Essay: determinant variables of loyalty in an university-stakeholder setting

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2.1. Introduction

As stated in the previous chapter, this study aims to uncover and validate determinant variables of loyalty in an university-stakeholder setting. As a knowledge institute, Fontys has the unique position to offer services that are beneficial to their own customers (students), but may simultaneously also be beneficial to others. In return, those who benefit from these services might create a positive attitude towards the Fontys which in time may lead to loyalty. Loyalty (2.2), in this study, will be comprised out of two elements knowingly: attitudinal loyalty and behavioural loyalty. The higher the attitudinal loyalty the more likely it will be that the stakeholder will speak positively about Fontys or will recommend working with the Fontys to colleagues or friends. The higher the behavioural loyalty, the more likely it is that individuals or organisations are willing to participate more often in the future, or may even consider enrolling in a study programme at Fontys. Even though there is an extensive amount of research on loyalty available, at this point, it is unknown what determinant factors for loyalty are in the particular context of this study. Therefore, an extensive literature study has been conducted by the author in order to uncover potential variables that could have a significant impact on loyalty. Simultaneously, the relationship between Fontys and its stakeholders has been analysed. During this process, critical interaction points have been identified which have formed the boundaries of this study. More information about this analysis can be found in appendix 2. As a result, the scientific part of this study will be comprised out of four different constructs. In order to ensure the managerial relevance, additional statements have been included in this research and will be discussed in appendix C: the management report.

2.1.1. Scientific relevance

When we take a closer look at the relationship between Fontys and its stakeholders the most prominent representatives of the Fontys are its students and their coaches. Therefore, there is believed that the rating a stakeholder will give to the experience they have had with students and coaches is an important antecedent of loyalty. In this study, this rating will be captured under the variable satisfaction (2.3). Furthermore, the perceived quality of the delivered service is deemed to be an important antecedent of loyalty as well. Because the service that Fontys provides is so diverse , quality can manifest itself in many different aspects. In order to cover all of these aspects, the service quality will be measured based on the five dimensions (reliability, empathy, assurance, responsiveness and tangibles) of the SERVPERF model (2.4). Besides satisfaction and perceived service quality, reputation (2.5) will also be taken into account. It is believed that the reputation of an organisation could play a role in the formation of attitudes and therefore influence loyal behaviour. Reputation could be seen as an extrinsic form of motivation; whereas, commitment (2.6) focusses on intrinsic motivation such economic benefits, perceived forms of obligations and affective aspects that could motivate. As can be seen in table 2.1, each of the four constructs of this research study represents a specific situation or encounter which could lead to the increase of loyalty.

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2.1.2. Managerial relevance

In order to ensure the managerial relevance, stakeholders have also been asked to indicate the extent to which they would find interesting to work more often with Fontys. Also, explorative qualitative research pointed out that stakeholders also have needs in which Fontys possibly could provide. Since the aim of this research is to create input for a loyalty programme which can be used among stakeholders, this study will also pay attention to the mediating effects of distance and the number of times that a stakeholder has come into contact with Fontys. More information about the managerial part of this study can be found in appendix C.

The variables loyalty, satisfaction, service quality, reputation and commitment will be discussed thoroughly in the following paragraphs of this report. Figure 2.1 illustrates the conceptual model of this study and the relationships that are proposed.

Figure 2.1. Conceptual Model

2.2. Loyalty

In the past, much research studies have been performed on the topic loyalty. Due through globalisation and the intensifying of competition organisation are evolving defensive strategies to maintain their current position. Loyalty is considered to be one of the key variables when it comes to developing these defensive strategies. Retaining current customers cost considerably less effort than the acquisition of new ones. In line with paying more attention to relationships, Tuominen (1995) suggested that an organisation needs to develop efficient long-term relationships with stakeholders. Tuominen also suggested that organisations need to attempt to move stakeholders up the “ladder of stakeholder loyalty” (Tuominen, 1995) whereby existing relationships with stakeholders gets strengthened.

