Mälardalen University
School of Sustainable Development of Society and Technology
MIMA-International Marketing
EFO705, Master Thesis
Examiner: Ole Liljefors
Tutor:
Tobias Eltebrandt
Authors:
Chayanut Phuaksawat-810315
Nuanyong Nualnim-830704
(Group 2492)
Customer’s Selection
Criteria When
Booking Yacht
Online
Abstract
Date: May 27, 2010
Course: Master Thesis EFO705, International Marketing
Tutor: Tobias Eltebrandt
Authors: Chayanut Phuaksawat
Nuanyong Nualnim
Title: Customer’s selection criteria when booking yacht online
Problem: Online yacht booking market is now very competitive market. There are many
yacht online companies in the market. Therefore, it is critical for yacht online companies to understand customers’ needs and to know what the selection criteria are that customers use to book yacht online. As rental yacht sales agents are mostly virtual companies, which mainly use Internet to reach target customers and conduct most of the purchase process. Therefore, one question that need to be researched is how important is the website for the rental yacht sales agent when it comes to getting new customers and keeping the old ones?
Purpose: The purpose of the study is to find out what the selection criteria which
customers use to evaluate when booking yacht online are.
Method: This study is primarily based on qualitative research by using in-depth interview
method. Customer decision making process is applied in order to suit with the topic. The data collection came from two sources, primary and secondary data.
Conclusion: The important selection criteria for new customers are websites containing
necessary information which mentioned by the interviewees during the interview, word of mouth of the company and services from the company and its sale staff. These three selection criteria have huge effect on new customers in order to book yacht online. For the experienced customers, there are two selection criteria which are considered as the most important criteria which are services from the company and its sale staff and website containing necessary information.
Key word: Service e- commerce, selection criteria, decision making process, yacht charter
Acknowledgement
As this is our final Master’s project, we would like to pay special gratitude to our thesis supervisor, Tobias Eltebrandt for encouragement, suggestion and guidance throughout our thesis. By giving us guidance, we gain knowledge in so many aspects which also have impact on our work as well. Thank to all interviewees who let us interviewed in order to conduct this thesis. We also would like to thank our friends who reviewed our work, gave us comments and suggestions in order to help us to improve our work step by step. Moreover, special thanks for the lovely and delicious fika during all the seminars and oppositions from Merve Ertekin, Burcak Aydin, Visut Charoenrungsiri, Umaporn Oonsuphab, Usama Awan and Muhammad Aamir Raza.
Table of Contents
1) Introduction ... 1
1.1 Strategic Question ... 2
1.2 The Research Question ... 2
1.3 Target Audience... 2
2) Theoretical Framework ... 4
2.1 Customer Decision Making Process... 4
2.1.1 Information Search ... 5 2.1.2 Evaluation of Alternatives ... 6 2.2 E-commerce ... 6 2.2.1 Definition ... 6 2.2.2 Business-to-customers e-commerce ... 6 2.2.3 Benefits of E-Commerce ... 7 2.3 Marketing Mix ... 8 2.3.1 Product ... 8 2.3.2 SERVQUAL ... 9 2.3.3 Price ... 10 2.3.4 Place ... 10 2.3.5 Promotion ... 11 2.4 Reputation ... 12 2.5 Word of Mouth... 13 3) Conceptual Framework ... 14 4) Methodology ... 18 4.1 Topic selection ... 18
4.2 Searching for literatures and writing a literature review ... 18
4.3 Developing Conceptual Framework ... 19
4.4 Collecting and analyzing data... 20
4.5 The procedure of the interview ... 21
5) Findings and Analysis ... 23
5.1 Personal information of the interviewees ... 23
5.2 General information ... 24
5.3.1 Price ... 24 5.3.2 Place ... 25 5.3.3 Promotion ... 27 5.4 SERVQUAL ... 29 5.5 Reputation ... 31 5.6 Word of mouth ... 31
5.7 Summary of the result ... 32
6) Conclusion ... 35 7) Recommendation ... 37 8)References ... 39 9)Appendix ... 42 9.1 Questionnaire... 42 9.2 Tables ... 47
List of Figures
Figure 1 ... 4 Figure 2 ... 15 Figure 3 ... 16List of Tables
Table 1 ... 9 Table 2 ... 15 Table 3 ... 47 Table 4 ... 47 Table 5 ... 25 Table 6 ... 47 Table 7 ... 47 Table 8 ... 48 Table 9 ... 48 Table 10 ... 48 Table 11 ... 48 Table 12 ... 49 Table 13 ... 49Table 14 ... 49 Table 15 ... 33 Table 16 ... 34
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1. Introduction
With the greater growth of the service industry in current world economy and the increasing competitiveness among the service providers themselves, "quality" which has been assessed by the customers could be perceived as a major element in the evaluation of the effectiveness of service providers. (Smith, 2007)
According to Quality Aspects of Services Marketing by Anne M. Smith (2007), there are 4 distinguishing characteristics of services that have implications for the management and delivery of service quality. Those are intangibility, inseparability, heterogeneity and perishability.
