previous research involving goods and services in western cultures. First, service quality affects loyalty indirectly. In addition, service quality significantly affects value, satisfaction and image, three factors determining satisfaction and loyalty. Thus, service quality is a key building block to improving value, satisfaction and image, which determine service loyalty. Second, customer satisfaction and corporate image are direct determinants of customer loyalty. Obviously, service providers are concerned with these outcomes and this mobile communications company needs to build and monitor both image and satisfaction. In fact, corporate image has a greater total effect on service loyalty than does any other construct. 6.2 Implications for researchers In this study, image plays a role in creating value and building customer satisfaction, and in directly enhancing loyalty. Researchers should consider the role of image in service loyalty, particularly for technologically oriented products. Most importantly, the results indicate quality may play a very important role in producing positive outcomes for service firms. In addition, the research context provides a contribution. Despite being the largest single market in the world, knowledge about Iran consumers remains limited. While a full cross cultural assessment is beyond the scope, the present study adds insight into one aspect of Iran buyer behavior. Certainly building a knowledge base regarding the Iran market is an increasingly important frontier for marketing academicians. 6.3 Limitations Several limitations of the study should be noted. First, some important factors are not integrated into the model. For example, possible factors which may significantly influence customer loyalty include number portability between various cellular operators (Gerpott et al., 2001) and other switching barriers (Kim et al., 2004; Jones et al., 2002). Second, one of the strengths of the study can also be considered a limitation. The model is tested in an Iran telecommunications setting in which cultural and economic factors are embedded. Therefore, the findings may not be fully applicable in other settings. 6.4 Conclusions This study examines a model incorporating service quality, value, image, satisfaction, and loyalty. Meanwhile several restrictions of reference paper such as small size sample have been removed and it has been used more objective measures to reduce the potential of self-reporting bias. Findings posit that among this Iran firm's telecommunication Customers, customer satisfaction and corporate image directly influence customer loyalty. In most aspects, evidence suggests the loyalty model in Iran is similar to what researchers have found in western cultures. References Kim, Y. k., & Lee, H. R. (2010). Customer satisfaction using low cost carriers. Tourism Management, 1-9. Lai, f., Griffin, m., & Babin. B.J. (2009). How quality, value, image, and satisfaction create loyalty at a Chinese telecom. Journal of business research, 62(10), 980-986. Table 1. Respondent profile gender age education Male 64.2% Under20 25.5% School 10.3% Female 35.6% 20-30 60.4% Diploma 48.8% 30-40 9.2% Bachelor 36.9% Above40 4.9% master 4% missing 276 .2% ISSN 1833-3850 E-ISSN 1833-8119
  • 7. International Journal of Business and Management Vol. 6, No. 8; August 2011 Table 2. Measurement model item Quality Standard loading Factor1:Tangibles Composite reliability 0.90 1.Modern equipments 3. XYZ s employees are neat-appearing. 4. XYZ s materials associated with the service are visually appealing. Factor2: Reliability 6. When you have a problem, XYZ shows a sincere interest in solving it. 7. XYZ performs the service right the first time. 8. XYZ provides its services at the time it promises to do so. Factor 3: Responsiveness 10. XYZ s employees tell you exactly when services will be performed. 11. XYZ s employees give you prompt service. 12. XYZ s employees are always willing to help you. 13. XYZ s employees are never too busy to respond to your requests. Factor 4: Assurance 14. Behavior of XYZ s employees instills confidence in customers. 15. You feel safe in your transactions with XYZ. 16. XYZ s employees are consistently courteous with you. 17. XYZ s employees have the knowledge to answer your questions. Factor 5: Empathy 18. XYZ dose not give you individual attention. 19. XYZ has operating hours convenient to all its customers. 22. XYZ s employees understand your specific needs. 0.71 0.80 0.75 Perceived Value 1. Overall, the service I receive from xyz is valuable. 2. The service quality I receive from xyz is worth my time, energy, and efforts. 0.75 .0.83 0.76 Satisfaction 1. How satisfied are you with the services you receive from XYZ. 2. Overall, how satisfied are you with XYZ. 0.71 0.84 0.80 Image 1. XYZ s overall reputation. 2. XYZ s prestige. 3. XYZ s brand reputation. 4. Compares reputation of XYZ vis-à-vis the competitors. 0.74 0.79 0.73 0.90 0.85 Loyalty 1. Consider XYZ your first choice to buy. 2. Say positive things about XYZ to other people. 3. Recommend XYZ to someone who seeks your advice. 4. Do more business with XYZ in next years. 0.80 0.82 0.85 0.81 0.89 0.85 0.78 0.85 0.82 0.80 0.73 0.72 0.89 0.76 0.87 0.92 0.83 0.75 0.77 0.89 0.78 0.88 0.71 NFI= 0.95 , NNFI=0.96,CFI=0.97, RMSEA=0.066 * Standardized factor loading, all are significant at 0.05 level. Table 3. Construct correlation Quality Image value Satisfaction Loyalty Quality 0.938* Image 0.751** 0.887 value 0.843 0.701 0.906 Satisfaction 0.835 0.692 0.891 0.852 Loyalty 0.495 0.713 0.523 0.625 0.869 * Square root of average variance extracted (AVE) is shown on the diagonal and in bold; ** Correlation coefficients are shown in the off diagonal; all correlations are significant at the 0.05 level. Published by Canadian Center of Science and Education 277
  • 8. International Journal of Business and Management Vol. 6, No. 8; August 2011 Table 4. Summary of fit indices Fit indices χ2/Df Recommend value >3 Value in this study 2.93 Table 5. Standardized effect RMSEA GFI < 0.08 > 0.90 0.066 0.85 Quality 0.7611 (0.7612, 03) 0.828 (0.60, 0.228) 0.30(0.30, 0) Satisfaction 0.795 (0.221, 0.574) CFI > 0.90 0.97 Image - Value AGFI > 0.80 0.82 Image NFI NNFI > 0.90 > 0.90 0.95 0.96 IFI > 0.90 0.97 Value - Satisfaction - - - 0.419(0.292, 0.127) Loyalty 0.589 (0.008, 0.581) 0.425(0.425, 0) - 0.561(0.354, 0.207) 0.413(0.413, 0) 0.294(0.119, 0.175) 1 Standardized total effects Standardized direct effects 3 Standardized indirect effects 2 Figure 1. Conceptual model 278 ISSN 1833-3850 E-ISSN 1833-8119
  • 9. International Journal of Business and Management Vol. 6, No. 8; August 2011 H9 = 0.008 ns R2 = 0.68 Value H8= 0.119 ns H2 = 0.425 H3 = 0.60 H1 = 0.221 Service quality H7=0.413 Satisfaction R2 =0.806 H5 = 0.292 Loyalty H6 = 0.30 R2 = 0.394 H4 = 0.761 H10= 0.354 * P<0.05 Ns: not significant Image Solid path: significant Dashed path: insignificant R2 = 0.579 Figure 2. Structural model with parameter estimates Published by Canadian Center of Science and Education 279