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The Relationships among e-Service Quality, Value, Satisfaction and Loyalty in Online 
Shopping 
Hsin Hsin Chang, National Cheng Kung University, Taiwan (R.O.C.) 
Hsin-Wei Wang, National Cheng Kung University, Taiwan (R.O.C.) 
ABSTRACT 
Since the online market has been growing rapidly overthe past 
several years, e-commerce marketing activities have drawn a lot of 
attention. The main purpose of the study is to develop acomprehen-sive 
research model of explaining the user's online shopping 
behavior. Empirical analyses are performed using structural equa-tions 
modeling analysis and results indicated that e-service quality 
would not affect the on-line shopping customer loyally directly but 
indirectly Ihrough the mediation of perceived value and customer 
satisfaction. And perceived value would not only affect the cus-tomer 
loyalty directly but also indirectly through the mediation of 
customer satisfaction. 
INTRODUCTION 
The business-to-customer (B-to-C) online market has been 
growing rapidly over the past several years. Reichheld & Schefter 
(2000) survey shows that consumers have increasingly favored 
online shopping. In the consumer marketing community, customer 
loyalty has long been regarded as an important goal. According to 
Taiwan Market Intelligence Center industry analysis (2006), online 
shopping market in Taiwan amounted to $59.8 billion last year with 
54% growth rate compared to former year. Growth rate forecast for 
this year is 50%. with sales amount to $ 89.3 billion, and might be 
up to S131.1 billion next year. Numerous studies have pointed out 
that two of the more effective means of generating customer loyalty 
are todelight customers (Oliver. 1999) and todeliver superior value 
derived from excellent services and quality products (Parasuraman 
and Grewal. 2000). 
Similar to a retail storefront, the electronic service quality (e- 
SQ) provides significant information and feeling to current and 
prospective target-market customers.Thus, if the service can achieve 
what users want in a website is an important area of study. 
Developing a website that is responsive to user needs is critical for 
all site designers and mangers. For website retailer to be successful 
and for customers to be satisfied, excellent e-service quality is 
essential. There are several factors to be considered, including the 
website design, reliability, security, and customer value 
(Wolfinbarger and Gilly. 2002; Aladwani and Palvia. 2002). Fur-thermore, 
it would be interesting to determine if these characteris-tics 
of the e-service quality have a potential influence on customer 
satisfaction. 
Several researchers have attempted to confirm the relationship 
between satisfaction and loyally in their research (Woodside, Frey. 
& Daley. 1989; Cronin & Taylor, 1992; Oliver. 1999). The relation-ship 
seems almost intuitive, however, the strength of the relation-ship 
between satisfaction and loyalty has been found to vary 
significantly under different conditions (Anderson & Srinivasan, 
2003), 
Customer perceived value has recently gained much attention 
from marketers and researchers because of the important role it 
plays in predicting purchase behavior and achieving sustainable 
competitive advantage (ZeithamI, 1988; Bolton & Drew. 1991; 
Parasuraman, 1997). Customer Perceived value involves "A "get" 
component—i.e., the benefits a buyer derives from a seller's 
offering—and a 'give' component—i.e., the buyer's monetary and 
nonmonetary costs in acquiring the offering". 
Researchers have also established a positive relationship be-tween 
perceived value and intention to purchase/repurchase (Dtxltis. 
Monroe. & Grewal, 1991 ; Parasuraman & Grewal, 2000). When the 
perceived value is low. customer will be more inclined to switch to 
competing businesses in order to increase perceived value, thus 
contributing to a decline in loyalty. Even satisfied customers are 
unlikely lo repurchase on the same web site, if they feel that they are 
not getting the best value for their give. Instead, they will seek out 
other web sites in an ongoing effort to find a better value (Anderson 
and Srinivasan, 2(X)3). 
It is only a mouse click away in electronic commerce (e-commerce) 
settings, so it is critical that companies understand how 
to build customer loyalty in online marketing. Since the e-service 
quality and customer perceived value of Internet Websites are 
regarded as the key influential factors for Internet marketing, a 
more detailed evaluation of e-service quality and customer per-ceived 
value may become a necessity. Although previous studies 
have recommended the importance of perceived quality in experi-ential 
marketing, few studies have empirically developed a frame-work 
to measure the e-service quality and value of experiential 
marketing in Internet Websites and distinctly interpreted the effect 
of different level of customer satisfaction and perceived value on 
the customer loyalty. We hope this study will add a little to the 
understanding of electronic commerce. 
There are two objectives in this study. First, this study identi-fied 
key antecedents that are likely to influence customer satisfac-tion 
and customer loyalty in online shopping environments.Sec-ond. 
this study integrated relevant literature and develop a compre-hensive 
research model of experiential marketing to explain the 
user's online shopping behavior. 