Similar to goods, services could also be compared and evaluated from the customers before the purchase, during the purchase and after the service delivery. However as mentioned above, the concept of intangibility of services makes the customers face the difficulty in assessing and evaluating services offered. The intangibility of services makes the service selection process even more complicated and forces customers to base their evaluation of service providers by for examples the company’s image, office environment and decoration, staff appearance and performance, price of service, special discount and promotion, and recommendation from friends etc. (Day and Barksdale, 2003)
Service provider selection process is a starting point of the relationship between customers and the service providers and it is definitely the most important step to get new customers for the service providers. (Devlin, 2002)
According to Kugyte and Sliburyte (2005), service provider selection criteria largely classified depending on service type which could be divided for instance into 2 categories, professional services and non-professional services. Kugyte and Sliburyte also stated that different studies regarding different service providers of customers’ selection criteria used different weighted criteria and therefore the results are hardly comparable.
Internet technology has become one of the important impacts in service industry. The rapid change in technology has created the new way of competition and operation of service providers. Internet is an important force in reducing the dependence of the companies on doing business in different countries and helps the companies to reach customers wherever they are. (Rowley, 2004)
Nowadays Internet has become an important place for private yacht charter customers to meet with yacht sales agents. Internet is a useful tool for yacht charter customers to find desirable charter destination, yacht information, yacht sale agents’ information and book the yacht. For online yacht sales agents, companies use Internet technology via their website to convince customers to make booking with them by showing the companies’ strength, attractive charter destination and attractive yachts. Online yacht charter sale agents today are well aware of the fact that Internet is a powerful marketing tool to promote, reach yacht charter customers and boost up the sales. Yacht charter customers on another hand know that they can find the yachts that they are looking for in their desirable destination by exploring yacht charter companies’ website. This particular situation is beneficial to both parties, as the result of Internet technology is
2 growing and Internet is becoming well used as an arena where the two can meet and do business together. (Nguyan et al, 2009)
However, yacht charter customers are facing the same problem with other services customers. Before booking the yacht they must compare and evaluate from many different online yacht charter companies’ websites.
Selection of an online service provider is difficult but important and it is a challenging issue in service marketing. That is because services are intangible and is it difficult of standardization the selection criteria of the service customers. It is also an important task of the service providers to explore the selection criteria customers use when customers in their industry attempt to make decisions and evaluations of their service providers. Understanding the selection of customers would help service providers to identify appropriate marketing strategies to attract new customers and keeping the old ones. (Grace and O’ Cass, 2003)
It is a challenge task for rental yacht companies to understand in what aspect customers use to evaluate for the numerous companies that are available online and what make them believe the company they book the yacht with could meet their needs the most.
This research attempts to deepen understanding about customer decision-making when selecting a yacht online sales agent and what selection criterion is considered by customers the most important. This research describes how decision to choose a yacht online sales agent is made and determine the selection criteria customers use when booking yacht online.
In order to conduct this thesis, the interview questions will be asked to ten interviewees to understand their selection criteria in order to book yachts online. However, all the interviewees are from England due to three important aspects as follow: the interview will be conduct in English, to avoid the culture differences of customers’ behavior might create conflicts in the result of the interview and according to Nguyan et al (2009) British is one of the major customers in private yacht chartering industry.
1.1 Strategic Question
The strategic question of this research is “How important is the website for the rental yacht sales agent when it comes to getting new customers and keeping the old ones?”
1.2 The Research Question
What selection criteria are customers using and what selection criteria are considered the most important when booking yacht online?
1.3 Target Audience
This research would be useful for virtual service companies especially online yacht sales agents and online marketing specialists of service companies that need to develop or evaluate customer
3 acquirement strategies. The research would also deliver information for anyone who is interested in study online marketing and online customer behavior.
4
2. Theoretical Framework
This part shows the summarize version of theories which will be used in order to conduct this thesis. The first theory is customer decision making process which plays important role for this thesis. The theory of customer decision making process is focused on steps that customers do before making decision. As the study will be focused on aspects which customers use in order to book yachts online, therefore this theory is considered as the main theory for this thesis.
