The Factors Influencing Low-cost Airline Passenger Satisfaction and Loyalty in Bangkok, Thailand

Zhicheng Qin

http://eprints.utcc.ac.th/id/eprint/1326

University of the Thai Chamber of Commerce

EPrints UTCC http://eprints.utcc.ac.th/

The Factors Influencing Low-Cost Airline Passenger Satisfaction

and Loyalty in Bangkok, Thailand

ZHICHENG QIN

A Thesis Submitted in Partial Fulfillment of the Requirements

For the Degree of Master of Business Administration

International College

University of the Thai Chamber of Commerce

2012

iv

ABSTRACT

In this research, we address the following questions that are becoming

increasingly important to managers in low-cost airline industries: is there a

relationship between marketing mix and service quality with customer satisfaction

and loyalty in the context of the Thailand low-cost airline industry? If yes, how is the

relationship between these four variables?

The low-cost airline industry in Thailand is one of the largest in the Asian country

and one of the fast growing globally. Loyalty is an important issue for the

sustainability of business of the companies. Relationships with the customers should

be built well in order to achieve their satisfaction and consequently loyalty.

Furthermore, the airlines sector has its own specific circumstances to be considered in

order to earn the customer satisfaction. In this study the service marketing mix and

service quality are the most important factors that affect the low-cost airline passenger

satisfaction and loyalty in Thailand. The concept of marketing mix divided into

product and service marketing mix. In this study would focus on the service

marketing mix. The service marketing mix consists of 7 Ps (Product, Price, Place,

Promotion, People, Physical Evidence, and Process). To measure functional quality

and perceived quality satisfaction in the low-costs airline industry, there are some

models. However, in this study, the proposed model was developed by the help of the

most popular and complete service quality measurement model of SERVQUAL.

Dissertation Title The Factors Influencing Low-cost Airline Passenger

Satisfaction and Loyalty in Bangkok, Thailand.

Name Zhicheng Qin

Degree Master of Business Administration

Major Field International Business

Thesis Advisor Dr. Piraphong Foosiri

Graduate Year 2012

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The population of the study is all of the low-cost airline passengers in Don

Mueang international airport. And the survey research will be through distributed

questionnaire to low-cost airline passenger in Don Mueang international airport to

collect data. After that use the multiple regression analysis to analysis the result and

examine the relationship among above factors. Results of the study show that there

are high positive correlation between the constructs of marketing mix and service

quality with customer satisfaction and loyalty. And the research also showed that (1)

the service marketing mix factors have partially affects low-cost airline passengers

satisfaction. (2) The service quality factors have partially affects low-cost airline

passengers satisfaction. (3) The service quality factors have partially affects low-cost

airline passengers loyalty. (4) The passengers satisfaction factor affects passengers

loyalty. Finally, Understanding customers responses to airline service quality and the

factor effect the low-cost airline passenger satisfaction and loyalty, airline managers

can gain a better understanding of how to improve their service offers to satisfy

customers and improve the customer loyalty. And the results of the study can be a

useful resource for future research.

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ACKNOWLEDGEMENTS

This thesis has been written for a Master of Master of Business Administration

Department of International Business. Many people have helped me during the

process to whom, I would like to extend my appreciation and regard.

First and foremost, I would like to express my deep and sincere gratitude to my

supervisor, Dr. Piraphong Foosiri, a respectable, responsible and resourceful scholar

who has provided me with valuable guidance in every stage of the writing of this

thesis.

I would like to express my sincere and appreciation to my committee members:

Dr. Pitsamorn Kilenthong, Dr. Li Li, Dr. Theeranuch Pusaksrikit, Dr. Saran

Ratanasithi. They gave me a lot of valuable suggestions and guidance for my thesis. I

would like to thank all my teachers who have helped me to develop the fundamental

and essential academic competence.

I wish to express my profound gratitude and thanks to my father and mother and

also my sister, for their love, affection, trust, support and encouragements throughout

my life.

Last but not least, I wish to give a special thanks to my friends for their great help

as well as encouragement. I would also like to thank all the participants who

contributed to my work. Completion of this research is impossible without their

participation.

Zhicheng Qin

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TABLE OF CONTENTS

Abstract .................................................................................................................. iv

Acknowledgements ................................................................................................ vi

Table of Contents .................................................................................................. vii

List of Tables .......................................................................................................... ix

List of Figures ......................................................................................................... x

Chapter 1 Introduction ........................................................................................... 1

Research Background ............................................................................................... 2

Problem Statement .................................................................................................... 4

Research Objectives ................................................................................................. 5

Research Questions ................................................................................................... 5

Expected Benefits ..................................................................................................... 6

Scope of Research .................................................................................................... 6

Operational Definition ............................................................................................... 6

Chapter 2 Literature Review ................................................................................. 9

Theories and Literature Review .............................................................................. 10

Conceptual Framework ............................................................................................ 23

Research Hypotheses .............................................................................................. 23

Chapter 3 Research Methodology ........................................................................ 25

Research Design ..................................................................................................... 26

Population and Sample ........................................................................................... 26

Variables of the Research ....................................................................................... 27

Research Instrumentation ........................................................................................ 27

Data Collection ....................................................................................................... 28

Data Analysis ......................................................................................................... 28

Reliability Analysis ................................................................................................ 29

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TABLE OF CONTENTS (Continued)

CHAPTER 4 Data Analysis and Results .............................................................. 32

The result of Customers Background Information .................................................. 33

Level of Agreement Analysis................................................................................... 38

Analysis and Results of Hypotheses ........................................................................ 40

Chapter 5 Conclusion and Discussion ................................................................... 47

Conclusion .............................................................................................................. 48

Discussion ............................................................................................................... 50

Implication of the Study .......................................................................................... 51

Limitation and Future Research ............................................................................... 53

REFERENCES ...................................................................................................... 54

APPENDICES ....................................................................................................... 69

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LIST OF TABLES

Table 3.7.1 Reliability Test Using Cronbachs alpha ................................................ 30

Table 4.1.1 Numbers and Percentage of Respondents by Characteristics .................. 33

Table 4.2.1 Level of agreement of marketing mix factors ......................................... 39

Table 4.2.2 Level of agreement of service quality factors ......................................... 39

Table 4.2.3 Level of agreement of customer satisfaction .......................................... 40

Table 4.2.4 Level of agreement of customer loyalty ................................................. 40

Table 4.3.1 Result of hypothesis the relationship between marketing mix factors and customer

satisfaction 41

Table 4.3.2 Result of hypothesis the relationship between marketing mix factors and customer

satisfaction ................................................................................................................ 41

Table 4.3.3 Result of hypothesis the relationship between service quality factors and

customer satisfaction ............................................................................................. 42

Table 4.3.4 Result of hypothesis the relationship between service quality factors and

customer satisfaction ............................................................................................. 43

Table 4.3.5 Result of hypothesis the relationship between service quality factors and

customer loyalty ..................................................................................................... 43

Table 4.3.6 Result of hypothesis the relationship between service quality factors and

customer loyalty .................................................................................................... 44

Table 4.3.7 Result of hypothesis the relationship between customer satisfaction factor

and customer loyalty ............................................................................................... 45

Table 4.3.8 Result of hypothesis the relationship between customer satisfaction factor

and customer loyalty ................................................................................................ 45

Table 4.3.9 Summary for all hypotheses .................................................................. 46

....................................................................................................................................

x

LIST OF FIGURES

Figure 2.2.1 Conceptual framework ......................................................................2223

Figure 4.1.1 Survey participants profile by gender ................................................... 34

Figure 4.1.2 Survey participants profile by nationality ............................................. 35

Figure 4.1.3 Survey participants profile by education level ...................................... 35

Figure 4.1.4 Survey participants profile by occupation ............................................. 36

Figure 4.1.5 Survey participants profile by income status ........................................ 37

Figure 4.1.6 Survey participants profile by flight frequency ..................................... 37

Figure 4.1.7 Survey participants profile by airlines .................................................. 38

CHAPTER 1

INTRODUCTION

This chapter focuses on the importance of the chosen subject and its different

aspects that are to be highlighted later on as the thesis proceeds. The area that will be

investigated is related to low-cost airlines, marketing mix, service quality, customer

satisfaction and customer loyalty. The background of the problem why this specific

subject has been chosen for the research study, Furthermore, the research problem and

the purpose with this study will also be presented in this chapter.