LITERATURE REVIEW AND HYPOTHESES 
E-Service Quality 
The Internet remains a critical channel for selling most goods 
and services (ZeithamI, Parasuraman, Malhotra. 2(X)2). Today, the 
most successful electronic commerce companies are beginning to 
realize that not only low price and web presence were initially but 
also the delivering of the high e-service quality became important 
(Yang and Jun, 2002; ZeithamI. Parasuraman, Malhotra, 2002), 
The first formal definition of web site service quality or electric 
service quality (e-SQ) was provided by ZeithamI. Parasuraman, 
and Malhotra (2001). ZeithamI et al.(200I) defined e-SQ as the 
extent to which a web site facilitates efficient and effective shop-ping, 
purchasing, and delivery of products and services. The online 
shopping can fulfill several consumers' needs more effectively and 
more efficiently compared with the conventional shopping (Grewal, 
Iyer, and Levy, 2004; Monsuwe et al. 2004). Online customers thus 
expect equal or higher levels of service quality than traditional 
channels customers (Lee and Lin, 2005). Therefore, many aca-demic 
researchers in online shopping have recently focused on the 
e-service quality to attract potential customers and on how to retain 
current customers (Jun et al.,2004). As a result, a fundamental 
understanding of factors impacting online customer satisfaction is 
10 European Advances in Consumer Research 
Volume 8, © 2008
European Advances in Consumer Research ( Volume 8) / II 
of great importance to electronic commerce (McKinney et al. 
2002). 
Customer Satisfaction and Loyalty 
Oliver ( 1997) slated that satisfaction is a summary psycho-logical 
state resulting when the emotion surrounding discontinued 
expectations is coupled with the consumer's prior feelings about the 
consumption experience. Kotier (2000) also expresses that satisfac-tion 
is a person's feelings of pleasure or disappointment resulting 
from comparing a product's perceived perfonnance (oroutcome) in 
relation to his or her expectations. Many researchers explored the 
role of satisfaction in the electronic commerce. Anderson and 
Sriniva.san (2003) investigate electronic commerce and defined e-satisfaction 
as the contentment of the customer with respect to his 
or her prior purchasing experience with a given electronic com-merce 
firm. Mckinney et. al (2002) posited that web-customer 
satisfaction has two distinctive sources-satisfaction with the qual ity 
of web-site's information content and satisfaction with the web-site's 
system performance in delivering information. Based on the 
definitions in this literature, we here define customer satisfaction as 
"the psycliological reaction of the customer with respect to his or 
her prior experience with comparison between expected and per-ceived 
performance". 
Enge!, Kollat. and Blackwell (1982) deñned brand loyalty as 
the preferential, attitudinal and behavioral response toward one or 
more brands in a product category expressed over a period of time 
by a consumer". Anderson and Srinivasan (2003) investigate the 
electronic commerce and defined customer loyalty as "the customer's 
favorable attitude toward an electronic business resulting in repeat 
buying behavior". Based on this literature, we here adopt a defini-tion 
of customer loyalty as "A commitment of repeat buying a 
preferred product!service and positive word of mouth consistently 
ill the future" 
Parasuraman et al. (1985, 1988) specifically suggested that 
service quality is an antecedent of customer satisfaction. Several 
studies have modeled service quality as an antecedent to behavioral 
intentions and found a significant link (Bitner. 1990; Boulding et 
al., 1993; Zeithamlet al.. 1996>. Website quality has been demon-strated 
to significantly influence consumers" online shopping atti-tudes 
and behavior. Better website quality can guide the consumer's 
complete transactions smoothly and attract them to revisit this 
internet store (Li and Zhang. 2002). Szymanski and Hise (20(X)) 
found that aspects associated with product information and web site 
design are important determinants in forming customer satisfac-tion. 
Satisfaction is a necessary prerequisite for loyalty but is not 
sufficient on its own to automatically lead to repeat purchases or 
brand loyalty (Bloenier and Kasper. 1995). A dissatisfied customer 
is more likely to search for information on alternatives and more 
likely to yield to competitor overtures than is a satisfied customer 
(Anderson and Srinivasan. 2(X)3). Based on this relationship among 
e-service quality, customer satisfaction, and customer loyalty, we 
propose the following hypotheses: 
Hypothesis ! : E- Service quality will have an impact on 
customer satisfaction. 
Hypothesis 2: E- Service quality will have an impact on 
customer loyalty. 
Hypothesis J: Customer satisfaction will have an impact on 
customer loyalty. 
Customer Perceived Value 
Customer value represents the trade-off between the quality, 
or benefits, the customer receives and the costs, such as monetary. 
energy, time and psychic transaction costs, the customer incurs by 
evaluating, obtaining and using a product (Kotier, 1977). Zeithaml 
(1988) defined the perceived value as the consumer's overall 
assessment of the utility of a product based on perceptions of what 
is received and what is given. Keeney(1999) defined the value 
proposition associated with internet commerce as the net value of 
the benefits and cost of both a product and the processes of finding, 
ordering, and receiving it, Based on a synthesis of previous defini-tions, 
perceived customer value is defmed here as"a consumer's 
perception of the net benefits based on perception of what is 
received and what is given." Lindgreen and Wynstra( 2(X)5) think 
that customer value has at least two dimensions . The first of these 
deals with the value of the (augmented) goods and services, while 
the second one focuses on the value of buyer-seller relationships. 
In this paper we focus on the value of the (augmented) goods and 
services. 
