E-Commerce Analysis: Online Ticket Purchasing

E-Commerce Analysis: Online Ticket Purchasing CHAPTER ONE: INTRODUCTION 1.1 INTRODUCTION This chapter presents the background of the research study. It starts by providing an overview of Electronic Commerce, customer satisfaction and service quality, followed by an outline of the current situation concerning â€Å"Online Ticket Purchasing† in Kuwait. The problem of the study is then defined, highlighting the research the study seeks to investigate and its significance alongside the research objectives, questions and methodology used to achieve these desired objectives. The research limitations are then explored and the chapter concludes with an outline of the thesis structure. 1.2 OVERVIEW Unprecedented advances in Information Technology in recent decades, alongside evolving business environments have seen the emergence of Electronic Commerce (E-commerce) as a major economic force. With the increasing number of Internet users and rapid development of network technologies, e-commerce is perceived as an essential application of the computer and communication technologies (Manvi and Venkataram, 2005 cited by Zhang and Tang, 2006). As observed by Gunasekaran and Ngai (2005) e-commerce enhances communication channels and provides a virtual interactive environment where the suppliers and customers can exchange information and products. Moreover, it improves the communications between partners along the value chain and offers an integrated business model by which companies can be more responsive and flexible to the changing markets and customers requirements (Zhang and Tang, 2006). E- commerce therefore replaces or enhances the traditional market channels by opening web-based storefronts, which is known as â€Å"business to customer e-commerce†. Firms present their products and services on the web and generate revenue from the sales of those products and services to their customers (Molla and Licker, 2001). According to Khalifa and Liu (2003) there has been considerable growth of internet based services, both from internet businesses and from traditional companies developing online services. The technology of e-commerce identifies what can be offered to customers, but only customers determine which of those technologies will be accepted (Lin, 2003). As Jamal (2004) has argued, in the last forty years the issue of customer satisfaction has been one of the most important theoretical as well as practical issues for most marketers and customer research. Satisfaction is significant in the success or failure of any business depending on the performance of the perceived service, if the perceived performance is less than customer expectation the customer will be dissatisfied; whereas, if the perceived performance exceeds their expectations then customers will be satisfied. Many researchers agree satisfaction is an attitude or evaluation that is formed by the customer comparing their pre-purchase expectations of what they would receive from the product to their subjective perceptions of the performance they actually experience (Oliver, 1980). Numerous studies on service quality and customer satisfaction present service quality and customer satisfaction as conceptually distinct, but closely related constructs. Satisfaction is defined as the degree of discrepancy between customers normative expectations for the service and their perception of the service performance (Parasuraman et al., 1994; Dabholkar, 1996). Different researchers such as Gronroos (1983) and Parasuraman et al. (1985) have tried to identify features of service more related to quality assessments. The most common measure reveals ten dimensions of service quality: tangibles, reliability, responsiveness, communication, credibility, security, competence, courtesy, understanding the customer and access. These were then filtered to 5 dimensions and based on these 5 items a measurement tool for service quality was devised known as SERVQUAL (PUT SOURCE HERE!!!). While Yang (2001) highlighted the rapid growth of online retailing with broadening experiences of consumers online shopping, Santos (2003) believes that e-service quality can increase attractiveness, hit rate, customer retention, stickiness and positive word of mouth. It can also maximize competitive advantages of e-commerce. Numerous researchers have the discussed the dimensions of e-service quality including Cox and Dale (2001), Madu and Madu (2002), Parasuraman (2002), Yang et al. (2003), Parasuraman et al. (2004) and Lee and Lin (2005), yet online retailers appear to fail due to poor quality services provided to their customers. For that reason online service quality is significant for two reasons: (1) it influences customers satisfactions and intentions to shop online and (2) e-service quality plays a major role in attracting potential customers (Cai and Jun, 2003). Zeithaml (2002) points out online companies should focus on all elements of e-service quality before, during and a fter the transaction, as e-service quality is the extent to which a website facilitates efficient and effective shopping, purchase and delivery. 