1.1 Research Background

1.2 Problem Statement

1.3 Research Objectives

1.4 Research Questions

1.5 Expected Benefits

1.6 Scope of Research

1.7 Operation Definition

2

1.1 Research Background

Low Cost Airline (or Low Fare Airline or Budget Airline) is a new business model

in the airline industry. It was first introduced by Southwest Airline (SWA) in the

United States in 1971. The success of SWA led to the spread of the model to Europe

and then to Asia. LCAs compete by offering lower fares than those of full-service

airlines. To make up for revenue lost in decreased ticket prices, the airline may charge

for extras like food, priority boarding, seat allocating, and baggage etc. Most airlines

have only a single passenger class and usually feature the Airbus 320s or Boeing

737s in their fleet of aircraft. Efficiency is the major consideration in LCAs

operation and several strategies in cutting the cost down are employed.

The domestic airline business in Thailand has been shaken by six low cost airlines

(LCAs) since December 2003. One-Two Go, hold by Orient Thai Airline, was the first

airline operating as an LCA between Bangkok and Chiang Mai. After that, in

February 2004, the second LCA took off. Thai Air Asia, a joint venture between Air

Asia (Malaysia) and Shin Corp (Thailand), started the operation. Solar Air is a low-

cost airline with its head office in Bangkok, Thailand. Its base is in Don Mueang

International Airport. It was founded in 2004. Nok Air which is a subsidiary of Thai

Airways International was launched to the Thai sky. Happy Air Travellers Co.,Ltd.,

trading as Happy Air is an airline based in Thailand, offering scheduled domestic

passenger flights out of Suvarnabhumi Airport and Phuket International Airport, as

well as charter services. It was founded on April 3, 2009. Lastly, Thai Smile Air is an

airline in Thailand, operated by Thai Airways International that began operations in

July 2012. When the ASEAN Open Sky policy comes into force and airlines will be

free to set up operations in any country within the 10-member group in 2015. More

and more low-cost airlines company will come to Thailand. The policy is likely to

create greater competition and even more financial challenges for local airlines. Now

the low-costs airlines major issues hampering progress include rising fuel costs,

increasing competition particularly from low cost carriers and slowing economic

growth in Thailand.

During the process of economic and social development, the world today is

undergoing led economy from a manufacturing society to a service-oriented change.

With the formation of the service economic and social, the services sector is facing

tremendous competitive pressure. Each of the services and service management study

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of the item theory and practice are more and more researchers concerned about. The

Airlines is a typical service industry. With the continued development of the economy,

the domestic air transport companies facing competitive pressures. A large number of

foreign airlines into the domestic aviation market through direct or indirect way. Not

only faced with the invasion of foreign airlines, but also increasingly intense

competition among domestic airlines. The aviation market has already shifted from

the strength of the market to be buying power market. With the passenger groups

increasing, the consumer requirements showing diversity and the current situation of

oversupply, led the air transport traveler choices greatly increase. Domestic civil

aviation enterprises in the low level of competition for the "price war" Those

understand the real needs of the customer. Improve service quality and marketing

strategy for airlines to improve customer satisfaction and loyalty is an important part.

Marketing mix is the efforts made by management in order to synergize a number

of activities, such as services design, pricing, communication or promotion and

providing the serviceHartono, B. 2010). Low-cost Airlines, as a typical service

industry, is expected to apply the concept of the seven aspect of service marketing

mix to arrange proper marketing strategies. Thus, it could be competing in the

business world with priority services according to the needs of its customers.

Furthermore, the application of the concept of the seven Ps of service marketing mix

would be able to give satisfaction to the customer, allowing them to keep using the

service has been provided and not switch to another place. Satisfaction towards well

integrated service marketing mix is expected to affect the customer decision of a

patient for using the same service in time to come (Rafiq, M., & Ahmed, P. K. 1992).

The concept of marketing mix divided into product and service marketing mix. The

service marketing mix consists of 7 Ps (Product, Price, Place, Promotion, People,

Physical Evidence, Process) compared to the 4 Ps (Product, Price, Place, Promotion)

of a product marketing mix (Rafiq, M., & Ahmed, P. K. 1992).

Successful service quality strategies are generally characterized by customer

segmentation, customized service, guarantees, continuous customer feedback, and

comprehensive measurement of company performance. The experience in many

industries and companies demonstrates that this process, although generally

acknowledged, is not universally implemented. Market segmentations by customer

expectations, to create separate levels of service that exceed those levels of

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expectations, have also been found essential to attract customers and create customer

loyalty (Porter, 1985).

Customer Satisfaction is one of the most important processes in airline industry

and is recognized as key to the success of business competition which is the

individuals perception of the performance of the service in relation to expectations.

Customers have drastically different expectations and the objective of airline

marketing efforts in todays fast moving world is to maximize customer satisfaction.

For this reason, airline marketers offer more products and services than ever before.

In such a highly competitive environment, customer loyalty has become an

increasingly effective means for securing a firms profitability (e.g. Reichheld &

Sasser, 1990; Reinartz & Kumar, 2002). Customers are the driving force for profitable

growth and customer loyalty can lead to profitability (Hayes, 2008). For a customer,

loyalty is a positive attitude and behavior related to the level of re-purchasing

commitment to a brand in the future (Chu, 2009). Loyal customers are less likely to

switch to a competitor solely because of price, and they even make more purchases

than non-loyal customers (Bowen and Shoemaker, 2003). Loyal customers are also

considered to be the most important assets of a company (Blackton, 1995). It is thus

essential for vendors to keep loyal customers who will contribute long-term profit to

the business organizations (Tseng, 2007). Therefore, good managers should

understand that the road to growth runs through customers not only attracting new

customers, but also holding on existing customers, motivating them to spend more

and getting them to recommend products and services to the other people

(Keiningham et al., 2008). With the objective of fostering customer loyalty, airlines

introduced loyalty schemes in the 1980s and 1990s. These so-called frequent flyer

programs award customers for flights taken with the given airline.

1.2 Problem Statement

Aviation industry is one of the fastest growing industries in the world. Aviation

industry has contributed more than anything else to the increased commerce,

communications, trade, and tourism among the industries of the world. Beside this

growth todays airline industry are facing challenges like, fuel consumption , oil

prices , air-traffic, high competition, economy crisis , aviation emission , safety ,

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design and operational challenges.

In a highly competitive circumstance like the Low-Cost Airlines marketplace, how

to provide high quality service to satisfy passengers is the core competitive advantage

for an airlines profitability and sustained development. Previous studies in the

marketing field have pointed out that service quality is one main key to determine

corporate success (Lu and Ling, 2008). Under the conditions of this fierce competition

and how to improve customer satisfaction, thereby increasing customer loyalty has

become of any airline unavoidable marketing theme and the frequent flyer program is

an important part. Because according to relevant statistical research, to attract a new

customer is roughly equivalent to the cost of maintaining an existing old customers

five times, 20% old customers often bring 80% of the profits. In general, increases

profit and growth in many ways (Chow and Reed 1997; Heskett et al. 1994) to the

extent that increasing the percentage of loyal customers by as little as 5% can increase

profitability by as much as 30% to 85%, depending upon the industry

involved(Reichheld and Sasser 1990).

But now just only a few people to do the research about the passenger loyalty in

Thailand, especially the low-cost airline passenger loyalty. Therefore, this paper aim

to study the factor effect the low-cost airline passenger loyalty in Thailand to improve

service quality and marketing strategy for airlines to improve passenger satisfaction

and loyalty.