Choia et al. (2004) postulated that value perceptions of medi-cal 
services will be directly infiuenced by perceived service quality. 
Perceived value contributes to the loyalty of an electronic business 
by reducing an individual's need to seek alternative service provid-ers 
(Anderson and Srinivasan. 2003).In electronic commerce, of-fering 
low customer transaction costs creates customer value, 
increases firm performance and contributes to competitive advan-tage 
(Chircu and Mahajan, 2006). In other words. When the 
perceived value is low. customers will be more inclined to switch 
to competing businesses in order to increa.se perceived value, thus 
contributing to a decline in loyalty (Anderson and Srinivasan, 
2(K)3), Based on above relationship, we propose the following 
hypotheses: 
Hypothesis 4: E- Service quality will have an impact on 
customer perceived value. 
Hypothesis 5: customer perceived value will have an impact 
on customer satisfaction. 
Hypothesis 6: customer perceived value will have an impact 
on customer loyalty. 
.L 
METHODOLOGY 
Research Model 
This research proposed an integrative model to explain the 
user's online shopping behavior which based on established rela-tionships 
among e-service quality (web site design, reliability, 
security and customer service), customer satisfaction, customer 
loyalty, and customer perceived value (presented in Figure 1 ). The 
model of this research is based on Fomell'set al.(I996) customer 
satisfaction index (CSI) model which measure the antecedents of 
overall customer satisfaction- expectations, perceived quality, and 
value and the consequences of overall customer satisfaction- voice 
and loyalty. 
Measures 
In order to measure the various constructs, validated items 
used by other researchers were adapted. The various dimensions of 
the e-service quality were talk about. Wolfinbarger and Gilly 
(2(X)2)developedascalenamed.comQ. And Zeithaml, Parasuraman 
and Malhotra (2002,2005) developed the E-S-QU AL and E-RecS-QUAL 
for measuring the service quality delivered by Web sites on 
which customers shop online. In this research, we found the two 
scales have many similar aspects and combine them as our measur-able 
variables of e-service quality with four dimensions: web site 
design, reliability, security, and customer service. Customer per-ceived 
value was assessed with two items based on the perceived
12 / The Relationships among e-Service Quality, Value, Satisfaction and Loyalty in Online Shopping 
FIGURE 1 
^ Proposed conceptual fratnework 
Customer 
Satisfaction 
Customer 
Perceived 
Value 
utility/worth resulting from the trade-off of "get" versus "give-up" 
(ZeithamI. I9S8). In this paper, we measure customer per-ceived 
value by the scale from Dodds, Monroe and Grewal (1991), 
Anderson and Srinivasan (2003). Customer satisfaction was as-sessed 
by adapting the scale developed by Oliver (1980) and 
Anderson and Srinivasan (2(X)3). Lastly, customer loyalty was 
evaluated by using scale items adapted from Berry and Parasuraman 
( 1996) and Anderson and Srinivasan (2(X)3) and Yang and Peterson 
(2004). Each items was used 7-point Likert scales ranging from 
"strongly disagree" to "strongly agree". A questionnaire initially 
including 29 items was generated, consisting of 14 items for e-service 
quality. 3 items for customer satisfaction, 8 items for 
customer loyalty and 4 items for customer perceived value. 
Pilot Test 
This study evaluated the results of the pilot test by using 
Cronbach's reliability and exploratory factor analysis. The three 
statements were deleted after the pilot test. Uliimately. a final 26- 
item survey questionnaire contained four parts including 14 items 
for e-service quality, 3 items for customer satisfaction, 8 items for 
customer loyalty and 4 items for customer perceived value. 
Data Cullection 
In order lo measure reliability and validity, a pretest was 
conducted. A pilot test of the measures was conducted by 70 
respondents who were asked to provide comments on the relevance 
and wording of the questionnaire items and adjusted based on their 
comments. In the formal questionnaire, the data were gathered 
through Internet questionnaire of Chungwa Telecom Co.. Ltd in 
Taiwan. For the final survey, a total of 350 survey questionnaires 
were collected from respondents who had online shopping experi-ence. 
20 invalid questionnaires were eliminated and 330 question-naires 
retained for analysis. The response rate is 94.3%. Online 
questionnaire also conilrm that our sample have experiences to use 
internet. In the aggregate sample, 44.8% of respondents are men 
and 55.2% are women. More than 85% of the respondents are Y 
generation people defined as people bom among 1976 to 1985. 
Almost 95% of the respondents" education is at institute/college 
level and above. 45.7% of the respondents are students and 54.3% 
are workers. Approximately 48.6% of the respondents use the 
Internet more than 20 hours each week. In disposable income, about 
71. l%ofthe respondents have less than 10,000 dollars per month. 
More than 67% of respondents pay for Internet purchases by credit 
card or ATM transfer account. Besides, the respondents also show 
some interesting characteristics. The top three products purchased 
onlineinourstudy are computer equipment (100). books (87), and 
clothes (79). ,... . - - . 
DATA ANALYSIS AND RESULTS 
t. 