1.2.1 E-Service Quality and Customer Satisfaction Customer satisfaction is a critical element in the success or failure of any business. Web customer satisfaction has been emphasized as crucial by the rising demand for long-term profitability of dotcom companies and traditional companies that are â€Å"Net enhanced† (Pather, Erwin and Remenyi, 2002). An understanding of the factors that influence web customer satisfaction is vital for e-commerce. Satisfaction is a result of an effective evaluation, where some comparison standard is compared to the actually perceived performance. If the perceived performance is less than expected, customers will be dissatisfied. In contrast, if the perceived performance exceeds expectations, customer will be satisfied (Lin, 2003). A broad idea of traditional service quality might not be enough to build the e-service quality dimension, hence amending several variables is important. Santos (2003) discussed the e-service quality dimensions of, ease of use, web-appearance, linkage, structure and layout, content as the incubative dimensions; reliability, efficiency, support, communication, security, and incentive as active dimensions. This paper focuses on achieving a measurement of the service quality of the Jazeera Airways Website as perceived by their passengers, using a conceptual model of e-service quality developed by Santos (2003). 1.3 ONLINE TICKETING Electronic ticketing over the Internet facilitates the buying or reservation of tickets online, by making the process more easily accessible and convenient. Through these services tickets may be purchased from any location and at any time, provided an Internet connection exists. The tickets are ordered from a web site that provides both ticket information and the purchasing or reservation service. Internet booking or online ticketing concentrates on providing a helpful and efficient service to clients. Firms who sell travel tickets, performing arts, game tickets, concerts, movies and many other activities have notably embraced the online ticketing system according to Burford (1998). Convenience is a main advantage of buying tickets via the internet as the service is available at any geographical location, including ones home via laptop and cellular phone and at any time or day. Electronic ticket services have a further advantage by providing relevant information along with the service. This can help purchasing decisions and may encourage future usage (Burford, 1998). Another feature is that apart from maintenance and data updates, no manpower is necessary to offer the service once it has been established. The process of recording the transactions is more automated and overheads are reduced. An essential point is that ticket providers while providing a convenient service are thereby improving their public image and encouraging return customers (Burford, 1998). A number of countries across the globe are already benefiting from electronic ticketing including the U.S.A., Canada, Australia, New Zealand, Great Britain and France. In fact the U.S.A. it has 80% market p enetration, while in Europe it is approximately 40% and in the U.S.A. more than $350 million dollars in event tickets were sold online during 2000 increasing to $3.9 billion in 2004 (Bhatia, 2004). 1.3.1 Online Services and E-Ticketing in Kuwait The internet is a technology with many properties with the potential to transform the competitive landscape in many industries while at the same time creating completely new industries (Afuah and Tucci, 2003). The revolution of the internet continues to excel leading to rapid changes in many fields, at an overwhelming speed. In Kuwait, prior to 1990 internet usage was limited to electronic mail and minor services, however in 1992 a decision was made by the Ministry of Communication to facilitate the public data network. In the same year the National Science Foundation agreed to extend the Internet to Kuwait at a time when it was only available for US institutions and some selected institutions overseas. In recent years with the support of the Kuwaiti government for IT plans, practical steps have been taken in this field with the possibility of payment for mobiles and traffic tickets via the internet and the sale of online airlines tickets for the first time. These advances indicate the growth and development in the IT field in Kuwait as a whole. In 1943, the oil boom opened a new chapter in the modern history of Kuwait as The Kuwait Oil Company Limited (KOC) was founded. By 1947-1948 KOC developed the new Al-Nugra (Al-Mayass) Airport, located in the Nuzha district, operating in daylight only, with airlines opening offices in Kuwait City to handle ticketing and cargo operations for the Arab expatriate community. By 1954, the Kuwaiti National Airlines Company celebrated the arrival of the first airplane, which was called â€Å"Kazma† (http://www.da.gov.kw). The worldwide revolution of low-cost carriers (LCCs) started successfully with Pacific Southwest Airlinesin the United States, which pioneered the concept in 1949. Notable successes which have followed are Irelands Ryanair, which began low-fares operations in 1990, and EasyJet, formed in 1995. These low cost carriers then developed in Asia and Oceania from 2000 led