1.3 Research Objectives

1. To study the influence of the service marketing mix on customer satisfaction.

2. To study the influence of the service quality on customer satisfaction.

3. To study the influence of the service quality on customer loyalty.

4. To study the influence of the customer satisfaction on customer loyalty.

1.4 Research questions

1. How is the influence of the service marketing mix on customer satisfaction?

2. How is the influence of the service quality on customer satisfaction?

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3. How is the influence of the service quality on customer loyalty?

4. How is the influence of the customer satisfaction on customer loyalty?

1.5 Expected Benefits

1. The study would make the airlines more understand the factor influence the

low-cost airline passenger loyalty in Thailand.

2. The result of this study will help the airlines improve service quality and

marketing strategy to improve passenger satisfaction and loyalty. Then the airlines can

development more new customers and maintain the old customers.

3. The results of this study can be the reference for the other researches to

continue this area study.

1.6 Scope of Research

1. The population: The low-cost airline passenger in Bangkok, Thailand.

2. In this study, the three target low-cost airlines were decided by draw lots. These

three low-cost airlines are Airasia airline, Nok air and Orient Thai Airline.

3. The research area: this research is planned to study the marketing strategy in

service marketing mix relate to customer satisfaction, and study relationship among

the service quality, customer satisfaction and loyalty. And customer loyalty would be

behavioral perspective and attitudinal perspective.

1.7 Operation Definition

Customer loyalty is viewed as the strength of the relationship between an

individual's relative attitude and behavior. There are two dimensions to customer

loyalty: behavioral and attitudinal.

Behavioral is a customers behavior on repeat purchases and purchasing

frequency.

Attitudinal is customers attitude toward loyalty by measuring customer

preference, buying intention, supplier prioritization and recommendation willingness.

7

Customer satisfaction is a judgment that a product or service feature, or the

product or service itself, provides a pleasurable level of consumption related

fulfillment including the level of under or over fulfillment

Service quality is defined as the overall assessment of a service by the customers.

Reliability: Ability to perform the service dependably and accurately. For

example the consistency in meeting service promises which could include keeping

schedules or appointment times

Responsiveness: Willingness to assist customers. This refers to the ability of the

service to respond to individual customer requirements such as specifying delivery

times, altering aspects of the delivery process, and ensuring that customers remain.

Assurance: This includes competence, courtesy, credibility and security. This

dimension would include staff training in the use of tools and knowledge of their

service processes, customer interaction, and the perception that the service is

competent and not going to harm anyone.

Empathy: This includes access, communication and understanding. This

composite dimension is really about the communication style of the service

organization through its service personnel, its communications including leaflets,

instructions, signage and people management

Tangibles: Appearance of physical facilities, equipment, and personnel. The

elements of the service environment impact upon perceived service quality for

instance cleanliness of premises, staff appearance and the appropriateness of things

like decor, seats and on board facilities.

Marketing mix is a business tool used in marketing. There are often synonymous

with the 7Ps: price, product, promotion, place, Personnel, Process and Physical

Evidence in service marketing

Product is anything that can be offered to a market for attention, acquisition, use,

or consumption that might satisfy a want or need.

Price is the amount of money charged for a product or service, or the total values

that consumers exchange for the benefits of having or using the product or service.

Place is a set of interdependent organizations that caters to the process of making

a product available to the consumers.

8

Promotion is sales promotion, advertising, personal selling, public relations and

direct marketing.

Personnel are the service employees who produce and deliver the service.

Process is the implementation of action and function that increases value for

products with low cost and high advantage to customer and is more important for

service than for goods.

Physical Evidence is the environment in which the service and any tangible

goods that facilitate the performance and communication of the service are delivered.

CHAPTER 2

LITERATURE REVIEW

This chapter provides the literature concern to marketing mix, service quality,

customer satisfaction and customer loyalty.

2.1 Theory and Literature Review

2.1.1 Marketing mix

2.1.2 Service quality

2.1.3 Customer satisfaction

2.1.4 Customer loyalty.

2.2 Conceptual Framework

2.3 Research Hypotheses.

10

2.1 Theory and Literature Review

2.1.1 Marketing mix

Today customers are very demanding than ever and it is vital for managers to

understand how apply effectively the marketing strategies for assuring the enterprise

sustainability in the fast moving competitive market. It becomes the first

responsibility of the marketing manager to critically know how combine the

diversified components of the marketing that most of the time results in the

application of the marketing-mix. In any company, there is no way that they can deal

with the customer satisfaction without understand the element of marketing-mix and

to which extend they do affect the customer satisfaction. The way marketing-mix is

understood and applied contributes in increasing companys performance through the

satisfied customer.

Marketing mix is the efforts made by management in order to synergize a number

of activities, such as services design, pricing, communication or promotion and

providing the serviceHartono, B. 2010). Low-cost Airlines as a typical service

industry is expected to apply the concept of the seven aspect of service marketing mix

to arrange proper marketing strategies. Thus, it could be competing in the business

world with priority services according to the needs of its customers. Furthermore, the

application of the concept of the seven Ps of service marketing mix would be able to

give satisfaction to the customer, allowing them to keep using the service has been

provided and not switch to another place. Satisfaction towards well integrated service

marketing mix is expected to affect the customer decision of a passenger for using the

same service in time to come (Rafiq, M., & Ahmed, P. K. 1992). The concept of

marketing mix divided into product and service marketing mix. The traditional

marketing mix originated from the marketing of goods for consumer markets and

consists of the well-known 4Ps: Price, Promotion, Place, and Product. Various

researchers (Low & Tan, 1995:38; McDonald, De Chernatony & Harris, 2001:268;

Moorthi, 2002:259 and Zeithaml & Bitner, 2000:18) mentioned the fact that the four

Ps of marketing identified by McCarthy (1960:122) are not relevant for services

marketing, but that it has to be expanded to more Ps. Judd (1997) proposes the fifth

element as People and takes thereby the human resource factor into account. Booms

and Bitner (1981) on their part created 7P's by adding Participants, Physical Evidence

and Process to the original 4P's. Thus, the service marketing mix consists of 7 Ps

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(Product, Price, Place, Promotion, People, Physical Evidence, Process) compared to

the 4 Ps (Product, Price, Place, Promotion) of a product marketing mix (Rafiq, M., &

Ahmed, P. K. 1992).

A hugely popular marketing strategy is 4Ps which comprises product, price, place and

promotion (Kotler et al., 1999). However, low-cost airline industry is a typical service

marketing which is considerably different from product marketing. Because it is a

service, production and consumption take place at the same time. Kandampully

(2002) suggests that traditional 4Ps marketing mix cannot sufficiently satisfy the

requirements of the low-cost airline market. Therefore, he has decided to expand it as

7Ps marketing mix, comprising product, place, price, promotion, people, process and

physical evidence. These seven elements can be defined as follows:

A product as defined by Armstrong and Kotler (2006), is anything that can be

offered to a market for attention, acquisition, use, or consumption that might satisfy a

want or need. As for services, according to Hirankitti, Mechinda, and Manjing (2009)

the product offer in respect of services can be explained based in two components: (1)

The core service which represents the core benefit; (2) The secondary services which

represent both the tangible and augmented product levels. The latter can be best

understood in terms of the manner of delivery of the particular service. Ferrell (2005)

opines that the product is the core of the marketing mix strategy where retailers can

offer unique attributes that differentiates their product from their competitors.

According to Borden (1984) product is characterized by quality, design, features,

brand name and sizes

According to Kotler, Armstrong, Wong, and Saunders (2008), price is the amount

of money charged for a product or service, or the total values that consumers

exchange for the benefits of having or using the product or service. Due to the

intangible nature of services, price becomes a crucial quality indicator where other

information is not lacking or absent (Zeithaml, 1981). Price is considered as the most

important measurement of repurchase intentions (Oh, 2000; Parasuraman and Grewal,

2000). In deciding to return to the service provider, the customers normally think

whether or not they received their value for money (Zeithaml, 1988). It has been

proven therefore, that customers usually buy products on the basis of price rather than

other attributes (Peter & Donnely, 2007).