Validity and Reliability 
We adopted confirmatory factor analyses to verify the reliabil-ity 
and validity of the measurement model. Reliability and Conver-gent 
validity of the constructs were estimated by composite reliabil-ity 
and average variance extracted. All of the factor loadings of the 
items in the research model were greater than 0.05(see Table I), 
with most of them above 0.70. The composite reliability were all 
above the recommended 0.7 level (Hair, 1997). Finally, convergent 
validity can assessed by the average extracted variances were all 
above the recommended 0.5 level (Hair. Anderson. Tatham. and 
Black, 1992). Therefore, all constructs in ttie model had adequate 
reliability and convergent validity. ' • •'• . 
Structural Model ' 
The purpose of this study is to fmd out the relationships 
among e-service quality, customer satisfaction, cu.stomer loyalty, 
and customer perceived value. The causal relationship of all the 
variables in the proposed research model was tested using structure
European Advances in Consumer Research (Volume 8) 113 
TABLE 1 
Structural Model Estimates 
Hyputhesized 
Relationship 
AVE 
O0.5) 
CR Fatlor t-vulue Conclusiun 
E-service quality 
Website design 
Reliability 
Security 
Customer .service 
0.56 
0.54 
0.75 
0.57 
0.67 
0.68 
Q.83 
473 
49Ô 
0.80 
• 
0.86 
0.73 
0.74 
0.74 
0.72 
0.87 
0.81 
0.85 
0.76 
0.83 
0.72 
0.83 
12.8X 
12.95 
12.54 
18.69 
20.47 
16.85 
2.42 
14.63 
17.72 
significant 
significant 
significant 
significant 
significant 
significant 
significant 
significant 
significant 
significant 
significant 
Customer perceived value 
CPVI 
CPV2 
CPV3 
CPV4 
Custümer satisfactiun 
S AT I 
SAT2 
SAT3 
Custumer luyalty 
Repurchase intention 
Word of mouth 
0.59 
0.64 0.78 
0.81 
0.89 17.60 
significant 
significant 
H1 : E-service quality-^Customer Satisfaction 
H2: E-service quality—»Customer Loyalty 
H3; Customer Satisfaction—»Customer Loyalty 
H4: E-service quality-^Perceived Value 
H5: Perceived Value—»Customer Satisfaction 
H6: Perceived Value—»Customer Loyalty 
0.65 
0.29 
0.84 
0.74 
0.332 
0.341 
8.09 
1.74 
4.81 
11.47 
4.812 
3.595 
Supported 
Not supported 
Supported 
Supported 
Supported 
Supported 
equation modeling (SEM) as performed in LISREL8. 52 software. 
The goodness-of-fit indices Torourtesting mode! areas following: 
Chi-square to degrees of freedom ratio is 3. GFI is 0.922. AGFI is 
0.882, NFI is 0.962 ,CFI is 0.973. RMR is 0.052 and RMSEA is 
0.083 which are all within the accepted thresholds as suggested in 
the literature. Thus, we ensure that our research model is adequate 
representation of the entire set of causal relationship. 
Tests of Hypotheses 
Most of the proposed hypotheses were supported except for 
H2 (E-service quality- Customer loyalty)(see Table 1). E-service 
quality has significant impact on customer satisfaction {y= 0.65, t-value= 
8.09) and customer perceived value (7=0.74, t-va!ue= 11.47). 
Bute-service quality has not significant impact on customer loyalty 
{-(= 0.29, t-value=1.74). Moreover, customer satisfaction has sig-nificant 
impact on customer loyalty (7= 0.84, t-vaíue=4.81 ). There-fore, 
results of the analy.sis supported HI, H3. and H4. These results 
indicated that e-service quality would not affect their on-line 
shopping customer loyalty directly but indirectly through the me-diation 
of perceived value and customer satisfaction. Finally, 
customer perceived value has significant impact on customer 
satisfaction {ß= 0.332, t-value=4.812) and customer loyalty (ß= 
0.341. t-value=3.595). Therefore, results of the analysis supported 
H5 and H6. These results are in conformity with the theories of 
experiential consumer behavior. 
CONCLUSIONS AND LIMITATIONS 
Conclusions 
This study was intended to make contributions to the current 
understanding of online shopping consumer behavior in two ways. 
Eirst. this study identified key antecedents that are likely to influ-ence 
customer satisfaction and customer loyalty in online shopping 
environments. The results showed that e-service quality (web site 
design, reliability, security, and customer service) would not affect 
theon-Iine shopping customerloyaltydirectlybut indirectly through 
the mediation of perceived value and customer satisfaction. There-fore, 
to enhance customer perceived value and customer satisfac-tion, 
online stores should start improving the design of web site, 
providing accurate service, strengthening the security of online 
transactions, and helping customer to solve problems. 
Second, we proposed an integrative model to explain the 
user's online shopping behavior which based on established rela-tionships 
among e-service, quality, customer satisfaction, customer 
loyalty, and customer perceived value. 