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2.2.1. Definition of loyalty

Over the years, there have been many definitions of loyalty. Loyalty could be defined as “a deeply held commitment to either re-buy or re-patronize a preferred product or service consistently in the future” (Oliver, 1999) , and by doing so causes repetitive brand purchasing, despite situational influences or marketing efforts of potential competitors. According to Beck (2015) loyalty is a customer’s sense of belonging or identification with the product, services or employees of an organisation. These feelings have got a direct impact on the behaviour of that customer. Basu and Dick (1994) argue that loyalty is multi-dimensional. Loyalty does not only indicate whether a customer will make repeat purchases, but also serves as a measure of customer support. Keller (2002) describes loyalty as the fourth and final stage in the Consumer Based Brand Equity (CBBE) model. During this stage, the focus lies around the question whether the consumer is willing to commit to a sustainable relationship. When the consumer is willing to do so, one might speak of real brand-loyalty. The consumer identifies himself greatly with the values of the brand and is willing to invest in a relationship. This can manifest itself in repeat-purchases, a reduction of the susceptibility of information of competitors and the willingness to pay a premium price. Capitulatory, loyalty is a customer’s sense of identification with an organisation or institution. This sense affects repurchase intentions, spending amounts, the possibility to recommend and even the willingness to become a part of a business.

2.2.2. Classification of Loyalty

The construct loyalty can be divided into two distinct dimensions: active and passive loyalty (Ganesh, 2000). Active loyal behaviour requires a conscious and deliberate effort to undertake and are reflected in both purchase behaviour as purchase intentions. Passive loyalty can be identified when purchase behaviour or intentions are affected by changes in the price or switching costs. Kumar and Shah (2006) described two alternative dimensions of loyalty: behavioural and attitudinal loyalty. Behavioural loyalty is associated with the unconscious part of the mind, which encourages behaviour to be consistent in the future (Maroofi, 2012). Wood et al. (2005) found out that the repeated use of a service or product could result in the establishment of deep-founded habitual behaviour, which in time leads to a reduction of effort since the product or service becomes a part of the daily routine. Past research has proven that habits have a significant impact on economic switching barriers (Woisetschläger, 2011; Jones, 2002). The higher the habitual behaviour, the higher the perceived effort deemed necessary to change that particular behaviour.

Attitudinal loyalty refers to the conscious part of the mind. Unlike behavioural loyalty, attitudinal loyalty is rational and planned. In economic terms, a customer who scores high on attitudinal loyalty towards brand A is also willing to be a premium price for it even if brand B would offer the exact same product. This type of loyalty comes forth out of a rational process of the mind. In this study loyalty will be comprised out of attitudinal loyalty (psychological) and behavioural loyalty (substantial element). This study aims to distinguish attitudinal loyalty from behavioural loyalty to examine their differences in relationship with the independent constructs of this study.

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1. Behavioural loyalty metrics

Behavioural loyalty refers to customers who are loyal out of habit. Sometimes switching from one brand to another can cause unforeseen problems. Therefore, stakeholders which score high on behavioural loyalty are more likely to re-purchase or re-patronize the same buying behaviour.In this study, behavioural loyalty will be measured by the following statements:

 The extent to which a stakeholder intents to re-patronize or re-choose previous or additional services provided by Fontys.

 The extent to which a stakeholder prefers working with Fontys above other knowledge institutes (Fontys is first choice).

2. Attitudinal loyalty metrics

Davies (1998), defined attitudinal loyalty as the extent to which someone speaks positively towards its peers about a certain brand or organisation. This phenomenon is called Word-of-Mouth (WOM). Research has pointed out that individuals are more inclined to trust WOM in comparison with formal forms of promotion. It is therefore that the extent to which one speaks positively about a brand or organisation is a strong indicator of attitudinal loyalty (Rajdeep, 2003; Davies, 1998). Parasuraman (1991) stated that recommendations also are an important antecedent of attitudinal loyalty. For these reasons attitudinal loyalty will be measured by the following statements:

 The extent to which a stakeholder intents to speak positively about Fontys.

 The likelihood that stakeholders would recommend the services of Fontys to a friend or colleague.

By operationalizing loyalty in two different dimensions and combining this with the literature of other academic studies, the results are deemed to be more reliable and valid. However, a respondent could score high on one dimension and low on the other one. When this is the case it could be useful to know what the effects of this are on the overall loyalty of that respondent. In order to tackle this, the results from both the attitudinal metrics and behavioural metrics will be combined and plotted in the loyalty –matrix from Walker (2013).