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The place factor is defined by Armstrong and Kotler (2006) as a set of

interdependent organizations that caters to the process of making a product available

to the consumers. Hirankitti et al., (2009) considers place as the ease of access which

potential customer associates to a service such as location and distribution. The

strategy of place needs effective distribution of the firms products among the

channels of marketing like wholesalers or retailers (Berman, 1996). An organization

should pay attention to place decisions, because of the importance of the product and

consumption occurring at the same time and at the same place; a place that provides

all information of customer, competition, promotion action, and marketing task. It

should pay attention to how it can deliver the product at the right time and at the right

place, and which channel should be used to deliver the product (Copley, 2004).

Promotion is defined as sales promotion, advertising, personal selling, public relations

and direct marketing (Borden, 1984) - A decision of how best to relate the product to

the target market and how to persuade them to buy it (Lovelock, Patterson and

Walker, 1998). A communication program is important in marketing strategies

because it plays three vital roles: providing needed information and advice,

persuading target customers of the merits of a specific product, and encouraging them

to take action at specific times (Lovelock and Wright, 2002). Activities that cater to

promotion are advertising, sales promotions, personal selling and publicity; they can

all influence consumers way of thinking, their emotions, their experience as well as

their purchasing. Communications should be devised by marketers in such a way that

it (1) offer consistent messages about their products and (2) are placed in media that

consumers in the target market are likely to use (Munusamy and Hoo, 2008).

Promotion is a selling technique; to succeed in any marketing program, it should be

involved with communication (promotion). Promotion is very important as it provides

information, advice, and it persuades the target market. It guides and teaches the

customer to take action at a specific time and how they can use the product and get

beneficial result from it. The product advertisement can be delivered by individual

sales people, T.V, radio, internet, magazine, press, and all types of media.

Personnel factor refers to the service employees who produce and deliver the

service. It has long been a fact that many services involve personal interactions

between customers and the site's employees, and they strongly influence the

customers perception of service quality (Hartline and Ferrell, 1996: Rust, Zahorik

13

and Keiningham, 1996). Personnel are keys to the delivery of service to customers. In

addition, according to Magrath (1986) customers normally link the traits of service to

the firm they work for. Personnel are also considered as the key element in a customer

centered organization as well as a way to differentiate variables with product,

services, channel, and image (Kotler, 2000). Achievement of a customer-orientation is

not possible if there is no cooperation coming from the personnel (Judd, 2001). The

interaction is important because it influences customer perception. In other words, the

actions of all the personnel normally influence success of action and function of an

organization and with more communication, training, skills, learning, and advice they

will achieve to display the optimum value of the product and the company.

Process is generally defined as the implementation of action and function that

increases value for products with low cost and high advantage to customer and is

more important for service than for goods. According to Hirankitti et al., (2009) the

pace of the process as well as the skill of the service providers are clearly revealed to

the customer and it forms the basis of his or her satisfaction with the purchase.

Therefore, process management ensures the availability and consistence of quality. In

the face of simultaneous consumption and production of the process management,

balancing services demand with service supply is extremely difficult (Magrath, 1986).

The design and the implementation of product elements are crucial to the creation and

delivering of product.

Physical Evidence factor refers to the environment in which the service and any

tangible goods that facilitate the performance and communication of the service are

delivered. This holds great importance because the customer normally judges the

quality of the service provided through it (Rafiq & Ahmed, 1995). In addition,

according to Mittal and Baker (1998), this factor also refers to the environment in

which the services production is in. Similarly, Bitner (1990) adds that other visible

surroundings can affect the impressions perceived by the customers about service

quality. The components of the service experience are called the services-cape-that

is, the ambience, the background music, the comfort of the seating, and the physical

layout of the service facility, the appearance of the staff can greatly affect a

customers satisfaction with a service experience (Rust, Zahorik and Keiningham,

1996). The environmental dcor and design also significantly influence the customers

expectations of the service (Shostack, 1977). Services normally cannot be displayed,

14

therefore firms should create a suitable environment to highlight the fact to the

customers (Rathmell, 1974).

2.1.2 Service quality

For a long time, the scholars at home and abroad have deeply researched the

relationship among the service quality, customer satisfaction and loyalty. The service

quality is a kind of general experience that the customers feeling for the service

provided by the enterprises.

In service quality literature the first model to measure service quality was

presented by Gronroos (1984). Gronroos (1984, p. 27) stated that a service is an

activity or series of activities of more or less intangible nature that normally, but not

necessarily, take place in interactions between the customer and service employees

and /or systems of the service provider which are provided as solutions to customer

problems.

Gronroos used a two-dimensional model to study the quality of service. The first

dimension was technical-quality, by which the outcome of service performance was

meant. The second dimension was functional-quality, meaning subjective

perceptions of how service is delivered. Functional quality reflects consumers

perceptions of their interactions with the service providers. The model of Gronroos

compares the two dimensions of service performance with the expectations of

customers. Groonroos general conclusion was that each single customer has its own

single perception of the quality of a service

A few years later, reserachers Parasuraman et al (1985) defined service quality as:

customer perceived service quality as a global judgment or attitude related to the

superiority of a service relative to competing offerings. Based on this

conceptualization they proposed a model for measuring the quality of services, which

is called the SERVQUAL model. Parasuraman and his research team tests develop

and refine a scale for measuring service quality as perceived by customers by five

dimensions led to SERVQUAL. The first and second parts of SERVQUAL measures

customers expectations and perceptions respectively along different kinds of service

attributes grouped into five dimensions; Parasuraman (2004) defines these five

dimensions as the following: reliability, responsiveness, assurance, empathic,

tangibility.

15

Reliability: Ability to perform the service dependably and accurately. For example

the consistency in meeting service promises which could include keeping schedules or

appointment times, completing tasks on time, ensuring that outcomes are met

(Gabbott et al 2006, 189.) Reliability covers such things as being efficient in check-in

process, showing on time performance for scheduled flights and performing service

right the first time.

Responsiveness: Willingness to assist customers. This refers to the ability of the

service to respond to individual customer requirements such as specifying delivery

times, altering aspects of the delivery process, and ensuring that customers remain

involved (Gabbott et al 2006, 190.) When employees correct problems immediately

or when they show a willingness to answer customer questions related the flight, the

airline company is demonstrating its responsiveness to the customer.

Assurance: This includes competence, courtesy, credibility and security. This

dimension would include staff training in the use of tools and knowledge of their

service processes, customer interaction, and the perception that the service is

competent and not going to harm anyone. This has also been seen to include brand

names, and reputation (Gabbott et al 2006, 189.) Customers expect a lot from their

selected brand; like knowledgeable and skillful provision of services.

Empathy: This includes access, communication and understanding. This composite

dimension is really about the communication style of the service organization through

its service personnel, its communications including leaflets, instructions, signage and

people management (Gabbott et al 2006, 190.) Talking to customers in language they

can understand, and making an effort to understand the needs of the customers (Mill

2001, 151).

Tangibles: Appearance of physical facilities, equipment, and personnel. The elements

of the service environment impact upon perceived service quality for instance

cleanliness of premises, staff appearance and the appropriateness of things like decor,

seats and on board facilities.

The idea behind the SERVQUAL model (Parasuraman et al, 1988) is that a service

provider tests his service quality by using several statements about the five predictors

of service quality. Eventually possible gaps between expected and delivered service

quality could be identified. There are five possible gaps:

16

Gap 1-between consumer expectation and management perception

Gap 2-between management perception and service quality specification

Gap 3-between service quality specification and service delivery

Gap 4-between service delivery and external communication

Gap 5-between expected service and experienced service

Recent studies confirm the findings of Parasuraman et al (1988). For example

Cavana et al (2007) and Zeithalm, Wilson and Bitner (2008) confirm the findings. In

the view of Ziethalm et al (2008) only without one exception, service quality is also

predicted by the convenience a customer experiences. Cavana et al (2007)

furthermore stated that conveniece and reliability do not have any significant

relationship with customer satisfaction, while responsiveness, assurance and empathy

have a strong relationship. Kao (2009) suggested that service quality and its

dimensions have a direct bearing on customers evaluation of an organization and the

intentions to choose the service provider. Lai (2004) stated that there is a significantly

positive relationship between the quality of the service and customer satisfaction, as

well as with future purchase intentions of customer.