Mostofpast studies of online consumer behavior have focused 
on the links among service quality. Although the crucial importance 
of customer perceived value in the online shopping environment, 
previous studies have been neglected that variable, in this research, 
the results showed that perceived value would not only affect the
14 / The Relationships among e-Service Quality, Value, Satisfaction and Loyalty in Online Shopping 
customer loyalty directly but also indirectly through the mediation 
of customer satisfaction. Because perceived value is conceptual-ized 
as the consumer's evaluation of the utility of perceived benefits 
and perceived sacrifices (Zeithaml. 1988). we suggested that online 
stores should try to raise ihe benetlis (such as good, services. 
personnel, and image value) and reduce the sacriñces {such as 
monetary, energy, time and psychic transaction costs). 
Limitations 
There are several limitations of this research that should be 
considered when interpreting its findings. First, replication of this 
research in different business and sellings such as Business-to- 
Business in both cross-sectional and longitudinal studies could also 
helpextendthevalidityofthesefindings. Second, besides customer 
perceived value, funher studies might also profit form focusing on 
a wider range of variables, possibly exploring the effect of involve-ment, 
convenience orientation, and switch cost etc. In addition, a 
more comprehensive model might be developed. Finally, repur-chase 
intention and word of mouth (WOM) were integrated into 
customer loyalty. However, some studies have shown that market-ing 
programs can have different effects on different customer 
behaviors. It would therefore be interesting to conduct further 
research to examine the different behaviors of customer loyalty. 
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Ps47

  • 1. The Relationships among e-Service Quality, Value, Satisfaction and Loyalty in Online Shopping Hsin Hsin Chang, National Cheng Kung University, Taiwan (R.O.C.) Hsin-Wei Wang, National Cheng Kung University, Taiwan (R.O.C.) ABSTRACT Since the online market has been growing rapidly overthe past several years, e-commerce marketing activities have drawn a lot of attention. The main purpose of the study is to develop acomprehen-sive research model of explaining the user's online shopping behavior. Empirical analyses are performed using structural equa-tions modeling analysis and results indicated that e-service quality would not affect the on-line shopping customer loyally directly but indirectly Ihrough the mediation of perceived value and customer satisfaction. And perceived value would not only affect the cus-tomer loyalty directly but also indirectly through the mediation of customer satisfaction. INTRODUCTION The business-to-customer (B-to-C) online market has been growing rapidly over the past several years. Reichheld & Schefter (2000) survey shows that consumers have increasingly favored online shopping. In the consumer marketing community, customer loyalty has long been regarded as an important goal. According to Taiwan Market Intelligence Center industry analysis (2006), online shopping market in Taiwan amounted to $59.8 billion last year with 54% growth rate compared to former year. Growth rate forecast for this year is 50%. with sales amount to $ 89.3 billion, and might be up to S131.1 billion next year. Numerous studies have pointed out that two of the more effective means of generating customer loyalty are todelight customers (Oliver. 1999) and todeliver superior value derived from excellent services and quality products (Parasuraman and Grewal. 2000). Similar to a retail storefront, the electronic service quality (e- SQ) provides significant information and feeling to current and prospective target-market customers.Thus, if the service can achieve what users want in a website is an important area of study. Developing a website that is responsive to user needs is critical for all site designers and mangers. For website retailer to be successful and for customers to be satisfied, excellent e-service quality is essential. There are several factors to be considered, including the website design, reliability, security, and customer value (Wolfinbarger and Gilly. 2002; Aladwani and Palvia. 2002). Fur-thermore, it would be interesting to determine if these characteris-tics of the e-service quality have a potential influence on customer satisfaction. Several researchers have attempted to confirm the relationship between satisfaction and loyally in their research (Woodside, Frey. & Daley. 1989; Cronin & Taylor, 1992; Oliver. 1999). The relation-ship seems almost intuitive, however, the strength of the relation-ship between satisfaction and loyalty has been found to vary significantly under different conditions (Anderson & Srinivasan, 2003), Customer perceived value has recently gained much attention from marketers and researchers because of the important role it plays in predicting purchase behavior and achieving sustainable competitive advantage (ZeithamI, 1988; Bolton & Drew. 1991; Parasuraman, 1997). Customer Perceived value involves "A "get" component—i.e., the benefits a buyer derives from a seller's offering—and a 'give' component—i.e., the buyer's monetary and nonmonetary costs in acquiring the offering". Researchers have also established a positive relationship be-tween perceived value and intention to purchase/repurchase (Dtxltis. Monroe. & Grewal, 1991 ; Parasuraman & Grewal, 2000). When the perceived value is low. customer will be more inclined to switch to competing businesses in order to increase perceived value, thus contributing to a decline in loyalty. Even satisfied customers are unlikely lo repurchase on the same web site, if they feel that they are not getting the best value for their give. Instead, they will seek out other web sites in an ongoing effort to find a better value (Anderson and Srinivasan, 2(X)3). It is only a mouse click away in electronic commerce (e-commerce) settings, so it is critical that companies understand