Second theory is E-commerce, as this thesis will be focused on all elements that virtual companies do to attract new customers and keep the old ones. Virtual company is how companies which doing their business online are called. Virtual companies, in this case refer to yacht online companies, are related directly to e-commerce theory. As a result, it is necessary to understand this concept to know the foundational concepts of e-commerce in order to operate virtual companies accordingly.
Third theory is marketing mix which is, of course, considered as the most critical element for every company. As this theory consists of Product, Price, Place and Promotion which are considered as the core elements for every companies. Without marketing mix companies could not perform its business. Therefore, Marketing Mix of yacht online companies will be studied in order to be able to evaluate this type business. In the “Product” part of marketing the authors will also mention SERVQUAL by Gronroos (2007, p. 83-84) which is the tool to evaluate customers perception of services. As mentioned before that yacht online companies are considered as service companies, in order to evaluate these companies SERVQUAL will be used as evaluation tool.
Fourth is the theory in companies’ reputation which is also important for every company. It is one of the aspects that help customers make their decision to choose the particular company. As reputation of the companies could be positive or negative, customers will either feel more secure in the company or another way around.
Last theory is Word of mouth, which plays similar role as reputation, has huge affect on customers’ decision in order to book yachts online as well. As customers might not know this particular company before, Word of mouth will make customers feel more secure in the company and possibly book yachts from it.
2.1 Customer Decision Making Process
The customer decision making process is a well-known concept which represents stages of customers when making decision on purchasing product. This process generally can be described into 5 stages which are need recognition and problem awareness, information search, evaluation of alternatives, purchase and post-purchase evaluation. (Gay, Charlesworth and Esen, 2007, p.167)
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Figure 1: Consumer buying decision process model Source: Gay, Charlesworth and Esen, (2007), Online Marketing a customer-led approach, p.167
For this research, in order to answer research question only the information search and evaluation of alternatives will be focused and discussed.
2.1.1 Information Search
Information search will happen after customers realize about their needs or problems, needs recognition and problem awareness. At this step, after customers know their needs then they will start to search for information about specific product which they believe will solve their problem. During information gathering, customers will learn about product from different brands or companies (Matsuno, 1997).
According to Gay, Charlesworth and Esen (2007, p. 168-170) during the step of information search e-commerce customers will search for information about the particular products or services in discussion groups, independent customers reviews, search engines, online communities and so on. Many studies and reports which have been studied in the past years showed that all most all of customers use search engines in order to find products or services information. Therefore, having the right keywords in the right search engines would create more
6 chance for customers to find out about the company. Moreover, online communities are another source which will influence customers. By sharing knowledge, experiences of products, services and companies customers will base particular product or service on this information which of course can be negative or positive way. As a result, companies should consider playing the role in either direct or indirect way in these online communities.
Kim and Srivastava (2007) also supported that due to various choices of products or services in the market, customers search for information which will help them in order to have less risk of buying new product and efficiently make satisfactory decision. As a result, company could reduce customers' search space by encourage current customers to write reviews about the products or services which they have experienced. Rating system about the quality of products or services is another useful element which customers can easily understand and evaluate.
2.1.2 Evaluation of Alternatives
After customers search for information about the product then next step is to evaluate the alternatives. Customers will evaluate to find the product which can satisfy their needs the most. In order to find the product which suit their needs, customers will also evaluate other aspects of product also such as price, benefits and other attributes to compare with their needs and abilities for them to afford. In order for customers to evaluate other aspects of specific product, each segment of customers has different ways and aspects to evaluate differently. Therefore, it is the companies’ role to understand their customers’ needs and preferences then provide their offers accordingly (Matsuno, 1997).
The evaluation stage takes place in potential customers mind after the information search stage. At this stage customers will bring together and analysis of all the information which gathered from information search stage. Then customers will do comparison between those choices of services or products that they have and try to figure out which will suit their acquisitions the most. In other word, searching stage will definitely plays important role on evaluation stage (Gay, Charlesworth and Esen, 2007, p. 171).
2.2 E-commerce
2.2.1 Definition
“Electronic commerce is doing business electronically which is trading goods, services and expertise using computers linked to each other” (Bandyo-padhyay, 2002, p.3).
Delone and McLean (2004) stated that electronic commerce is the use of internet to facilitate, accomplish and process all kinds of business transactions which involves buyers and sellers and exchange of goods or services for money.
Kalakota and Whinston (as cited in Chimay J. and Kirti, 2008, p.7) described e-commerce in two dimensions. First, from the root dimension of e-commerce, it can be defined as an electronic method of doing business which generally operates over internet. Another dimension, defined
e-7 commerce as a modern methodology that emphasizes the needs of companies, merchants and customers to save the costs which happen in the same time as improving the quality of services and goods and also increasing of service delivery. In other word, e-commerce is the concept which mainly helps both company and customer. Company can do business more efficiently and customer can purchase products or services easily.