Several researchers have attempted to apply the SERVQUAL scale developed by

Parasuraman et al. (1985)

Service Quality and Satisfaction for Low Cost Carriers were studied by Ariffin,

Salleh, Norzalita, and Asbudin (2010). The results revealed that caring and tangible

was the most important dimension of service quality for low cost carriers, followed by

reliability,responsiveness, affordability and visual attractiveness. However,

only caring and tangible dimension contribute significantly to the prediction of

satisfaction on the services of low cost carriers.

Passengers Views of Service Quality in Thai Low Cost Carriers were studied by

Somwang (2008) who found the expectations of Thai low cost carriers passengers on

service quality were higher than their perceptions.

Agarwal & Dey (2010) studied the perception of travellers for the six domestic

airlines in India. The perception of Malaysian consumers of the quality of airline

services was examined by Abdullah, Manaf, & Noor (2007) using the SERVQUAL

measurement. The results of the study indicate that the most significant factors in

17

Malaysian customers perception of service quality are Empathy, Tangibles and

Assurance. In addition, the respondents indicated that the airlines surveyed performed

better than expected on the Responsiveness dimension of service quality.

Ling, Lin & Lu (2005) developed an instrument, based on the SERVQUAL

model, to gauge the characteristics of specific cross-strait routes, in order to measure

the service quality, perceived by travellers from Taiwan and Mainland China. The

results indicated that there were significant differences between the perceptions of

Taiwanese and Mainland Chinese travellers related to cross-strait airlines, in all

service attributes.

Huang (2010) sought to improve the understanding of air passengers decision-

making processes by testing a conceptual model that considers service value, airline

service quality, satisfaction, perceived sacrifice, and behavioural intentions. Two

modelling approaches were applied: the structural equation model (SEM) and the

importance-performance analysis (IPA). The SEM results of the study showed that the

service value is the major factor that can influence the behavioural intention. IPA

results indicated that responsiveness is the most important airline service quality

attribute for passengers.

Diggines (2010) conducted a research to gain an understanding of the perceptions

South African passengers have of the low-cost carrier model and the full-service

carrier model and establish how these perceptions relate to choice of airline when

deciding to fly.

Clemes, Gan, Kao, and Choong, (2008) conducted an empirical analysis of

customer satisfaction in international air travel. The study examined which

dimensions had a positive influence on service quality and which dimensions had the

most and least important impact on service quality in international air travel, as

perceived by airline passengers.

2.1.3 Customer Satisfaction

Customer satisfaction is viewed as an important research topic by both

practitioners and academics. From a managerial point of view, customer satisfaction is

the primary source of future revenue and is regarded as the key factor in winning

market share. In the academic field, customer satisfaction has been a popular topic

since the early 1960s, reflected by the constant growth of literature on customer

18

satisfaction. Since satisfaction was introduced as a field of study, a considerable

number of studies have focused on this concept. This is because it is conceived as the

key to business success in todays competitive landscape.

In the contemporary global and highly competitive economy, it is fatal for a

business organization to be non-customer-oriented. Indeed to survive organizations

need to produce products and services of very good quality that yield highly satisfied

and loyal customers (Fecikova, 2004). For many years customer satisfaction has been

a major goal of business organizations, since it has been deemed to affect customer

retention and companies market share (Hansemark and Albinsson, 2004).

Traditionally, satisfied customers have been thought of as less price sensitive and less

influenced by competitors, buying additional products or services and staying loyal

longer (Zineldin, 2000).

Marketing literature has focus on improvement of customer satisfaction.

Satisfaction is defined by different studies in different ways. Customer satisfaction is

defined as overall affective response to a perceived discrepancy between prior

expectation and perceived performance after consumption (Oliver, 1980). Later,

Oliver (1981) also defined satisfaction as an emotional post-consumption response for

comparing expected and actual performance. Although satisfaction has been defined

as the difference between expectation and performance, but there are differences

between quality and satisfaction. Such as, Parasuraman et al. (1991) say that

satisfaction is a decision made after experience while quality is not the same. Fornell

(1992) defined satisfaction as an overall evaluation dependent on the total purchase

and consumption experience of the target product or service performance compared

with repurchase expectations over time. Rust and Oliver (1994) defined satisfaction as

the customers fulfillment response which is an evaluation as well as an emotion-

based response to a service. Customer satisfaction is determined by defining customer

perceptions of quality, expectations and preferences (Barsky, 1995, Ch. 2). Oliver

(1997, 1999) reviewed satisfaction as pleasurable fulfillment which is sensed by

customers in the consumption. It means that the consumer senses that consumption

fulfills some need, desire, goal, or so forth and that this fulfillment is pleasurable

(Oliver, 1999, p.34).Primarily referred to as a function of pre-travel expectations and

post travel experience (Reisinger and Turner, 2003). Customer satisfaction is defined

as a customers overall evaluation of the performance of an offering to date

19

(Gustafsson, Johnson, and Roos, 2005). Chen (2008) defining customer satisfaction

stated that it pertains to a holistic evaluation after a service delivery experience, and

acts as a consequence of satisfaction with individual attributes. Wang, Zhang, Gu, and

Zhen (2009) defined tourist satisfaction as a feeling generated both by cognitive and

emotional aspects of tourism activities as well as an accumulated evaluation of

various components and features of the destination.

Satisfaction can be obtained because of what was expected. If the supply of a firm

were according to expectations of customers, they would be satisfied. The amount of

high and low satisfaction depends upon the level of supply that meets the level of

expectation or fall above/below to that level (Gerpott, Rams & Schindler, 2001).

Satisfaction of customer is used for indication of future possible revenue (Hauser,

Simester & Wernerfelt, 1994).Customer satisfaction is the necessary foundation for

the company to retain the existing customers (Guo, Xiao & Tang, 2009). The

customers who are unsatisfied with the received services would not be expected to

have long run relationships with the company (Lin & Wu, 2011). Poor services can

also cause to dissatisfaction. Like Inherently poor services or satisfactory level of

services, which cannot achieve customer, expectation may be cause of dissatisfaction

in customers (Rust & Zahorik, 1993). Variation in the quality and value of products

and services provided to customer creates variation in customer satisfaction and that

create variation in customer loyalty (Auh & Johnson, 2005). According to (Anderson,

1994) customer satisfaction is used to measure company performance at both

internally to compensate human resource, observe performance and assign funds as

well as for externally the satisfied customer is also source of information for all stake

holders ( customers, public policy makers competitors and investors).

For developing customer satisfaction, reliability in the providing of services and

commitment to service relationships a company must attempt to increase customers

future expectations (Lin & Wu, 2011). According to Rust and Zahorik (1993)

customer satisfaction has direct impact on loyalty. Auh and Johnson (2005) Argued

that there are strong relationships between satisfaction and loyalty. Similarly, Bodet

(2008) confirmed the relationship between customer satisfaction and customer loyalty.

Shankar, Smith and Rangaswamy (2003) also provide evidence that there is positively

relationship between satisfaction and loyalty. As Kim, Jeong, Park, Park, Kim, and

Kim (2007) stated that customer satisfaction has impact on customer loyalty. Vesel

20

and Zabkar (2009) provide evidence that customer satisfaction is one of the

significant determinants of customer loyalty. Hallowell (1996) also support that

satisfaction and loyalty are related to one another. Satisfaction is traditionally

considered as an overall affective response resulting from the use of a product or

service (Oliver 1981). It is believed to have a direct influence on customer loyalty

(Mittal and Lassar, 1998; Oliver, 1997) and repurchase behaviors (Kumar, 2002;

Mittal and Kamakura, 2001). There also are many researchers agree on a direct effect

of satisfaction on loyalty but some other researchers have focused more on identifying

moderators or mediators of the effect of satisfaction on loyalty (Abdullah et al; 2000).

