2. THE JOURNAL OF SERVICES MARKETING, VOL. 11 NO. 1 1997 11
criteria by different dining situations (dinner with a friend vs. dinner with a
group of friends). In general, reputation, manner of employees and
appearance of premises were viewed consistently as very important. In
neither case did the authors indicate that the criteria selected have any
validity other than face validity (they seem like reasonable criteria).
Reeves and Hoy (1993) in their study of management commitment to service
quality used surroundings, customer turnover, location, price, quality of
food, quality of service, and type of food. These variables were chosen
because they are used in restaurant trade journals to identify strategies of
competing restaurants (p. 55).
The National Restaurant Association (1995) has two lists of criteria. One list
has 15 items. One group of seven items pertains to the server (e.g. friendly
service, answering questions about the menu, etc.); the other eight items
address nonserver-related issues such as quality of food, noise level, etc. The
second list aggregates the 15 items into five items: food, service, price,
location and ambiance.
Theory of service guarantees
A second approach to ensuring customer satisfaction with a service offering
involves guaranteeing the quality of service performance. Hart (1988) argues
that service guarantees will lead to increased satisfaction in a number of
ways:
• It forces the business to focus on customers. Failure to know what the
customer wants can lead to poor guarantees.
• A guarantee sets clear standards for the company.
• A guarantee generates feedback. It gives customers an incentive to
communicate dissatisfaction meaningfully.
• A guarantee forces you to understand why you fail.
• A guarantee builds marketing muscle. It encourages purchase through
risk reduction and enhances loyalty of existing customers.
In addition, Hart holds that services guarantees are particularly effective
when:
• price of service is high;
• customer’s ego is on the line;
• customer’s expertise is low;
• consequences of failure are high;
• there is a bad industry image for quality;
• they depend on repeat purchases;
• word-of-mouth is critical for business.
Hart then provides anecdotal evidence that service guarantees are useful for
improving performance. He cites the cases of British Airways, “Bugs”
Burger Bug Killers, L. L. Bean, Domino’s Pizza, Citibank, and others.
Browning (1989) discusses the use of service guarantees by the Colorado
National Bank. Rose (1990) discusses the use of service guarantees by the
Promus Companies (Hampton Inns, Embassy Suites and Harrah’s Casinos).
Maher (1991) also cites several cases where service guarantees have worked.
Ettorre (1994) cites several instances involving service guarantees with
particular focus on GTE.
Guaranteeing the
quality of service
performance
3. 12 THE JOURNAL OF SERVICES MARKETING, VOL. 11 NO. 1 1997
An implicit assumption in the services guarantee literature is that offering a
service guarantee will increase consumer satisfaction with the offering.
Hart’s reasons for increased satisfaction all relate to improved managerial
performance which then translates to improved customer satisfaction. This
managerially-oriented approach may have some problems. We agree with
Lewis and Nightingale (1991) in their discussion of quality service in a hotel
context that “Service must be designed for customers’ needs and their
willingness to pay for it” (p. 20). As a consequence, offering service
guarantees may not necessarily be appropriate if customers do not desire
such a service or benefit or if the service is not consistent with customer
expectations.
While their work was not directly on service guarantees, but on warranties in
general, Boulding and Kirmani (1993) provide some useful insight into how
service guarantees might be perceived by consumers. They hold generally
that high or better warranties are signals of high quality, while low or poor
warranties are signals of weak or poor products. Their study dealt with
tangible products (a personal computer). High credibility firms (computer
firms believed to offer high quality) offering high warranties benefitted from
these warranties. Low credibility firms (computer firms believed to offer low
quality products) offering high warranties did not benefit. When the
warranty was perceived to be not credible, high levels of length and scope
generally did not benefit the firm. In particular, when the buyer did not
believe the warranty to be credible, unconditional warranties significantly
decreased performance perceptions and overall quality perceptions.
In terms of restaurants, what should we expect? Following Boulding and
Kirmani (1993), we would expect that unconditional service guarantees in
restaurants would benefit those restaurants that are already perceived as high
quality and may actually reduce quality perceptions of restaurants perceived
as lower quality.
According to Boulding and Kirmani (1993), implementation of a service
guarantee will signal to consumers either positively or negatively depending
on the initial consumer perception of the restaurant. Hart (1988) would hold
that the service guarantee will lead to an internal change that will result in
improved quality and hence improved consumer acceptance. If Hart is
correct, then service guarantees would indeed be highly desirable. If
Boulding and Kirmani are right then service guarantees may, in some cases,
be the absolutely wrong strategy.