2.2.3. Loyalty Matrix*

Since the Fontys has never conducted any research among stakeholders, the results of this study will be plotted in the loyalty-matrix. By doing so, more insights will be gained for the management of Fontys about the current loyalty situation among stakeholders. More information about the loyalty matrix can be found in appendix C: the management report.

2.3. Satisfaction

Anderson et al. (1994) suggests that that customer satisfaction is both an emotional evaluation and a comparison between “pre-consumption expectation” and the “post-consumption perceived performance”. Due to competition, customer satisfaction has become one of the key elements in the development of business strategies. According to Anderson et al. (1994), customer satisfaction can be divided into two different perspectives. On one side, there is the transaction-specific perspective which proposes that satisfaction is an evaluation of recent purchase experience. On the other side, there is the cumulative perspective which suggests that satisfaction is an evaluation of all past purchase intentions, regardless of the circumstances. When the service performance of an organisation is evaluated, the cumulative perspective is considered to be more effective in predicting customers’ intentions (Khan, 2012). Satisfaction is a concept that can be interpreted in numerous ways. According to Lin (2004) and Homburg (2006) one can be satisfied about the functioning

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(cognitive evaluation) of a service or product, or can be satisfied about emotional (affective evaluation) aspects of a product or service. Cognitive evaluation has been studied mainly in terms of the disconfirmation paradigm, which predicts satisfaction to be a function of a comparison between expectations and performance. Affective evaluation states that affect ( happiness, contempt, joy etc.) experienced during the acquisition or consumption of a product or service also has a significant effect on satisfaction.

Satisfaction is one of the most dominant independent variables in research studies on loyalty. In this study, the stakeholders satisfaction of the consumed service will be measured on cognitive aspects as well as on affective aspects. If the cognitive satisfaction is high, the likelihood that stakeholders will re-patronize their actions is great (behavioural loyalty). If the affective satisfaction is high, this could result in positive word of mouth or recommendations (affective loyalty). In other words, stakeholders satisfaction is deemed to have a positive effect on stakeholders loyalty.

2.3.1. Cognitive Satisfaction

Cognition refers to judgement or evaluation. Judgments are often specific to the intended use application and use the occasion for which the product is purchased, regardless if that use is correct or incorrect. According to Homberg (2006) cognitive satisfaction can be seen as the extent to which a consumer believes that the service was useful and met their expectations. Therefore, cognitive satisfaction will be measured by two positively formulated statements. These statements have been derived from existing literature (Homburg, 2006) and have been made specific based on the results of the explorative qualitative research (appendix B).

 The extent to which stakeholders believe that the results of the service met their expectations.

 The extent to which stakeholder believe that the results of the service were useful to them, and their organisation

2.3.2. Affective Satisfaction

Affect, or emotion, can according to Homburg (2006) best be measured in the context of attitudes. The attitudes consumers can have towards a product or service is the result of any experience that the consumer has with the product or service, regardless of this experience was perceived or real. In this study, affective satisfaction will be measured by two positively formulated statements. These statements have been derived from existing literature (Homburg, 2006) and have been made specific based on the results of the explorative qualitative research (appendix B.

 The extent to which a stakeholder enjoyed the experience of working with student(s).

 The extent to which stakeholders are satisfied with the functioning of the student(s) within their organisation.

2.3.3. Hypothesis 1

The relationship between satisfaction and loyalty has been verified by a lot of independent research in the last decade (Khan, 2012; Bowen, 2001; Sharma, 2001). It is therefore that there is hypothesized that this relationship also is applicable to the relationship between stakeholders’ satisfaction and their loyalty towards the Fontys.

Hypothesis 1: Satisfaction significantly influences loyalty.

Hypothesis 1A: Cognitive satisfaction significantly influences loyalty.

Hypothesis 1B: Affective satisfaction significantly influences loyalty.