2.2.2 Business-to-customers e-commerce
According to Laudon and Laudon (as cited in Huang, Liang, Lai and Lin, 2010, p. 348), the concept of business to customer e-commerce is similar to traditional method of retail which is business transactions that occurs between company and customer. The critical different of B2C e-commerce is the channel which is used to carry out business, through internet. Bandyo-padhyay (2002, p. 8) also supported that B2C e-commerce is when company sell products or services online to individual customers.
2.2.3 Benefits of E-Commerce
Nowadays, E-commerce is commonly used by many companies as another channel to reach potential customers. On the other hand some companies only rely on E-commerce by using it as the main communication tool. E-commerce benefits are that more companies invest in (Gay, Charlesworth and Esen, 2007, p.9). According to Barsauskas, Cvilikas and Sarapovas (2007) supported that large number of companies are now using E-commerce due to its benefits which can be generally described in two dimensions:
(1) Benefits for companies: E-commerce gives possibilities for companies to present their products and services on international market with no limitation in geographic barriers. As a result, companies will have more opportunities to reach new customers (Lewis as cited in Barsauskas, Cvilikas and Sarapovas,2007) E-commerce provides opportunities for companies to source new suppliers and distributors to maintain competitive advantages. Internet is an interactive marketing tool which allows customers and companies to communicate to each other. Therefore, companies can understand customers' needs and acquisitions and try to satisfy them in efficiently ways. Moreover, due to the communication between customers and companies, it gives companies to keep customers' needs and profiles via account history and other data (Gay, Charlesworth and Esen, 2007, p.11). Internet-base transaction systems costs less than traditional process in long run. Besides, the fact that those companies do most of processes online so companies could save expenses on shops or offices. Moreover, E-commerce gives companies opportunity to understand the market more. As customers buying behavior and other information will be captured along with communication and transaction. Therefore, companies can use those information in order predict the market or observe repeated customers and offer special promotion to them to create customer loyalty (Damanpour and Damanpour, 2001).
(2) Benefits for customers: E-commerce gives customers convenience to access websites any place in any time. By offering products or services online, customers can access different companies' websites to compare the products/services and prices easily. In other word, E-commerce gives customers more choices to choose from within short amount of time, surfing and searching online (Gay, Charlesworth and Esen, 2007, p.10). Due to the lower
8 cost of transaction process of companies, the final prices or products and goods are lower also. In other word, customers will generally pay less compare to products or services from the stores. Moreover, customers will do less searching, ordering and receiving, in case if products can be transformed in digital form, processes online (Barsauskas, Cvilikas and Sarapovas, 2007).
2.3 Marketing Mix
The Marketing mix is consider as a set of tools which the company uses to accomplish its marketing objectives in the target market (Kotler, 2003, p. 15) The marketing mix is one of the critical element of marketing plan which could lead company to be success or fail in penetrate new market or new product to target market. (Reid, 1980)
For online business, the e-marketing mix can be defined as the package of goods and services that a company offers for sale to the public (Lazer and Kelly as cited in Dennis, Fenech and Merrilees, 2005, p. 179) E-marketing mix is developed from the tradition marketing mix by adapt all 4Ps to fit more with e-commerce criteria and e-customers aspects (Fenech and Merrilees, 2005, p. 179). Marketing mix can be called as “4P” which are product, price, place and promotion. The marketing mix is the only factor which company can adjust and control in the market (Ghauri and Cateora, 2006, P. 8).
2.3.1 Product
Product is designed and produced to solve or satisfy customers demand. It is the most tangible elements of all the marketing mix elements (Ghauri and Cateora, 2006, p. 8).
According to Ian (2006, p. 104) product can be defined in two dimensions: the tangible dimension is the product itself (goods) and the intangible dimension is service. Both of product (goods) and service are considered as product which company produce according to customer demands. Product can either be goods or service depends on company business and strategies. However, it is quite common nowadays for company to have product which is the combination of both goods and service (Ian, 2006, p. 105).
Gay, Charlesworth and Esen (2007, p.101-102) said that selling products or services online is not only just another distribution channel to reach potential customers but it could add value to products or services as well. For doing so it is better to separate products into three categories in order to sell and distribute them effectively online. The three categories are physical, virtual and service products. By selling them online, the added value can be described in the following figure:
9 Table 1: Adding product value online
Source: Gay, Charlesworth and Esen, 2007, Online Marketing a customer-led approach, p.102
Yacht booking companies in general only offer services, in other word, their products are services that they provide for customers. Therefore to evaluate the quality of the product for service business SERVQAUL tool will be mentioned and described accordingly.