Bloemer and Lemmink (1992) examined the assumed positive influence of customer

satisfaction on loyalty in a car sales context.

On another hand, customer satisfaction articles several authors show empirical

evidence for the relationship of customer satisfaction with customer loyalty (Yu &

Dean, 2001; Heskett et al, 1997; Rauyruen et al, 2007). Henkel et al (2006) found that

customers who are satisfied with a service provided are intent to increase the usage

and purchase in future times. Parasuraman, Zeithalm and Berry (1988) and Naeem

and Saif (2009) found that customer satisfaction is the outcome of service quality and

several researches have been done on the relation between service quality and

satisfaction: findings of some of these researches show that satisfaction results in

service quality (Parasuraman et al., 1988). Also, the research conducted by

Sureshchandar et al. (2002) shows that there is a two-way relation between

satisfaction and service quality.

Customer satisfaction is an important element in service delivery because

understanding and satisfying customers needs and wants can generate increased

market share from repeating customers and referrals (Barsky, 1992). Therefore, it has

a significant effect on future purchase intentions (Cronin and Taylor, 1992;

McAlexander et al., 1994) and on the formation of customer loyalty. There also are

some previous research suggests that customer satisfaction can influence customer

loyalty and future purchase intentions (Abdullah et al., 2000). Several authors have

suggests that it is the most important element of customer loyalty (Anderson and

Fornell, 1994; Cronin and Taylor, 1992; Fornell, 1992; Oliva et al., 1992; Oliver and

Linda, 1980; Reichheld, 1993).

21

2.1.4 Customer loyalty

Loyalty in air sector depends on fulfilling completely the needs of customers in

order to attract them. There are two types of customers, the ones who are loyal to the

low-cost airline concept, and the ones who continue to prefer the traditional flag

carriers. For airlines, Customer loyalty is the most important goal of implementing

relationship marketing activities. Customer loyalty has been largely studied in

consumer and service market context. Oliver (1997, p.392) defined customer loyalty

as a deeply held commitment to rebury or repatronize a preferred product or service

consistently in the future. But a common used definition is given by customer loyalty

pioneers Dick & Basu (1994): Customer loyalty is viewed as the strength of the

relationship between an individual's relative attitude and repeat patronage (Dick and

Basu, 1994, p 16). Dick and Basu (1994) pointed out that customer loyalty is not only

a behavioral phenomenon, besides the behavior aspects, loyalty refers to the attitude

of a customer. Garland and Gendall (2004) tested the framework of Dick and Basu

and they confirmed their typologies. They stated that both attitude and behavior are

important determinants of customer loyalty. In line with Dick and Basu (1994),

Rauyruen, Miller and Barrett (2007) stated that there are two fields of research in

customer loyalty: behavioral loyalty and attitudinal loyalty. Where behavior loyalty is

focusing on the patterns of repeat purchasing and attitudinal loyalty is focusing on the

willingness to recommend a product or service and the positive word of mouth.

The behavioral perspective, purchase loyalty, strictly looks at repeat purchase

behavior and is based on the customer's purchase history. The emphasis is on past -

rather than on-future actions. Moreover, no other loyal behavioral actions such as

price tolerance, word of mouth, or complaint behavior can be interpreted (Zins, 2001).

Concentrating on the behavioral aspect of loyalty could overestimate true loyalty

(Zins, 2001). On another hand, the attitudinal perspective, in contrast, allows gain in

supplemental understanding of loyal behavior (Zins, 2001). The customer loyalty is

approached as an attitudinal construct. An Attitude denotes the degree to which a

consumer's disposition towards a service is favorably inclined. This inclination is

reflected by activities such as the customers recommending service providers to other

consumers or their commitment to repatronize a preferred service provider (Gremler

& Brown, 1996). Based on a favorable attitude towards a service provider, customers

may develop preference loyalty (De Ruyter, Wetzels & Bloemer, 1998).

22

The principal antecedents of loyalty that have been identified are satisfaction,

(Singh and Sirdeshmukh, 2000). Satisfaction has been considered as the principal

postulate of loyalty meaning that if customers are completely satisfied it leads us to

conclude that they will be loyal. As a consequence of these experiences, when the

level of satisfaction is low, the customers level of loyalty to the airline will suffer.

When the consumer experiences an increase in satisfaction, his loyalty also increases.

Therefore, it can be concluded that the users' satisfaction with an airline is directly

influenced by users satisfaction in general.

In general, increases profit and growth in many ways (Chow and Reed 1997;

Heskett et al. 1994) to the extent that increasing the percentage of loyal customers by

as little as 5% can increase profitability by as much as 30% to 85%, depending upon

the industry involved (Reichheld and Sasser 1990)

Customer loyalty deals with customer intentions to do more business with the

vendor and to recommend that vendor to other customers (Zeithaml et al. 1996). One

way of increasing customer loyalty, suggested by case studies (e.g., Heskett et al.

1994) and by survey research (e.g., Shankar et al. 2000; Zeithaml et al. 1996) is

through superior service quality. Since quality service is something that customers

typically want and value, providing high quality service should arguably increase their

willingness to come back and do more business with the vendor. Conversely,

customers who experience low service quality will be more inclined to defect to other

vendors because they are not getting what they expect (Heskett et al. 1994; Reichheld

and Sasser 1990; Reichheld and Schefter 2000; Watson et al. 1998). Research indeed

shows that in many traditional companies, perceived service quality as measured by

adapted SERVQUAL scales, strongly and directly influences customer loyalty

(Zeithaml et al. 1996).

Several authors have advocated the importance of customer loyalty to the future

stability and growth of any organization (Parvez, 2005; Calik and Balta, 2006;

Tsoukatos and Rand, 2006; McMullan and Gilmore, 2008). Benefits of CL include

reducing the initial cost of introducing and attracting new customers, positive word of

mouth, increases in the number of purchases, and increases in the value of purchases.

In marketing theory, customer satisfaction acts as an antecedent to customer loyalty

(Zeithaml et al., 1996; Anderson and Sullivan, 1993; Kim et al., 2004; Xu et al., 2006;

Zulganef, 2006; Chadha and Kapoor, 2009; Ee Ling and De Run, 2009). A multitude

23

of scientific articles in the Low-cost airline service industry has found that customer

satisfaction is a major driver of customer loyalty Aydin et al., 2005; Aydin and Ozer,

2006; Lim et al., 2006, Kuusik and Varblane, 2009).

2.2 Conceptual Framework

Figure 2.2.1 Conceptual framework

2.3 Research Hypotheses

Yelkur (2000) found that the critical elements in the services marketing mix

influence and positively effects customer satisfaction. Yayla (2007) find marketing

mix to have a positive effect on satisfaction and loyalty on word of mouth

communication from accounting offices in Turkey. Therefore the result of our study

supported the argument that there is a positive correlation between the marketing mix

and passenger satisfaction. So from the above mentioned model and previous research

Marketing mix Product Price Place Promotion People Process Physical Evidence

Service quality Tangibility Reliability Empathic Assurance Responsiveness

Customer

satisfaction

H1 H2

Customer loyalty Behavioral Attitudinal

H3

H4

24

the hypotheses are developed as follow

H1: The marketing mix factors influences on customer satisfaction in the Thailand

low-cost airline industry.

From the previous research, Kao (2009) suggested that service quality and its

dimensions have a direct bearing on customers evaluation of an organization and the

intentions to choose the service provider. Lai (2004) stated that there is a significantly

positive relationship between the quality of the service and customer satisfaction, as

well as with future purchase intentions of customer. From the above mentioned model

and previous research the hypotheses are developed as follow:

H2: The service quality factors influences on customer satisfaction in the Thailand

low-cost airline industry.

Research indeed shows that in many traditional companies, perceived service

quality as measured by adapted SERVQUAL scales, strongly and directly influences

customer loyalty (Zeithaml et al. 1996). One way of increasing customer loyalty,

suggested by case studies (e.g., Heskett et al. 1994) and by survey research (e.g.,

Shankar et al. 2000; Zeithaml et al. 1996) is through superior service quality.