by operators such as Malaysias AirAsia, Indias Air Deccanand Australias Virgin Blue. The low-cost carrier model is applicable worldwide, although deregulated markets are most suited for its rapid spread. In 2006, new LCCs were announced in Saudi Arabia and Mexico (http://www.absoluteastronomy.com). On September 12, 2005 Jazeera Airways owned by Marwan Boodai, Chairman and CEO, announced its first flights were open for booking. Jazeera Airways is the first privately owned airline in the Middle East, established in Kuwait. It offers passengers ticketless flights to Dubai, Lebanon, Damascus, Amman and Bahrain via the web, by phone, SMS or through travel agents (www.jazeeraairways.com). Breaking away from out-dated business models by developing a new model tasked with raising operational efficiency requires incorporating the latest revenue management procedures into the company and installing state-of-the-art technologies. This will ultimately enable travelers to become more independent in their bookings and payment. With tickets sold through a website as the main distribution channel, online booking is a very efficient distribution method for airlines. It reduces the number of back office staff and reduces the payment cycle. Jazeera Airways has worked hard to entice travelers to book through its website by making it the cheapest method to purchase tickets. Many promotional offers made by the company are available only to travelers who book online, therefore Jazeera Airways strategy is rewarding travelers who book online (www.jazerraairways.com) 1.4 PROBLEM DEFINITION Understanding customers requirements is vital to any business enterprise in order for it to remain competitive. Customer satisfaction is of great interest since it has a direct effect on customer retention, loyalty and the prospect of new customers. Retention is a major challenge, as customers can easily switch from one service provider to another considering the internet can facilitate easy access to a wide variety of choices with lesser cost. Acquiring new customers may involve significant cost on the part of the company in terms of marketing, advertising and promotion. Hence it is important to understand the determinants of customer satisfaction and assess the current experience of the customer in order to improve services. Customer satisfaction is a major issue of Jazeera Airways and good online service quality is a key factor that will determine in the long term, whether it will succeed or fail in retaining existing customers and attracting new ones. Due to rapid technological advancements in the marketplace Jazeera Airways maintains a close relationship with their customers, as their expectations and perceptions of online service quality may change. This research will therefore be conducted on Jazeera Airways, the first low cost airline in Kuwait. Jazeera Airways offers online ticketing in its website as the main distribution channel. Therefore it is important to take into account the quality of its website and to pay more attention to customer evaluation of the service given. Customers want to make their own bookings in their own time without depending on middlemen; as a result it is necessary that online service quality determinants lead to satisfaction. Dissatisfied travelers may perceive one of the following: Web sites do not seem to have many of the very basic features that experts consider important in forming relationship with customers. Service providers undervalue the attributes that customers use to judge service quality that should be monitored and enhanced to help the service performance. There are other variables of the online service quality that affect the overall travelers satisfaction. Therefore this research aims to address such problematic issues by researching the relevant factors including current opinion of the airline users. 1.5 RESEARCH OBJECTIVES As this research study aims to examine the customer satisfaction of the service of Jazeera Airways in online ticketing through the quality delivered through its website, its main objectives are as follows: To assess the perception of each service of Jazeeras e-service Quality dimensions. To evaluate consumer satisfaction towards e-service quality for online service quality within Jazeera. To determine the important dimensions leading to satisfaction when purchasing online tickets within Jazeera. 1.6 RESEARCH QUESTIONS In order to fulfill the objectives of this study, the following questions need to be addressed: What key incubative dimensions do online customers perceive as important for their e-service quality? What key active dimensions do online customers perceive as important for their e-service quality? What are the most influential online service quality dimensions of the website as perceived by respondents with a high level of customers satisfaction in the Jazeera Airways website? What are the most influential online service quality dimensions of Jazeera Airways contributing to customer satisfaction when examining the Jazeera Airways website? Are the different socio-demographic variables involved perceiving e-service quality and satisfaction in the same way or differently? 