2.3.2 SERVQUAL
As mentioned before that yacht online companies are considered as service companies. As a result, their core products are services which provide to satisfy customers needs. In order to evaluate these companies SERVQUAL will be used as evaluation tool.
SERVQUAL is the instrument to evaluate perception of customers on the service quality that they have experienced. This instrument is well-known and has been used often in service industry (Rosenbaum and Wong, 2009). Gronroos (2007, p. 83-84) supported that SERVQUAL instrument to measure customers' perceive the quality of service. SERVQUAL is based on a comparison
10 between customers’ expectation of how the service should be performed and how the service is carried out.
In order to measure SERVQUAL there are 5 determinants to evaluate which are:
- Tangible: Gronroos (2007, p. 83) stated that tangible refers to materials, equipments or employees that service company used to serve customers. Kiran (2010) supported that tangible is the appearance of physical facilities, equipments and personnel of employees for service company.
- Reliability: Reliability is how accurate the performance ability of service company (Kiran, 2010) It shows the ability of company to perform accurately and right service at the first time. Moreover it refers to delivering time that company has promised to do by the time that both customers and company have agreed on (Gronroos, 2007, p. 83).
- Responsiveness: Ladhari (2009) stated that responsiveness is the employees' willingness to help, respond to customers' requests and provide prompt services.
- Assurance: Refers to employees' behavior in specific. Employees' abilities to make the customers feel safe and confident in the company and have knowledge to respond customers’ needs (Gronroos, 2007, p. 83).
- Empathy: Gronroos (as cited in Ladhari, 2009) stated that empathy is the level of caring and individualized attention that the company provides in order to satisfy customers’ needs.
2.3.3 Price
Ghauri and Cateora (2006, p. 9) stated that price is the cost which customers have to spend on product. It is an element which can attract customers which on the other hand is also reflects products' quality. Company should adapt the price according to the market segment which its products belong to. Ian (2006, p. 168) also supported that price can affect the way customers behave toward the product. Price is perceived as amount of money which can easily compare the prices that company offers to what competitors offer. Indeed, price is dynamic element of marketing mix.
According to Gay, Charlesworth and Esen (2007), the price online generally slightly lower than price in the stores due to cost saving from not having official stores. In contrast, most of online pricing will have additional cost add to the price that shows on the website. That additional cost is normally from shipping cost or delivering charge which in some case after combines the actual product price with the delivering cost then the total price might be higher than the price in stores. That is the disadvantage of shopping online which customers have to aware of.
2.3.4 Place
Place is the location of distributors which is important to the products. The good locations for products are where the target customers are situated (Ghauri and Cateora, 2006, p. 9). Ian (2006,
11 p.116) also stated that no matter how good the product is if company could not find the right location for potential customers then all the effort that company has put will be wasted.
According to Sultan (2004, p.15), there are two types of place to sell products: through distributors or sell them directly. Distributors are those middlemen who locate in different locations. Sell directly are thought storage, warehouse, outlet, tele-selling and selling-online (internet). The latter way has become more popular recent years and more convenience for customers compare to the former way.
The website can be described as another channel for some companies. On the other hand, for other companies is totally different. The website can be used as the core business model with the potential to reach potential customers beyond normal geographic boundaries. The fact that internet could reach where ever that has the signal is what makes internet more special and potential to reach customers worldwide (Gay, Charlesworth and Esen, 2007, p. 103).
According to the Place in above theories, they considered website as Place in the Marketing Mix. However, in this thesis the authors will look at the Place differently. The authors will consider representation offices at the destinations as Place instead. Due to the websites are not considered as selection criteria for customers to evaluate before making decision. As information on websites could give details but not have an effect on customers' decision. In fact, websites are considered as tool to provide information for customers. Therefore, company websites are supporting tool in this thesis.
2.3.5 Promotion
Bennett (1997) stated that promotion is an action to inform and let potential customers know as much as possible about the product which company offers. According to Ghauri and Cateora (2006, p.8, p. 388) also supported that promotion is the channels or how to reach and inform about products to target customers. Promotions are basically designed to boost the sales. There are many kinds of promotions which such as:
Underhill (2009, p.234-235) mentioned about how great promotion online is compare to traditional one. He examined the case of Samsung that it spent big amount of money to promote its advertisements in television, news papers and magazines. However, all those advertisements were failed to reach potential customers. As a result, Samsung changed its plan and invested in online advertisements where its target customers visit. The result turned out more successful than the company expected.