Therefore the result of previous study supported the argument that service quality

factors influences on customer loyalty. So in this study the hypotheses are developed

as follow:

H3: The service quality factors influences on customer loyalty in the Thailand

low-cost airline industry.

According to Rust and Zahorik (1993) customer satisfaction has direct impact on

loyalty. Auh and Johnson (2005) Argued that there are strong relationships between

satisfaction and loyalty. Similarly, Bodet (2008) confirmed the relationship between

customer satisfaction and customer loyalty. Shankar, Smith and Rangaswamy (2003)

also provide evidence that there is positively relationship between satisfaction and

loyalty. Thus, in this study, from the above mentioned model and previous research

the hypotheses are developed as follow:

H4: The customer satisfaction factor influences on customer loyalty in the

Thailand low-cost airline industry.

CHAPTER 3

RESEARCH METHODOLOGY

This chapter presents the methodology approach of collecting and interpreting

data of this study. The topics are as following:

3.1 Research Design

3.2 Population and Sample

3.3 Variables of the Research

3.4 Research Instrumentation

3.5 Data Collection

3.6 Data Analysis

3.7 Reliability Analysis

26

3.1 Research Design

This study investigates how is the marketing mix, service quality and passenger

satisfaction effect on low-cost airline passenger loyalty. It also explains the

relationship among these factors. Hence, in this study would use quantitative research

methodology for examining a model of the low-cost airline passenger loyalty. And the

survey research will be through distributed questionnaire to low-cost airline passenger

in Don Mueang international airport to collect data. After that use the multiple

regression analysis to analysis the result and examine the relationship among above

factors.

3.2 Population and Sample

The main purpose of this article is to study the low-cost airline passenger loyalty.

Therefore, the target population in this study is selected as the low-cost airline

passenger in Bangkok, Thailand. Because the population could not be clearly

identified, for the size of sample group in this study would be through the Cochrans

formula (1977) to select. The accepted standard is confidence level at 95% and

allowable error at 5%. Hence, the size of the sample group is calculated as following:

n = Z2 / 4e2

n = size of the sample group

Z = confidence level at 95% (= 0.05)

e = probability of error at 5%

n = 1.962 / 4 * 0.052

n = 384.16

From the calculation, the result of the sample size is 384.16, basing on the

confidence level at 95% and probability of error is 5%. Therefore, the size of sample

group set in 384 samples who extraction from the population.

27

3.3 Variables of the research

The variable of the research in this study includes two parts: dependent variable

and independent variable.

3.3.1 The dependent variables

Dependent variables: customer satisfaction, customer loyalty, and the two measure

variables: behavioral and attitudinal were measured by using one item that required

responds on a five-point Likert-scale where 1= the least favorable responds

alternative (Highly dissatisfied/never recommended etc.) and 5= the most favorable

response alternative (very satisfied/strongly recommend etc.)

3.3.2 The independent Variable

Independent variable: marketing mix and the seven measures variables: product,

price, place, promotion, people, process and physical evidence. Service quality and

the five measure variables: reliability, responsiveness, assurance, empathic and

tangibility. Those were measured by using one item that required responds on a five-

point Likert-scale where 1= the least favorable responds alternative (Highly

dissatisfied/never recommended etc.) and 5= the most favorable response

alternative (very satisfied/strongly recommend etc.)

3.4 Research Instrumentation

In this study, the research instrument use for collecting data is the questions of

loyalty level of the passengers. It composes five parts:

Part 1 General background information sampling consisted of question about

gender, nationality, marital status, the level of education, income, flying frequency

and flying experience.

Part 2 Question about the marketing mix

In this part of the study, the marketing mix is a business tool used in marketing.

The service marketing mix consists of 7 Ps (Product, Price, Place, Promotion, People,

Physical Evidence, Process) compared to the 4 Ps (Product, Price, Place, Promotion)

of a product marketing mix (Rafiq, M., & Ahmed, P. K. 1992). Thus, there are totally

21 items be described in the questionnaire.

28

Part 3 Question about the service quality

In this part study, Parasuraman and his research team test, develop and refine a

scale for measuring service quality as perceived by customers by five dimension led

to SERVQUAL. Parasuraman (2004) defines these five dimensions as the following:

Reliability, responsiveness, assurance, empathy and tangibles. Thus, there are 15

items be described in the questionnaire.

Part 4 Question about the passenger satisfaction

In this study the passenger satisfaction is measure by four items which describe in

the questionnaire.

Part 5 Question about the passenger loyalty

In this part study, There are two dimensions to customer loyalty: behavioral and

attitudinal (Julander et al, 1997). Thus, there are totally eight items be described in the

questionnaire.

3.5 Data Collection

The questionnaire will be translated into Thai-language and English two versions

in order to facilitate the respondent. The questionnaires are directed from 384 low-

cost airline passengers in Don Mueang international airport. And the data collection

time from December, 2012 to January, 2013. After that all data will classify input

computer waiting for analysis.

3.6 Data Analysis

The five-point Likert scale will be used to measure the each variable in this study.

The interval of range in measuring each variable calculated from weak to strong as

following:

= (highest point lowest point) / scale point

= (5 1) / 5

= 0.80

It means the interval value between each level is 0.8, the items with the interval value

29

have been declining. The scale ranges are:

4.21 5.00 are considered as most agreement

3.41 4.20 are considered as high agreement

2.61 3.40 are considered as neutral

1.81 2.60 are considered as high disagreement

1.00 1.80 are considered as most disagreement

The researcher analysis the data collection by questionnaire then compare with

above scale ranges. Before that, using the statistical program to analysis then obtain

the result as mean and percentage. Afterwards, use descriptive statistics to analysis

part 1 (the personal information), then analysis the relationship between dependent

variables (passenger satisfaction and passenger loyalty) and independent variables

(marketing mix and service quality) by multiple linear regression.

3.7 Reliability Analysis

Reliability is an extent to which a scale produces consistent results, and is a scale

to measure the quality of an important indicator, the analysis on reliability is called

reliability analysis (Armor, 1974). Many researchers through the exam test or

questionnaire survey form to measure the research object of knowledge, ability,

personality, interest and the quality. Both papers and questionnaire form of

measurement tools, they are made by some test item consisting of the scale. Use

reliability make of scale can achieve more accurate, stable test results. Reliability

analysis has four different approaches, there is Test-retest, internal consistency

reliability, split half reliability and inter rater reliability. Internal consistency was use

in this thesis. In addition, it use Cronbachs alpha model. Internal consistency

reliability coefficient, the most popular form is Cronbachs alpha.

Cronbachs Alpha method is applied to calculate the reliability of measurement

tool e.g. questionnaire or tests which measure different characteristics. According to

Jamal & Naser (2002) a tool with Cronbachs Alpha greater than the minimum

quantity level 0.7 suggested by Nunnally (1987) is considered reasonable from

reliability aspect. Therefore, the researcher chosen 30 samples to do the pretest before

test all the 384 samples. However, the results of the coefficients calculated by using

30

Cronbachs alpha score are show as follows:

Table 3.7.1 Reliability test using Cronbachs alpha

Variable Pre-test Main empirical

Marketing Mix

Product 0.777 0.803

Price 0.703 0.860

Place 0.788 0.770

Promotion 0.759 0.811

People 0.875 0.808

Process 0.774 0.795

Physical Evidence 0.903 0.866

Service quality

Tangible 0.722 0.737

Assurance 0.959 0.882

Empathy 0.823 0.707

Responsiveness 0.932 0.847

Reliability 0.897 0.830

Customer satisfaction

Customer satisfaction 0.891 0.894

Customer loyalty

Attitudinal 0.947 0.906

Behavioral 0.938 0.916

From the table, reliability of the variable was shown the Cronbachs Alpha score

of pre-test and actual value of all variables. The questionnaire was from the

conceptual framework of the thesis. It included four Variable Marketing Mix, Service

quality, Customer satisfaction and Customer loyalty.