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2.4. Perceived Service Quality

Service quality can be seen as the customer’s evaluation of the overall superiority of a service encounter; it is a perceived, not objective, quality. Defining perceived service quality might be a bit of a challenge, compared to product quality because service possesses some unique features such as intangibility and imperishability. One of the first researchers to develop a model to measure service quality was Parasurama. Parasurama (1991) proposed that service quality can be defined as the difference between the expected and the perceived service quality (PSQ). Based on this proposition he developed the five-dimensional SERVQUAL model, consisting of tangibility, reliability, responsiveness, assurance and empathy. One of the main criticisms of the SERVQUAL model is that it is not generalizable to all types of services. Even though it is true that the five dimensions of the SERVQUAL model are important antecedents of PSQ, the question remains how the dimensions should be formalised. F.e. reliability is an important factor, but which aspects of the service provider need to be reliable is unknown. Furthermore, because the SERVQUAL model measures the difference between the expected and perceived quality, it might be possible that during the measurement expectations and perceived quality are intertwined. Also, when an individual already has had a previous experience with the service provider the expectations will probably deviate. Lastly, when an individual has very bad expectations of the quality and later on perceived the service as bad the difference between both measurements will be positive since the perceived service quality exceeded the expected service quality. This could result in misleading results.

To partially encounter the criticisms Cronin and Taylor (1995) developed a variant of the SERVQUAL model: the SERVPERF model. In the SERVPERF model there only is one measurement moment. The model only focuses itself on the perception of the delivered performance. Cronin and Taylor most important argument for this model is that individuals do not explicitly make an assessment between expectations and perceptions. Expectations are therefore not accounted for in the SERVPERF model. Furthermore, because there is only one measurement moment it is not possible for separate constructs to be intertwined. For these reasons the perceived service quality will be measured based on the SERVPERF model in this study.

In the past, many researchers have claimed that service quality is an important antecedent of loyalty. Anderson and Sullivan (1993) indicated that service quality affects loyalty, emphasizing that customer loyalty is an integrated appraisal of the post-purchase experience. At this moment, it is unknown which dimensions have got a significant effect on loyalty in a stakeholder-university setting. The perceived service quality will be measured based on multiple statements which will be derived from the original study from Cronin et al. (1992) and a more recent study of Vera et al. (2013 ) in which both of them developed a questionnaire to measure the dimensions of PSQ. These original questionnaires can be found in appendix 3. Even though the SERVPERF model counters some of the arguments against the SERVQUAL model, the question still remains how the dimensions should be formalized. In order to tackle this, explorative qualitative research has been carried out among stakeholders to identify critical indicators for each of the five dimensions. The results of the qualitative research can be found in appendix B: the research report.

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2.4.1. Reliability metrics

In comparison to the other four dimensions, reliability is a service outcome. What is important in this dimension is that the organisation is able to deliver the promised service reliable and accurately. In this study, the reliability dimension will be measured by the following statements:

 The extent to which stakeholders believe that employees of Fontys are professional and instil confidence.

 The extent to which stakeholders believe that Fontys has communicated clearly in advance what was expected of them and their organisation.

2.4.2. Empathy metrics

The empathy dimension is a dimension in which the individual and specific attention that has been given to the assignment stands central. In this study, the responsiveness dimension will be measured by the following statements:

 The extent to which stakeholders believe that Fontys has got their best interest at heart.

 The extent to which stakeholders believe that Fontys has provided them with services that comply with the specific needs of stakeholders and their organisation.

2.4.3. Assurance metrics

The assurance dimension stands for the level of trust an individual has in the service provider. Also, the level of dignity and respect that they receive are indicators of this dimension. In this study, the assurance dimension will be measured by the following statements:

 The extent to which stakeholder believe that Fontys can be trusted with sensitive business information.

 The extent to which stakeholders believe that Fontys has treated them with respect and dignity.

2.4.4. Responsiveness metrics

The responsiveness dimension consists out of the benevolence and willingness of employees of an organisation to offer prompt services to provide in the wishes and needs of a client. Also, the communication process between the organisation and the client is an indicator for this dimension. In this study, the responsiveness dimension will be measured by the following statements.

 The extent to which stakeholders believe that Fontys has communicated all relevant information on time.

 The extent to which stakeholders believe that the communication with Fontys is easy, fast and clearly.

2.4.5. Tangibles metrics

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