how to build customer loyalty in online marketing. Since the e-service quality and customer perceived value of Internet Websites are regarded as the key influential factors for Internet marketing, a more detailed evaluation of e-service quality and customer per-ceived value may become a necessity. Although previous studies have recommended the importance of perceived quality in experi-ential marketing, few studies have empirically developed a frame-work to measure the e-service quality and value of experiential marketing in Internet Websites and distinctly interpreted the effect of different level of customer satisfaction and perceived value on the customer loyalty. We hope this study will add a little to the understanding of electronic commerce. There are two objectives in this study. First, this study identi-fied key antecedents that are likely to influence customer satisfac-tion and customer loyalty in online shopping environments.Sec-ond. this study integrated relevant literature and develop a compre-hensive research model of experiential marketing to explain the user's online shopping behavior. LITERATURE REVIEW AND HYPOTHESES E-Service Quality The Internet remains a critical channel for selling most goods and services (ZeithamI, Parasuraman, Malhotra. 2(X)2). Today, the most successful electronic commerce companies are beginning to realize that not only low price and web presence were initially but also the delivering of the high e-service quality became important (Yang and Jun, 2002; ZeithamI. Parasuraman, Malhotra, 2002), The first formal definition of web site service quality or electric service quality (e-SQ) was provided by ZeithamI. Parasuraman, and Malhotra (2001). ZeithamI et al.(200I) defined e-SQ as the extent to which a web site facilitates efficient and effective shop-ping, purchasing, and delivery of products and services. The online shopping can fulfill several consumers' needs more effectively and more efficiently compared with the conventional shopping (Grewal, Iyer, and Levy, 2004; Monsuwe et al. 2004). Online customers thus expect equal or higher levels of service quality than traditional channels customers (Lee and Lin, 2005). Therefore, many aca-demic researchers in online shopping have recently focused on the e-service quality to attract potential customers and on how to retain current customers (Jun et al.,2004). As a result, a fundamental understanding of factors impacting online customer satisfaction is 10 European Advances in Consumer Research Volume 8, © 2008
  • 2. European Advances in Consumer Research ( Volume 8) / II of great importance to electronic commerce (McKinney et al. 2002). Customer Satisfaction and Loyalty Oliver ( 1997) slated that satisfaction is a summary psycho-logical state resulting when the emotion surrounding discontinued expectations is coupled with the consumer's prior feelings about the consumption experience. Kotier (2000) also expresses that satisfac-tion is a person's feelings of pleasure or disappointment resulting from comparing a product's perceived perfonnance (oroutcome) in relation to his or her expectations. Many researchers explored the role of satisfaction in the electronic commerce. Anderson and Sriniva.san (2003) investigate electronic commerce and defined e-satisfaction as the contentment of the customer with respect to his or her prior purchasing experience with a given electronic com-merce firm. Mckinney et. al (2002) posited that web-customer satisfaction has two distinctive sources-satisfaction with the qual ity of web-site's information content and satisfaction with the web-site's system performance in delivering information. Based on the definitions in this literature, we here define customer satisfaction as "the psycliological reaction of the customer with respect to his or her prior experience with comparison between expected and per-ceived performance". Enge!, Kollat. and Blackwell (1982) deñned brand loyalty as the preferential, attitudinal and behavioral response toward one or more brands in a product category expressed over a period of time by a consumer". Anderson and Srinivasan (2003) investigate the electronic commerce and defined customer loyalty as "the customer's favorable attitude toward an electronic business resulting in repeat buying behavior". Based on this literature, we here adopt a defini-tion of customer loyalty as "A commitment of repeat buying a preferred product!service and positive word of mouth consistently ill the future" Parasuraman et al. (1985, 1988) specifically suggested that service quality is an antecedent of customer satisfaction. Several studies have modeled service quality as an antecedent to behavioral intentions and found a significant link (Bitner. 1990; Boulding et al., 1993; Zeithamlet al.. 1996>. Website quality has been demon-strated to significantly influence consumers" online shopping atti-tudes and behavior. Better website quality can guide the consumer's complete transactions smoothly and attract them to revisit this internet store (Li and Zhang. 2002). Szymanski and Hise (20(X)) found that aspects associated with product information and web site design are important determinants in forming customer satisfac-tion. Satisfaction is a necessary prerequisite for loyalty but is not sufficient on its own to automatically lead to repeat purchases or brand loyalty (Bloenier and Kasper. 1995). A dissatisfied customer is more likely to search for information on alternatives and more likely to yield to competitor overtures than is a satisfied customer (Anderson and Srinivasan. 