The Marketing Mix included 7 variables, which are product, price, promotion,

people, process, and physical evidence. The service quality factors have 5 variables,

which is tangible, assurance, empathy, responsiveness, reliability. The third is

satisfaction factor and last one is customer loyalty. For Pre-test score was from 30 sets

of the questionnaire that the researcher collected from the customers and collected

data again from 384 questionnaires by respondents. The result as the following:

1. The pre-test value of product is 0.777 and the actual value is 0.803. Second,

the value of price is 0.703 for pre-test value and 0.860 for actual value. Third, the

value of place is 0.788 for pre-test value and 0.770 for actual value. Fourth, the value

of promotion is 0.759 for pre-test value and 0.811 for actual value. Fifth, the value of

31

people is 0.875for pre-test value and 0.808 for actual value. Sixth the value of process

is 0.774 for pre-test value and 0.795 for actual value. The last value of price is 0.903

for pre-test value and 0.866 for actual value

2. There are the Cronbachs Alpha score for tangible at 0.772 for re-test and

0.737 for actual value. The second variable is assurance, it shown the re-test value is

0.959 and the actual value is 0.882. Third, the pre-test value of empathy is 0.823 and

0.707 for actual. Fourth, the pre-test value and actual value of responsiveness is 0.932

and 0.847. The last one is reliability, it shown the pre-test is 0.897 and 0.830 for

actual value.

3. The pre-test of customer satisfaction is 0.891 and 0.894 for actual value.

4. First, the re-test is 0.947 and actual value is 0.906 of Attitudinal. Second,

the pre-test value of Behavioral is 0.938and actual value is 0.916.

The reliability score is used to each variable of the questionnaire. If the value

equal or more than 0.7 score, it means the question is have reliability or respect. All

the pre-test value and actual value of all variables are more than 0.7.

CHAPTER 4

DATA ANALYSIS AND RESULTS

Information analysis is considered to be the most important part of the research

process. This chapter presents the data that has been collected through quantitative

survey. Detailed information acquired from the questionnaire survey is presented and

discussed in order to prove the research objective. The researcher used the descriptive

statistics to explain the demographic characteristics by presenting the frequency and

the percentage. Use inferential statistics to analysis the dependent variable by

Multiple Regression. The researcher has directly distributed to 384 respondents in

Don Mueang international airport Bangkok, Thailand to cover the objective of the

study. The result from the respondents has consists in 3 parts as follows:

4.1 The result of Customers Background Information

4.2 Level of Agreement Analysis

4.3 Analysis and Results of Hypotheses

4.3.1 Relationship between Marketing Mix Factors and customer satisfaction

4.3.2 Relationship between Service quality Factors and customer satisfaction

4.3.3 Relationship between Service quality Factors and customer loyalty

4.3.4 Relationship between Customer Satisfaction factor and customer loyalty

33

4.1 The result of customers background information

Data in this part have been organized into different types according to the

distinctive characteristics of the variables under consideration. The data are presented

in term of number and percentage of respondents as below:

Table 4.1.1 Numbers and Percentage of Respondents by Characteristics

n = 384

Item Characteristic detail No. of respondents Percentage

1 Gender

Male 206 53.6

Female 178 46.4

Total 384 100.0

2 Nationality

Thai 322 83.9

Foreigner 62 16.1

Total 384 100.0

3 Education

Diploma or lower 35 9.1

Bachelor degree 245 63.8

Master degree 89 23.2

Doctor degree or higher 15 3.9

Total 384 100.0

4 Occupation

Teacher or professor 29 7.6

Government officer 70 18.2

General employee 137 35.7

Tourist 38 9.9

Student 31 8.1

Business man 63 16.4

Other 16 4.2

Total 384 100.0

5 Income

20,000 Baht or Less than 91 23.7

20,001-50,000 Baht 193 50.3

50,001-100,000 Baht 72 18.8

More than 100,000 Baht 28 7.2

34

Total 384 100.0

6 Flight frequency

1-2 times per year 119 31

3-5 times per year 119 31

More than 5 times per year 146 38

Total 384 100.0

7 Airlines

Thai Air Asia 160 41.7

Nok Air 202 52.6

Orient Thai airline 22 5.7

Total 384 100.0

The demographic detail of the 384 respondent was divided into two parts which

are: number of respondents and percentage. From Table 4.1.1, there are 7 main items

were considered in the statistic, which are gender, nationality, education, occupation,

income flight frequency and airlines.

Figure 4.1.1 Survey participants profile by gender

The gender are including male and female. There are total 206 respondents are

male and the percent is 53.6% and 178 respondents were female, the percent is 46.4%.

The proportion of each group is almost balance.

0%

54%

46%

Gender

Male Female

35

Figure 4.1.2 Survey participants profile by nationality

In the nationality category have 2 groups, Thai nationality group have 322

respondents or 83.9%, and the foreigner group is about 16.1%.

Figure 4.1.3 Survey participants profile by education level

In the education group, the majority of educations respondents are bachelor degree

has 245 respondents or 63.8%, the second are the master degree has 89 respondents,

which distributed as 23.2%, and there were 35 respondents were in the group in the

0%

84%

16%

Nationality

Thai Foreigner

0%

9%

64%

23%

4%

Education

Diploma or lower Bachelor degree

Master degree Doctor degree or higher

36

group of diploma or lower, or distributed as 9.1%. The last group was doctor degree

or higher group, which were15 respondents or distributed as 3.9%.

Figure 4.1.4 Survey participants profile by occupation

For the occupation item, there were 7 kinds of different occupations, such as

teacher or professors, government officer, general employee, tourist, student, business

man and others. Most occupation of respondents is general employee 35.7% and

18.2% of government officer, and for the business man there are 63 respondents

which with 16.4%, the group of tourist there were 38 respondents or 9.9%, and the

group of teacher or professor and student are 7.6 and 8.1%, and the last one is the

people who were not in the 6 groups before, there are 16 persons not into the six

groups before.

0% 8%

18%

36% 10%

8%

16% 4%

Occupation

Teacher or professor Government officer

General employee Tourist

Student Business man

Other

37

Figure 4.1.5 Survey participants profile by income status

In the Income group, respondent majority in the group of respondent is between

20,001-50,000 Baht about 50.3% and second group is 20,000 Baht or Less than about

17.5%, there are 72 respondents which about 18.8% in the group who has income

between 50,001-100,000 Baht, and the last group is who has income more than

100,000 Baht, in this group there were just only 20 person, which as 7.2% of

respondents.

Figure 4.1.6 Survey participants profile by flight frequency

The flight frequency is including 3 groups, they are 1-2 times per year, 3-5 times

0%

24%

50%

19%

7%

Income

20,000 Bath or Less than 20,001-50,000 Bath

50,001-100,000 Bath -More than 100,000 Bath

0%

31%

31%

38%

Flight frequency

1-2 times 3-5 times More than 5 times

38

per year, and more than 5 times per year. The large group is respondents family are

more than 5 times about 38% and the group 1-2 times and 3-5 times have the same

respondents about 119 respondents.

Figure 4.1.7 Survey participants profile by airlines

The airline is the last item of demographic. There are three groups of the airlines.

52.65 % of persons choose the Nok air as they travel transport agent, and 160 persons

choose fly with Thai Air Asia. The others ride with Orient Thai airline about 5.7%.

4.2 Level of agreement analysis

The level of agreement of respondent about affect low-cost airline passenger

satisfaction and loyalty with the independent variable marketing mix factors, service

quality factors and the dependent variable passenger satisfaction and loyalty were

presented in the table 4.2.1 to table 4.2.4.

From the table 4.2.1, the marketing mix factors had the means 3.76080 and

standard deviation as 0.49115 and it was distributed to 7 items, they were Product,

Price, Place, Promotion, People, Process and Physical Evidence. Product had the

means as 3.82990 and standard deviation as 0.59637, which was considered as agree

level.

0%

42%

52%

6%

Airlines

Thai Air Asia Nok Air