Another view supporting the above statements sees promotion not just about advertising or trying to push customers to buy. In fact promotion is actually communication between customers and companies. Communication is the two-way process which involves customers’ feedbacks to companies. To communicate online there are many ways to do so such as banner ads, pop-ups, paid-for listing in search engines, affiliate programs and so on. To get feedbacks from customers will give companies to improve or develop their products and services to satisfy customers efficiently (Dennis, Fenech and Merrilees, 2005).
12 Moreover, as Gay, Charlesworth and Esen (2007, p. 104-105) stated that even though internet is viewed as virtual and powerful channel for advertising and promotion but it still needs offline promotion support in order to affect customers more efficiency. In fact, offline promotion is a must for online company. The offline promotion is referred to offline or traditional advertisement. Every opportunity from letterheads to the outside of company's transport should carry URL for maximum exposure. The offline promotion is used to increase web traffic and enrich the database. There are wide range of online promotion that virtual company need to have in order to get customers attention and simplify each processes such as product information, video clips to support product information, customers reviews, comparison with competitors offerings, e-mail enquiries, account information, efficient shopping cart and so on.
2.4 Reputation
Reputation is a concept related to image, but not the same, which involve outsider's subjective judgment of company's quality in the past performance which will create over time. Company's reputation creates expectation for customers. Reputation could lead to the first stage of trust from customers which will have an effect on the decision making to buy product or service from this specific company.(Bennett and Gabriel, 2001) Corporate reputation can be in negative or positive way. The positive reputation has positive influence on customers trust in the company. When customers trust in the company they are more likely to be loyal to the company as well. All in all, reputation has a huge affect on company profits (Dinnie, Walsh and Wiedmann, 2006).
Moreover, corporate behavior and strategies: when reputation counts (2005) supported that by having good reputation, company could develop its brand image. The brand image will state the certain qualities which particular company has apart from others in customers' perception. Therefore, reputation will create profits for company in the long term.
Shemanshi (as cited in Hunt, 2008) said that company reputation takes quite some time to gain and when once company lose its reputation then it is hard to re-establish again. Reputation is resulted from events which company controls directly or indirectly. Unethical practices, unhappy employees or not environmental friendly situations are situations that can damage company reputation. Therefore, it is critical for each of company elements to behave or perform well on the behalf of the company in order to keep or create good reputation of the company.
Employees’ behavior is considered as another aspect that has a huge effect on company reputation. In other word, employees will behave in positive way if they have good attitude about the company. When employees who hold positive attitude about the company interact with customers, they will have good perception about the company as well. Due to those employees will state positive points about the company as they have previously experienced. When customers have good perception, it is more likely for them to purchase more, become loyal customer and even recommend other people about the company. In contrast, the result for employees who hold negative attitude about the company will be in the opposite way. All in all, company should create positive attitude for employees by provide good benefits, welfare and so on in order to create positive attitude for employees (Chun, Davies and Kamins, 2010).
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2.5 Word of Mouth
Word of mouth is the action described when customer who has experienced product or service himself then let other people know about the product which could be in negative or positive way. Word of mouth is considered as another way of communication which has a significant effect on customers’ behavior (Mangold, Miller and Brockway, 1999).
According to Cheung, Lee and Rabjohn (2008), there are two types of word of month. First, the tradition word of mouth, which is from customers who have experience in product or service tell others about their experience. Second, which is happens when the online business has started, e-word of mouth. The basic concept is same as traditional e-word of mouth except these actions happen via internet Nicolas (2007) supported that e-word of mouth is considered more efficient compare to the traditional one due to there is no space and time limitation to access or receive word of mouth. Since word of mouth can be found in discussion boards, social networks, e-mails and so on. As a result, there are more possibilities for customers to perceive e-word of mouth.
Tylee (2010) said that word of mouth is not considered the same as advertising but the result of it have huge affect on advertising message, products or services details to research and development. It is a human nature to tell or express experiences that they have either good or bad about products or services to other people. Word of mouth is now considered as other marketing efficient tools from marketers. The result of one study shows that word of mouth takes place 70 percent face-to-face, 20 percent via phone and 10 percent online. Even though the percentage of online social networks are not that high but it is still increasing continuously. As a result, company should concern more about get involve in online social networks more as follow the communication trend.
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3. Conceptual Framework
The conceptual framework is an important analytical tool when doing research. The conceptual framework of this research is used to improve the analysis quality in relation with the chosen theories (Fisher, 2004, p. 125). In this chapter, we develop the conceptual framework, which is appropriate for our research. The conceptual framework is designed by structuring theories we reviewed and discussed above in our literature review.