2(X)3). Based on this relationship among e-service quality, customer satisfaction, and customer loyalty, we propose the following hypotheses: Hypothesis ! : E- Service quality will have an impact on customer satisfaction. Hypothesis 2: E- Service quality will have an impact on customer loyalty. Hypothesis J: Customer satisfaction will have an impact on customer loyalty. Customer Perceived Value Customer value represents the trade-off between the quality, or benefits, the customer receives and the costs, such as monetary. energy, time and psychic transaction costs, the customer incurs by evaluating, obtaining and using a product (Kotier, 1977). Zeithaml (1988) defined the perceived value as the consumer's overall assessment of the utility of a product based on perceptions of what is received and what is given. Keeney(1999) defined the value proposition associated with internet commerce as the net value of the benefits and cost of both a product and the processes of finding, ordering, and receiving it, Based on a synthesis of previous defini-tions, perceived customer value is defmed here as"a consumer's perception of the net benefits based on perception of what is received and what is given." Lindgreen and Wynstra( 2(X)5) think that customer value has at least two dimensions . The first of these deals with the value of the (augmented) goods and services, while the second one focuses on the value of buyer-seller relationships. In this paper we focus on the value of the (augmented) goods and services. Choia et al. (2004) postulated that value perceptions of medi-cal services will be directly infiuenced by perceived service quality. Perceived value contributes to the loyalty of an electronic business by reducing an individual's need to seek alternative service provid-ers (Anderson and Srinivasan. 2003).In electronic commerce, of-fering low customer transaction costs creates customer value, increases firm performance and contributes to competitive advan-tage (Chircu and Mahajan, 2006). In other words. When the perceived value is low. customers will be more inclined to switch to competing businesses in order to increa.se perceived value, thus contributing to a decline in loyalty (Anderson and Srinivasan, 2(K)3), Based on above relationship, we propose the following hypotheses: Hypothesis 4: E- Service quality will have an impact on customer perceived value. Hypothesis 5: customer perceived value will have an impact on customer satisfaction. Hypothesis 6: customer perceived value will have an impact on customer loyalty. .L METHODOLOGY Research Model This research proposed an integrative model to explain the user's online shopping behavior which based on established rela-tionships among e-service quality (web site design, reliability, security and customer service), customer satisfaction, customer loyalty, and customer perceived value (presented in Figure 1 ). The model of this research is based on Fomell'set al.(I996) customer satisfaction index (CSI) model which measure the antecedents of overall customer satisfaction- expectations, perceived quality, and value and the consequences of overall customer satisfaction- voice and loyalty. Measures In order to measure the various constructs, validated items used by other researchers were adapted. The various dimensions of the e-service quality were talk about. Wolfinbarger and Gilly (2(X)2)developedascalenamed.comQ. And Zeithaml, Parasuraman and Malhotra (2002,2005) developed the E-S-QU AL and E-RecS-QUAL for measuring the service quality delivered by Web sites on which customers shop online. In this research, we found the two scales have many similar aspects and combine them as our measur-able variables of e-service quality with four dimensions: web site design, reliability, security, and customer service. Customer per-ceived value was assessed with two items based on the perceived
  • 3. 12 / The Relationships among e-Service Quality, Value, Satisfaction and Loyalty in Online Shopping FIGURE 1 ^ Proposed conceptual fratnework Customer Satisfaction Customer Perceived Value utility/worth resulting from the trade-off of "get" versus "give-up" (ZeithamI. I9S8). In this paper, we measure customer per-ceived value by the scale from Dodds, Monroe and Grewal (1991), Anderson and Srinivasan (2003). Customer satisfaction was as-sessed by adapting the scale developed by Oliver (1980) and Anderson and Srinivasan (2(X)3). Lastly, customer loyalty was evaluated by using scale items adapted from Berry and Parasuraman ( 1996) and Anderson and Srinivasan (2(X)3) and Yang and Peterson (2004). Each items was used 7-point Likert scales ranging from "strongly disagree" to "strongly agree". A questionnaire initially including 29 items was generated, consisting of 14 items for e-service quality. 3 items for customer satisfaction, 8 items for customer loyalty and 4 items for customer perceived value. Pilot Test This study evaluated the results of the pilot test by using Cronbach's reliability and exploratory factor analysis. The three statements were deleted after the pilot test. Uliimately. a final 26- item survey questionnaire contained four parts including 14 items for e-service quality, 3 items for customer satisfaction, 8 items for customer loyalty and 4 items for customer perceived value. Data Cullection In order lo measure reliability and validity, a pretest was conducted. A pilot test of the measures was conducted by 70 respondents who were asked to provide comments on the relevance and wording of the questionnaire items and adjusted based on their comments. In the formal questionnaire, the data were gathered through Internet questionnaire of Chungwa Telecom Co.. Ltd in Taiwan. For the final survey, a total of 350 survey questionnaires were collected from respondents who had online shopping experi-ence. 20 invalid questionnaires were eliminated and 330 question-naires retained for analysis. The response rate is 94.3%. Online questionnaire also conilrm that our sample have experiences to use internet. In the aggregate sample, 44.8% of respondents are men and 55.2% are women. More than 85% of the respondents are Y generation people defined as people bom among 1976 to 1985. Almost 95% of the respondents" education is at institute/college level and above. 