The previously cited restaurant studies do not include service guarantees as a
variable in consumer choice and evaluation of restaurants. The service
guarantee literature does not measure consumer perceptions of the value of
service guarantees. Thus, we are interested in consumer perceptions of the
value of service guarantees. That is, is offering a service guarantee a
desirable strategy for restaurants? In particular, does the presence of a
service guarantee influence consumer choice positively?
The literature does not address whether or not the mere presence of a service
guarantee has an impact on consumer choice. This study does not measure
whether or not a service guarantee actually increases performance or
customer satisfaction. Rather, it addresses whether or not customers,
knowing that a service guarantee is in place, are influenced in their choice of
restaurants. Conjoint analysis can help us bridge the gap in our knowledge
about the relationship between choice criteria and purchase intention. That
is, the higher scores on the various criteria presumably mean higher levels of
A managerially-
oriented approach
Consumer perception
of service guarantees
4. THE JOURNAL OF SERVICES MARKETING, VOL. 11 NO. 1 1997 13
utility for a particular restaurant description. If consumers view service
guarantees as a positive attribute, restaurants that offer such guarantees
should receive higher rankings than do restaurants that do not offer service
guarantees, all other things being equal.
Hypothesis formulation
The major hypothesis tested in this study is that the utility of a restaurant
will be greater if the restaurant offers a service guarantee to its clients.
Moreover, the utility level associated with this guarantee should increase the
more inclusive the terms of the guarantee. For example, explicit guarantees
should produce higher utilities than a vague or absent service guarantee.
Selection of determinant attributes
Obviously, restaurants, as well as any other service provider, could be
evaluated by consumers on an almost infinite number of possible attributes.
In this study, we used a variation of Kelly’s repertory grid technique (Kelly,
1955). A group of 30 MBA students were given the task of writing on an
index card which features differentiate a “good” restaurant from a “bad”
restaurant. The logic of this approach is that the subjects would list only
those attributes which were of great importance in the selection of an eating
establishment.
A common set of four attributes emerged. They included the following:
price, speed of service, quality of food and courtesy of server. These
attributes largely are consistent with previous studies of restaurant choice
criteria. Service guarantee was added as the fifth attribute by the authors.
Experimental design
A main effects only design was chosen for the study. Each of the main
effects was estimated independently. The five attributes each had three levels
(Table I).
The final questionnaire consisted of 32 different descriptions of restaurants
(restaurant profiles) and four questions regarding basic demographic
characteristics. MBA students were selected as subjects. All who
Table I. The five attributes and associated levels
Attribute Levels
Price Less than $15.00
$15.00 to $25.00
More than $25.00
Speed of service Slow service
Average service
Prompt service
Quality of food Average
Above average
Excellent
Courtesy of server Not friendly
Friendly
Very friendly
Service guarantee No explicit or stated guarantee
An explicit guarantee of satisfaction, but no details
An explicit guarantee of satisfaction (full refund
or no charge for the meal)
Explicit guarantees
should produce high
utility levels
5. 14 THE JOURNAL OF SERVICES MARKETING, VOL. 11 NO. 1 1997
participated in the study indicated at least a recent dining out experience.
The 161 MBA students who participated in the study were given instructions
to assume that the restaurants were identical on all but the attributes listed in
the profile.
This study did not address all types of restaurants. In particular, respondents
were told that: “Attached are a number of descriptions of different table
service restaurants. A table service restaurant is one where a waiter or
waitress takes your order, serves your meals and so on.”
Each of the 32 descriptions was prefaced by the following statement: “If you
were selecting a restaurant for a quiet dinner with friends, would you choose
this restaurant if all your other requirements were met?”
Thus, the focus of the study was on table service restaurants chosen for a
quiet dinner with friends. Not all restaurant types were considered in the
study nor were different dining occasions chosen. The principle involved in
the design of the study should be readily applicable to other restaurant types
in different dining circumstances.
Result
There were three attributes which exhibited statistically significant
differences between highest and lowest attribute levels. The following
discussion is based on the results found in Table II. Respondents associated
higher utility with the presence of prompt versus slow service. A server with
a very friendly manner was accorded greater utility than a server who was
not friendly. Excellent food had higher utility than average food.