1.7 Research Methodology This research is considered deductive, quantitative, descriptive, explanatory, and exploratory to some extent type of study. The research follows the survey strategy approach and consists of 67 questions composed of a two page questionnaire distributed to the target sample in Kuwait. Data was collected using Arabic and English questionnaires, from a sample size of X passengers who booked online through Jazeeras website. The questionnaire consists of four sections (A, B, C, D). Section A solicits demographic information. Section B evaluates Jazeeras Airways e-service quality using an adapted Santos (2003) model. Section C measures the level of customer satisfaction. Statements of Section B and C are scaled using a Likert type scale from 1 to 5. Section D collects information added by customers that will add value to the research. 1.8 RESEARCH LIMITATIONS Throughout this research conducted in Kuwait regarding Jazeera Airways website service quality a number of limitations were noted as follows: The thesis investigates the customer satisfaction of Jazeeras Airways website service quality and does not include the companys perspective/point of view; therefore the study is limited in its scope to customers and not employees or managers. The study does not include product quality, price, situational factors, personal factors, and other services provided by Jazeera Airways. Using a quantitative approach only towards addressing the research problems, a qualitative approach is lacking. The research scope is limited as it assesses Jazeera online service â€Å"e-ticketing† excluding airport customer services such as check in, luggage, lounge and on board services. There is limited relevant literature concerning service quality in the airline industry in Kuwait and the region, therefore there are no previous findings or frameworks to consult. 1.9 THESIS STRUCTURE This study is composed of five main chapters. Chapter One presents the background details of the selected research area and the experience in Kuwait, followed by the problem definition, the research objectives and questions, the methodology, the studys limitations and the thesis structure. Chapter Two discusses related theories, concepts and models providing a comprehensive review and an insight into the subject area as a whole, followed by an explanation of the research to the country of Kuwait. Chapter Three describes the methodology, research design and techniques used in the collection and analysis of the data. Chapter Four presents the gathered data, their interpretation and analysis. Chapter Five looks at the findings, assessing whether they satisfy the research questions and objectives to draw conclusions from the results. Based on these conclusions, recommendations for management are provided with further suggestions for future research. CHAPTER TWO: LITERATURE REVIEW 2.1 INTRODUCTION In this chapter a comprehensive review of available related literature is made concerning website service quality and customer satisfaction. In the process various concepts, models and theories covering customer satisfaction, determinants of customer satisfaction, the relationship between online service quality and satisfaction and online service quality dimensions are presented and explored to give the study a wide ranging theoretical basis. In addition the relevance of the research to the country of Kuwait is also addressed. 2.2 CUSTOMER SATISFACTION 2.2.1 Definition of Customer Satisfaction Oliver (1980) explains satisfaction as the summary of a psychological state resulting when the emotion surrounding disconfirmed expectations is coupled with a consumers prior feelings about the consumer experience. In other words, satisfaction is an attitude or appraisal that is created by the customer comparing their pre-purchase expectations of what they would receive from the product or service to their subjective perceptions of the performance they actually did receive. Customer satisfaction has become a key intermediary objective in service operations, because of the benefits it conveys to organizations (Ranaweera and Prabhu, 2003). The importance of customer satisfaction results from the generally accepted philosophy that for a business to be successful and profitable, it must satisfy customers (Shin and Elliott, 2001). While many authors have described satisfaction using various definitions, Table 2.1 presents a few notable explanations of customer satisfaction. Table 2.1 Definition of Customer Satisfaction Definition Author Customer satisfaction is a collective outcome of perception, evaluation and psychological reactions to the consumption experience with a product/service. Yi (1990) Satisfaction is function of consumers belief that he or she was treated fairly. Hunt (1991) Satisfaction is a persons feelings of pleasure or disappointment resulting from comparing a products perceived performance (or outcome) in relation to his or her expectation. Kotler et al. (2000) Source: Research based From the above table we understand that satisfaction is the consumers evaluation of the product and service that meet their needs and expectations. According to Parker and Mathews (2001) there are two main interpretations of satisfaction; satisfaction as a process and satisfaction as an outcome. Whereas Gustafsson (2005) argues satisfaction has a strong positive effect on customer loyalty intentions across a wide range of product and service categories. 