45.7% of the respondents are students and 54.3% are workers. Approximately 48.6% of the respondents use the Internet more than 20 hours each week. In disposable income, about 71. l%ofthe respondents have less than 10,000 dollars per month. More than 67% of respondents pay for Internet purchases by credit card or ATM transfer account. Besides, the respondents also show some interesting characteristics. The top three products purchased onlineinourstudy are computer equipment (100). books (87), and clothes (79). ,... . - - . DATA ANALYSIS AND RESULTS t. Validity and Reliability We adopted confirmatory factor analyses to verify the reliabil-ity and validity of the measurement model. Reliability and Conver-gent validity of the constructs were estimated by composite reliabil-ity and average variance extracted. All of the factor loadings of the items in the research model were greater than 0.05(see Table I), with most of them above 0.70. The composite reliability were all above the recommended 0.7 level (Hair, 1997). Finally, convergent validity can assessed by the average extracted variances were all above the recommended 0.5 level (Hair. Anderson. Tatham. and Black, 1992). Therefore, all constructs in ttie model had adequate reliability and convergent validity. ' • •'• . Structural Model ' The purpose of this study is to fmd out the relationships among e-service quality, customer satisfaction, cu.stomer loyalty, and customer perceived value. The causal relationship of all the variables in the proposed research model was tested using structure
  • 4. European Advances in Consumer Research (Volume 8) 113 TABLE 1 Structural Model Estimates Hyputhesized Relationship AVE O0.5) CR Fatlor t-vulue Conclusiun E-service quality Website design Reliability Security Customer .service 0.56 0.54 0.75 0.57 0.67 0.68 Q.83 473 49Ô 0.80 • 0.86 0.73 0.74 0.74 0.72 0.87 0.81 0.85 0.76 0.83 0.72 0.83 12.8X 12.95 12.54 18.69 20.47 16.85 2.42 14.63 17.72 significant significant significant significant significant significant significant significant significant significant significant Customer perceived value CPVI CPV2 CPV3 CPV4 Custümer satisfactiun S AT I SAT2 SAT3 Custumer luyalty Repurchase intention Word of mouth 0.59 0.64 0.78 0.81 0.89 17.60 significant significant H1 : E-service quality-^Customer Satisfaction H2: E-service quality—»Customer Loyalty H3; Customer Satisfaction—»Customer Loyalty H4: E-service quality-^Perceived Value H5: Perceived Value—»Customer Satisfaction H6: Perceived Value—»Customer Loyalty 0.65 0.29 0.84 0.74 0.332 0.341 8.09 1.74 4.81 11.47 4.812 3.595 Supported Not supported Supported Supported Supported Supported equation modeling (SEM) as performed in LISREL8. 52 software. The goodness-of-fit indices Torourtesting mode! areas following: Chi-square to degrees of freedom ratio is 3. GFI is 0.922. AGFI is 0.882, NFI is 0.962 ,CFI is 0.973. RMR is 0.052 and RMSEA is 0.083 which are all within the accepted thresholds as suggested in the literature. Thus, we ensure that our research model is adequate representation of the entire set of causal relationship. Tests of Hypotheses Most of the proposed hypotheses were supported except for H2 (E-service quality- Customer loyalty)(see Table 1). E-service quality has significant impact on customer satisfaction {y= 0.65, t-value= 8.09) and customer perceived value (7=0.74, t-va!ue= 11.47). Bute-service quality has not significant impact on customer loyalty {-(= 0.29, t-value=1.74). Moreover, customer satisfaction has sig-nificant impact on customer loyalty (7= 0.84, t-vaíue=4.81 ). There-fore, results of the analy.sis supported HI, H3. and H4. These results indicated that e-service quality would not affect their on-line shopping customer loyalty directly but indirectly through the me-diation of perceived value and customer satisfaction. Finally, customer perceived value has significant impact on customer satisfaction {ß= 0.332, t-value=4.812) and customer loyalty (ß= 0.341. t-value=3.595). Therefore, results of the analysis supported H5 and H6. These results are in conformity with the theories of experiential consumer behavior. CONCLUSIONS AND LIMITATIONS Conclusions This study was intended to make contributions to the current understanding of online shopping consumer behavior in two ways. Eirst. this study identified key antecedents that are likely to influ-ence customer satisfaction and customer loyalty in online shopping environments. The results showed that e-service quality (web site design, reliability, security, and customer service) would not affect theon-Iine shopping customerloyaltydirectlybut indirectly through the mediation of perceived value and customer satisfaction. There-fore, to enhance customer perceived value and customer satisfac-tion, online stores should start improving the design of web site, providing accurate service, strengthening the security of online transactions, and helping customer to solve problems. Second, we proposed an integrative model to explain the user's online shopping behavior which based on established rela-tionships among e-service, quality, customer satisfaction, customer loyalty, and customer perceived value. Mostofpast studies of online consumer behavior have focused on the links among service quality. Although the crucial importance of customer perceived value in the online shopping environment, previous studies have been neglected that variable, in this research, the results showed that perceived value would not only affect the
  • 5. 14 / The Relationships among e-Service Quality, Value, Satisfaction and Loyalty in Online Shopping customer loyalty directly but also indirectly through the mediation of customer satisfaction. Because perceived value is conceptual-ized as the consumer's evaluation of the utility of perceived benefits and perceived sacrifices (Zeithaml. 1988). we suggested that online stores should try to raise ihe benetlis (such as good, services. personnel, and image value) and reduce the sacriñces {such as monetary, energy, time and psychic transaction costs). Limitations There are several limitations of this research that should be considered when interpreting its findings. First, replication of this research in different business and sellings such as Business-to- Business in both cross-sectional and longitudinal studies could also helpextendthevalidityofthesefindings. 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