Surprisingly, there was not a statistical significance between the highest and
lowest price levels, although the highest level of price (more than $25.00)
was accorded the lowest level of utility. The findings for the service
guarantee indicate no difference in utility between no guarantee and the
presence of an explicit guarantee of satisfaction.
Table II. Results of conjoint analysis
Attribute Levels Part worths T-value
Price Less than $15.00 3.15 0.3055
$15.00 to $25.00 3.18 0.68
More than $25.00 2.85
Speed of service Slow service 2.74* –1.34
Average service 3.09 0.15
Prompt service 3.35
Quality of food Average 2.55* –1.99
Above average 3.10 0.18
Excellent 3.53
Courtesy of server Not friendly 2.59* –1.5
Friendly 3.25 0.98
Very friendly 3.36
Service guarantee No explicit or stated guarantee 3.09 0.18
An explicit guarantee of
satisfaction, but no details 3.14 0.41
An explicit guarantee
of satisfaction (full refund or no
charge for the meal) 2.94
R2 = 0.75
Note:* indicates a one tailed t-test which is significant at the 0.10 level. A significant t-test
rejects the null hypothesis of no difference between the lowest and highest level of an attribute
6. THE JOURNAL OF SERVICES MARKETING, VOL. 11 NO. 1 1997 15
The conjoint analysis program allowed us to perform market share
simulations. Table III contains the results of a market share simulation where
the attributes of speed of service, food quality and courtesy of server were
all held constant at their highest level, while price and service guarantee
where allowed to vary. The cell entries are estimates of market share for
particular combinations of price and service guarantee. For example, a meal
with a price of less than $15.00 and no service guarantee would gain 24.3
percent of the market. The same meal with an explicit guarantee would earn
a 13 percent market share. Finally, a low priced meal with an explicit
guarantee of satisfaction with details would attract a 5.55 percent market
share.
Thus for low priced meals, as the service guarantee increases, the market
share falls. For medium and high priced meals, as a service guarantee is
included, market share rises, but as more details are given, the market share
then falls. This pattern is consistent with the views of Boulding and Kirmani
(1993).
Discussion
The major finding of this study that service guarantees are not uniformly
important in the selection of restaurants is surprising. Especially in light of
the importance ascribed to such guarantees by various authorities. How can
the finding be explained? There are several possibilities:
• Some authors (e.g. Hart, 1988) have stated the circumstances under
which guarantees are effective, including: “A service guarantee loses
power in direct proportion as the number of conditions it contains.” This
study may lend support to this statement. In retrospect, as the service
guarantee became more explicit, that is, contained more “conditions”,
the respondents valued the guarantee less. If the guarantees used in this
study were phrased even more explicitly with more conditions, the
results may have been more different. Consistent with Hart, we do note
that it is unclear whether or not giving more detail about the service
guarantee is considered a condition.
• Service guarantees are relatively new to this product category. Many
consumers have not had any experience with the offering of service
guarantees by restaurants, therefore they may doubt the usefulness/value
of the guarantee. If this is the case, some effort would need to be
expended to inform consumers as to the nature of service guarantees.
• Consumers may view low priced restaurants that offer a service
guarantee with suspicion. The market share estimates in Table III
Table III. Market share simulation results
Price
Service guarantee Less than $15.00 $15.00-$25.00 More than $25.00
None 24.3 11.2 0.82
An explicit guarantee of
satisfaction but no details 13.0 22.7 10.8
An explicit guarantee of
satisfaction (full refund
or no charge for the meal) 5.60 7.9 3.7
Note: Attributes held constant at highest level: speed of service – prompt; quality of food –
excellent; courtesy of server – very friendly
Market share
simulations
Service guarantees
are not uniformly
important
7. 16 THE JOURNAL OF SERVICES MARKETING, VOL. 11 NO. 1 1997
indicate that these restaurants lose market share if they offer any type of
service guarantee. While the guarantee may be offered by the restaurant
as proof that it has improved its past poor performance, the consumer
view of this supposed proof of a positive change may be confirmation of
the existence of lingering problems.