2.2.2 Determinants of Customer Satisfaction Zeithaml et al. (2005) argued that satisfaction, as shown in 2.1, is influenced by service quality perception, product quality, and price as well as situational and personal factors. Economists differentiate between two categories of properties of consumer products; search qualities and experience qualities. With search qualities consumers determine before purchasing a product like color, style, price, fit, feel, hardness and smell. Experience qualities, are hard to determine; as a result it can be evaluated after the purchase and until the service is received like vacations and restaurant meals (Zeithaml et al., 2005). Keaveney (1995)ppp.jpg point out that a main reason leading to customers switching services is price, as customers, based on prior experience with the service provider, sometimes felt cheated and believed that price increases were unfair or even deceptive. According to (Zeithaml et al., 2005) comparing the price relative to value and state, research reveals that customers of services will make trade-offs among different service features such as price level versus quality. A number of customers, for example, view price as an important element for their satisfaction more than quality. Perceived service quality is only one factor of customer satisfaction (Zeithaml et al., 2005). Consequently to achieve a high level of customer satisfaction, most researchers suggest that a high level of service quality should be delivered by the service provider as service quality is normally considered an antecedent of customer satisfaction (Cronin et al. 2000). Zeithaml et al. (2005) described a consumers emotional state as a personal factor. Satisfaction will vary due to customers biographical characteristics such as age, gender, education, ethnicity and income (Gilbert and Veloutsou, 2006;Van Pham and Simpson, 2006). Customers take partial responsibility for outcomes and describe those negative feelings that influence how a consumer responds to services, causing a person to overreact negatively to the slightest problem (Zeithaml et al., 2005). Situational factors can notably influence purchase decisions such as social environment, physical environment of the purchase place, time influence and the previous states (Vysekalovà ¡, 2004; Nagyovà ¡, 2001). 2.3 The Evidence of Service (3Ps) Services are intangible; therefore customers are searching for evidence of service in every interaction they have with the organization. The three major factors of service experienced by customers are: people, process, and physical evidence. Together these elements are considered as an evidence of the service. Each evidence or subset is present in each service 2.2. Firms should essentially manage the service quality that will lead to satisfying their customers (Bitner, 1993). 2.4 SERVICE QUALITY Numerous researchers have defined service quality their own ways, including Bitner, Booms and Mohr (1994) who described service quality as the consumers overall impression of the relative inferiority / superiority of the organization and its services. Perceived service quality is only one component of customer satisfaction (Zeithaml et al., 2005). According to Parasuraman et al. (1994) service quality is defined as, the degree of discrepancy between customers normative expectations for the service and their perception of the service performance. Gronroos (1982) stated that total service quality is customers perception of difference between expected service and perceived service. Afterward in 1984, he then explained service quality of the service encounter as two different dimensions: one is technical or output quality and the other functional or process quality. Therefore, service quality has become a well-liked area of academic investigation, recognized as a major factor in differentiating service products and gaining competitive advantage (Zeithaml et al., 1996). Table 2.2 presents the concept of service quality from varied authors viewpoints who combined suggest we can understand that meeting the need and requirements and achieving customers expectations depends on delivering the best level of service quality. Notably with time, service quality takes place before and leads to overall customer satisfaction Table 2.2 Definition of Customer Satisfaction Definition Author Service quality as the subjective comparison that customers make between the quality of the service that they want to receive and what they actually get. Gefan (2002) Service quality can be defined as â€Å"the difference between customers expectations for service performance prior to the service encounter and their perceptions of the service received†. Asubonteng et al. (1996) Service quality is determined by the differences between customers expectations of services providers performance and their evaluation of the services they received. Parasuraman et al. (1985,1988) Source: Research based Gilbert and Veloutsou (2006) determined different approaches to measure customer satisfaction, varying between measuring expectations relative to perception or measuring the performance aspect only, without relating it to the desired level of service. Service quality has been found to be an important input to customers satisfaction (Caruana, 2002). 