For many developed countries, their economics is dominated by the service sector and most of the population is employed in this sector. With this result, to understand customers’ selection criteria in service sector is important as the result could lead to the sufficient growth of the whole service industry (Ettenson and Turner, 1997).
If companies could understand what criteria, which are used by customers to evaluate in their yacht booking decision, the companies then would be able to manage and influence the customers’ evaluation and perceptions of their offerings more efficiency (Grace and O’ Cass, 2003).
Figure 2 presents conceptual framework of this research.
Figure 2: Conceptual Framework Source: The authors’ model
The conceptual framework of this research mainly focuses on one of the part in decision making process of the customer – information search and evaluation of the alternative.
Similar to goods marketing, service marketing can be searched and evaluated prior to the purchase as well as can be evaluated the quality of the services during the purchase and after the service deliver. For this research, we will study the service marketing that customers search and evaluate before the purchase.
15 For virtual companies, Internet is the main marketing tool used to reach target customers. On the other hand, customers nowadays use Internet as a tool in gathering information and evaluating all alternatives available online. With this result, it is important to understand how online marketing tool like E-Commerce works.
E-Commerce uses Internet technology in order to connect existing and potential customers with a company. For the virtual companies, E-Commerce is a main channel for the companies to give information about their products and services. Also E-Commerce is a communication tool for both the companies and customers to exchange information and interact before making decision to purchase. Service providers could understand the needs and interest of the customers more as well as to create relationship via their communication skills.
Marketing Mix (4P’s) is the four categories (price, place, promotion, and product/service) actively controls by the service companies. While the credence (reputation and word of mouth) couldn’t be controlled as they are part of experience perception by previous customers.
Product, which is service in this research, will be analyzed how good the services are by using SERVQUAL.
After customers evaluate all relevant selection criteria, customers then will continue the next step, decision making (book a yacht) from the service provider that they consider the best from their view.
The previous of service provider selection criteria largely depend on professional services. However, there is still no study that could indicate the common service provider selection model which could serve as a basic analysis tool for all service types or to be used for comparing results from different services as showed in Table 2.
16 Table 2: The selection criteria in different services conducted by authors
Keaveney (1995) developed the model for determinants of switching service providers. And later in 2005 Kugyte and Sliburyte adapted his model for their research in “A Standard Model of Service Provider Selection Criteria for Different Service Types: a Consumer-Oriented Approach” as showed in figure 3 below.
Figure 3: Modified Model of Service Provider Selection Criteria Source: Kugyte and Sliburyte, 2005
Evaluative selection criteria for online yacht customers
In order to develop effective marketing strategies for a yacht online sales agent, marketers have to understand the evaluative criteria customer uses in selecting a yacht online sales agent. Evaluative criteria in this research refer to the attributes that are important to online yacht customers in assessing or evaluating yacht sales agents.
There have been a few studies regarding the evaluative criteria in service marketing and still no selection criteria could be used as a standard for all services. (Crane and Clarke, 1998)
The selection criteria used in this research are based on the study “Influences upon Consumer Expectations of Services” by Webster (n.d.) Webster showed in her study the expected services in both nonprofessional and professional of customers is being influenced and shaped by personal needs, service experience, and word-of mouth communication. However, the exact impact of each factor was not still studied.
17 To answer the research question, the authors took out factors from Webster's study and formed interview questions on 6 selection criteria customers might use in evaluating their decision - making process.
Personal needs 1. Price
2. Place
2.1 The important of the sales agent to have the representative office in the charter destination.
2.2 The important of the company website to provide necessary information of the yachts. 3. Promotion
Service experience
4. Product (in this research we will study the service encounter by the sales staff) 5. and 6. Reputation and Word of Mouth
The conceptual framework of this research (Figure 2) is adapted and applied from the model of Kugyte and Sliburyte (2005) and the study of Webster (2005). As a result, the conceptual model for this research is more appropriate to our study for yacht online bookings.
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4. Methodology
This chapter presents all processes of the research. Methodology of this research shows how the information for the research is collected and analyzed.
Methodology in this research begins with choosing a topic area which is interesting and will be useful for readers to study. Then the authors searched for relevant information and also related literatures in order to identify research problems and purpose of the research. The authors later adapted and applied chosen literatures and develop conceptual framework for this research. Afterward, the authors started to collect data from all different kinds of sources which are relevant for the research problems. Then analyzed all the information that has been gathered in order to conclude and give recommendations to the audiences.
4.1 Topic selection
According to Fisher (2004, p. 31), choosing research topic is a critical stage in writing master dissertation. There are a number of factors the authors took into consider when making topic selection.