• Many consumers view dining out at a low price restaurant as a low
involvement (low risk) purchasing decision. Therefore consumers are
willing to experiment with patronizing unfamiliar restaurants and do not
consider the negative utility associated with a poor choice to be very
great. Thus the value of a service guarantee as assurance against a bad
dining experience is marginal. Consumers are content to bear the risk
without a desire for a formal remedy for dissatisfaction. However, we
can assume that, conversely, the selection of a moderate to high priced
restaurant is a higher involvement (high risk) decision. Therefore, the
ability of a service guarantee to reduce risk would be an issue in this
instance. The results in Table III indicate that such eating establishments
gain a marked increase in market share when they offer a service
guarantee. But note that an explicit guarantee in those service profiles
leads to a decrease in market share. The more explicit service guarantee
is, in fact, perceived as less desirable than the more general service
guarantee.
Conclusion
Service guarantees are not a panacea for service providers. The offering of
such guarantees will not necessarily offer the service provider a competitive
advantage over other firms. As with virtually any consumer offering, it is not
reasonable to expect that consumer reactions will be uniform. Reaction to a
change in the offering will be tempered by the interaction of that change
with all other elements of the marketing mix. In this instance, a change in
the guarantee component of the extended product produces favorable
consumer reactions under some circumstances and unfavorable ones under
other circumstances.
Service guarantees should be used with caution. The results of this study
indicate that the cost of offering such guarantees can exceed any positive
utility that they deliver to consumers. Therefore, consumer perceptions of
service guarantees should be thoroughly researched by a service provider
before utilization. The reader is cautioned that this particular study
considered one general type of restaurant and one type of dining occasion.
Different types of restaurants and different dining occasions may produce
different results. Ultimately, successful implementation of a service
guarantee is dependent on matching the guarantee to the needs and
perceptions of the customers.
References
Boulding, W. and Kirmani, A. (1993), “A consumer-side experimental examination of
signaling theory: do consumers perceive warranties as signals of quality?”, Journal of
Consumer Research, Vol. 20, June, pp. 111-23.
Browning, D.D. (1989), “Put up or pay up”, Bank Marketing, Vol. 21, September, pp. 53-5.
Ettorre, B. (1994), “Phenomenal promises that mean business”, Management Review, Vol 83,
March, pp. 18-23.
Hart, C.W.L. (1988), “The power of unconditional service guarantees”, Harvard Business
Review, Vol. 66, July-August, pp. 54-62.
June, L.P. and Smith, S.L. (1987), “Service attributes and situational effects on customer
preferences for restaurant dining”, Journal of Travel Research, Vol. 26, Fall, pp. 20-7.
Service guarantees
are not a panacea
8. THE JOURNAL OF SERVICES MARKETING, VOL. 11 NO. 1 1997 17
Kelly, G.A. (1955), Psychology of Personal Constructs, W.W. Norton, New York, NY.
Lewis, R.C. and Nightingale, M. (1991), “Targeting service to your customer”, Cornell Hotel
and Restaurant Administration Quarterly, Vol. 32, August, pp. 18-27.
Maher, D. (1991), “Service guarantees: double-barrelled standards”, Training, Vol. 28, June,
pp. 27-30.
National Restaurant Association (1995), Tableservice Restaurant Trends, National Restaurant
Association, Washington, DC.
Reeves, C. and Hoy, F. (1993), “Employee perceptions of management commitment and
customer evaluations of quality service in independent firms”, Journal of Small Business
Management, Vol. 31, October, pp. 52-9.
Rose, M.D. (1990), “No strings attached”, Chief Executive, July-August, pp. 30-3.
Sweeney, J.C., Johnson, L.W. and Amstrong, R.W. (1992), “The effect of cues on service
quality expectations and service selection in a restaurant setting”, Journal of Services
Marketing, Vol. 6, Fall, pp. 15-21.
Louis A. Tucci is Assistant Professor of Marketing at Widener University, Chester,
Pennsylvania, USA. James Talaga is Assistant Professor of Marketing at LaSalle
University, Philadelphia, Pennsylvania, USA.
s
Executive summary and implications for managers and executives
Great service – guaranteed!
The guarantee in all its myriad forms is a powerful marketing tool. Not only
does it act as reassurance – a backstop if you like – for customers but it
focusses the attention and efforts of employees on delivering the quality
guaranteed. Thus, in theory, the guarantee both provides short-term sales
benefits and assists in the longer-term search for high quality.
Tucci and Talaga look at the guarantee in the context of restaurant service
noting that use of such approaches is uncommon in the sector. Yet, as they
point out, people generally regard service quality in restaurants as rather
poor and this relates to very high rates of failure for restaurant businesses.