2.4.2 Dimensions of Service Quality Service quality has been the focus of increased study in recent years as many researchers have tried to reveal features of services that significantly relate to quality evaluation in traditional service environments. In 2001 Brady and Cronin presented a model consisting of interaction quality, physical environment quality, and outcome quality. These dimensions draw on, among others, the work of Gronroos (1982) and Rust and Oliver (1994) who suggest that exploring both what is delivered (Gronroos technical quality) and how it is delivered (Gronroos functional quality) are important aspects of service quality. Table 2.3 Dimensions of Service Quality Quality Requirement Description Reliability Reliability Consistency of service/ dependability, i.e. the ability to provide the service on time, accurately and dependably Responsiveness Responsiveness Willingness/readiness of employees, i.e. the ability to deal effectively with complaints and promptness of services Assurance Credibility The extent to which the service is believed and trusted; involves honesty, trustworthiness and believability Courtesy The politeness, respect, consideration and friendliness shown to the customers by the contact personnel Security The freedom from danger, risk and doubt Competence The possession of staff of the necessary skill, knowledge and information to perform the service effectively Empathy Access The ease of approachability and contact Communication Listening to customer and keeping them informed about the service Understanding the customer Trying to understand the customers needs and specific requirements Tangibles Tangibles Appearance of personnel and condition of equipment Source: Parasuraman et al. (1985); Ghobadian et al. (1994); Curry and Herbert (1998) A most widely used and accepted study done on service quality is by Parasuraman et al. (1985). Having developed ten dimensions through focus group studies: tangibles, reliability, responsiveness, communication, credibility, security, competence, courtesy, understanding the customer, and access. These ten dimensions were then filtered and extracted to five: tangibles, reliability, responsibility, assurance, and empathy, which constitute the basis of a global measurement for service quality, SERVQUAL (Parasuraman et al., 1988). Based on these five dimensions researchers presented a 22-item service quality scale and on an operational level service quality research has been dominated by the SERVQUAL (Parasuraman et al., 1985; Curry and Herbert, 1998). Table 2.3 presents a description of the service quality dimensions. 2.4.3 Relationship between Customer Satisfaction and Service Quality Service quality has been found to be an important input to customer satisfaction (Caruana and Malta, 2002). Cronin and Taylor (1992) examined the causal relationships between service quality, customer satisfaction, and purchase intention. The results suggested that service quality was an antecedent of consumer satisfaction, service quality had less effect on purchase intentions than did consumer satisfaction, and consumer satisfaction had a significant effect on purchase intentions. Customer satisfaction had a stronger effect on behavioral intentions than service quality did (Dabholkar et al., 2000). As a process in time, service quality takes place before, and leads to overall customer satisfaction. Customers loyalty was affected by product quality, service quality, and retailer image. They also suggested that quality of product and service is directly related to customer satisfaction, and then leads to the loyalty of the customer (Cà ¶ner and Gà ¼ngà ¶r, 2002). Based on empirica l findings in service quality and satisfaction literature, service quality is one of the antecedents of satisfaction (Anderson and Sullivan, 1993; Cronin and Taylor, 1992), and loyalty is one of the consequences of satisfaction. Luarn and Lin (2004) indicated that not only customer satisfaction and perceived value directly affected customer loyalty, but also indirectly affected customer loyalty through commitment. 2.5 THE ROLE OF TECHNOLOGY IN SERVING CUSTOMERS According to Parasuraman (2000), delivering excellent customer service is vital in case customers have to serve themselves by technology-based systems. With quick penetration of technology-based customer-company interfaces such as online banking and e-commerce, employee-delivered service is being replaced by self-service, reducing the need for face-to-face encounters between customers and company personnel. However, this fundamental shift does not mean that companies can afford to ignore customer service. Development of self-service technologies need to emphasize customer service to ensure the customer-technology interface is user-friendly, putting in place an excellent customer-service infrastructure (including properly tr