In simple terms Tucci and Talaga ask whether offering a guarantee of
service quality to customers will provide advantages especially in
encouraging potential customers to visit a particular restaurant.
We all have views about what constitutes a good restaurant. And our
expectations in terms of service undoubtedly vary according to the occasion
for dining and the type of restaurant. How we define service quality in a
classy city centre restaurant will differ greatly from the definition in a friendly
Italian diner. Tucci and Talaga describe four different lists of “choice
criteria” from different sources. Looking at these different lists of criteria, we
find the following consistently emerging as factors: price – included in all the
lists; location – included in three out of four; atmosphere (or ambience or
surroundings) – three; service – three; food quality – three.
Tucci and Talaga select a four-item set of criteria derived from this review –
price, speed of service, food quality and courtesy. Along with price, we have
two service elements and one “product” quality element. I suppose that in
looking at their results, we must accept the findingsceteris paribus but, given
the type of experiment conducted, introducing the subjectivity of location and
ambience preferences would have complicated matters somewhat.
The key finding that guarantees are at best a mixed blessing to restaurateurs
requires some serious consideration. For lower priced restaurants where we
This summary has been
provided to allow
managers and executives
a rapid appreciation of
the content of this
article. Those with a
particular interest in the
topic covered may then
read the article in toto to
take advantage of the
more comprehensive
description of the
research undertaken and
its results to get the full
benefit of the material
presented
9. 18 THE JOURNAL OF SERVICES MARKETING, VOL. 11 NO. 1 1997
expect less assiduous service, Tucci and Talaga find that a guarantee could
have a negative effect on choice. Articulating the putative consumer’s
thoughts, we might hear them say “…a guarantee – they must be worried
about their service.” Moreover, as customers, we are empowered in a
restaurant. We understand the product and know what we anticipate in terms
of service. This does not apply in the case of technical goods or skilled
activities such as plumbing or electrical work. More to the point, providing a
guarantee may provide some financial reparation, but it does not put things
right when we have had a disagreeable night out. Regardless of guarantees,
we are likely to vote with our feet and simply not visit the restaurant again.
And we will tell our friends about the poor experience.
For higher priced restaurants, there is some evidence that providing some
form of guarantee increases the likelihood of selection. In Tucci and Talaga’s
view this reflects the greater financial (and probably social) commitment
involved in choosing an expensive restaurant. We know that up-scale
restaurants’ business is dominated by people dining on special occasions
and, as a result, the proprietors generally endeavor to accommodate it into
their approach to service. The “quiet dinner with friends” scenario used by
Tucci and Talaga shows that, for more ordinary occasions, choosing a
restaurant could be influenced by the existence of a guarantee. But what is
not asked is what price bracket consumers are most likely to choose for such
a relatively low key occasion. For most people, going to the more expensive
restaurants is reserved for anniversaries, job promotions and other
particular and important occasions. An “ordinary” meal out would more
likely be at a mid-scale or “cheap and cheerful” place.
From this research it emerges that some form of guarantee of service quality
is probably not as strong for restaurants as it is in other areas of business. Its
main benefit lies perhaps in the motivation and management of staff. They
would know what standards are expected and also know that the success of
the business relies on them delivering that service. Additionally it provides
some basis for defining the skills and learning needed for successful service
in areas traditionally regarded as fundamentally unskilled such as waiting
tables. However, a guarantee is not a prerequisite for effective management
of customer service staff since minimum standards and aspirational standards
can be applied without direct reference to individual customer experiences.
My advice to restaurants is that they should communicate to prospective
customers what standards they expect to deliver. This helps set the tone for
the restaurant as well as informing the consumer of the restaurant’s “service
mission.” Indeed, advertising for restaurants often concentrates on
ambience and style rather than merely the type and standard of the food
served. Cue words such as “friendly”, “silver service”, “intimate” and
“exclusive” all contribute to our impression and assist in us making a
choice appropriate to our particular needs. Setting out these standards does
not require a guarantee and, as Tucci and Talaga conclude, the provision of
a guarantee is no panacea for other service or promotional problems. Given
the relatively low entry price for a restaurant business, it remains likely that
restaurants will retain a generally poor image and the sector will still suffer
from high rates of business failure regardless of whether the guarantee, in
whatever form, becomes an element of service promotion.
(A précis of the article “Service guarantees and consumers’ evaluation of
services.” Supplied by Marketing Consultants for MCB University Press)