Tourism industry plays an important role in the world economy. Companies in tourism industry especially the online yacht charter companies are becoming globalization and are highly competitive with the expanding of Internet technology. (Nguyan, 2009)
Internet becomes a useful and powerful marketing tool for online yacht charter sales agents to present their luxury products and services throughout the world and reach potential clients. For the customers who book yacht online, this group of customers tend to use Internet as a tool to gather information, comparing, and evaluation for products and services from what the companies provided themselves on their website. They also use Internet to seek information from vary people who have experience with those products and services from forum or web board and find out the company’s reputation and performance before making decision to purchase.
Nevertheless, in order for yacht online customers to make a decision, there are different criteria for each individual customer to use in their evaluation. With this result, we think it is interesting to study about selection criteria the yacht charter customers use when booking yacht with online companies.
4.2 Searching for literatures and writing a literature review
The literatures have been conducted to support the research. The resources that have been used are the university databases, textbooks and websites. Those resources are used differently depending on the purpose of searching.
The authors first started to search the related articles of the research from the university databases and search engines. Then the authors reviewed relevant existing articles and research
19 data to gain fundamental base of study area. The databases used are ABI/Inform, Emerald and ELIN and the website search engines are Scholar Google and Yahoo. The keywords that authors used are for example “yacht charter business”, “service e-commerce”, “selection criteria”, “decision making process”, “online marketing”, “Selecting services” and “service marketing”.
Authors also found many useful articles which are related to selection criteria customers use in choosing service providers in different service types such as bank, dentist, and lawyer but not in online yacht charter industry. Still all this information gave the authors more ideas and knowledge of in what areas the authors should focus on in this research.
After searching for fundamental study area and relevant literatures, the chosen theories are e-commerce, marketing mix, and SERVQUAL. Also customer decision making process are described and used to develop conceptual framework for the research.
4.3 Developing Conceptual Framework
A conceptual framework is used in order to help the authors to analyze research materials and structure this research. The conceptual framework of this research was conducted in accordance to structured approach, which is based on theories the authors have used. (Fisher, 2007, p.122-124)
The theories which will be used to conduct this thesis are already mentioned in Literature review part. However, as each theory could be interpreted differently. As a result, the authors will define some of the theories which will be used in specific terms in order to evaluate the result effectively for this research.
Reputation
Reputation in this research will be defined as the reviews, feedbacks or any kinds of story-telling information online. All of this information could be found on social networks, forums, blogs and web boards and could be- whether or not- organized and managed directly or indirectly from online yacht companies themselves. In other word, that information could be one way of advertisement or public relation from yacht companies in order to create positive image and reputation of themselves.
Word-of-mouth
The authors will define this concept as the suggestions, recommendations or any kind of stories which customers have been told by people they know. The stories could be told to customers via face-to-face communication or any kind of technology equipments or tools. These stories could be trusted and relied on more due to they were experienced by customers’ friends, relatives or their social networks.
Place in Marketing Mix
In order to evaluate efficiently, “Place” in this research will be separated into two elements which are the representation offices of the yacht companies at the destinations and companies’ websites
20 which contain necessary information that customers looking for. The necessary information was then defined by the interviewees during the interview.
The fact that “Place” for online yacht companies can be separated into two elements which already mentioned above. Due to these two elements are completely different from each other, the authors then chose to evaluate them separately in order get more efficient result from the interview. As a result, in the interview questions representation office and website will be asked separately.
4.4 Collecting and analyzing data
The continued growing in service industries has led to the high competitive pressure for the service providers. To be able to survive and stay competitive, service providers are trying to understand buying behavior to guide their marketing strategies decisions in order to attract, manage, and keeping their customers. Still there has not been much development of marketing skills in service marketing compared to the goods marketing. And most of the research has been done toward the understanding in the evaluation and purchasing of goods. (Ettenson and Turner, 1997)
Services have unique characteristics. With this result the research and all techniques in goods marketing could not be able to directly use and apply. With the result of the differences in goods and services, they deserve different research and study to develop marketing strategies. (Anne M. Smith, 2007)
Among the research in service marketing, most of the research has been done to understand the customer decision behavior in professional services related to health, legal, accounting and bankings but much less when it comes to nonprofessional services. Examples of non professional services are dry cleaners, restaurants, and hair dressers. It is important for marketers to understand how customers evaluate and select nonprofessional services because the customers in this group tend to purchase in regular basis. (Ettenson and Turner, 1997)
(1) Secondary data
The authors collected the information about the overview of service marketing, e-commerce, and selection criteria in many different service types from secondary sources. Moreover, the authors also collected data in other area which related to the topic. The main sources used for the secondary data for this research are books and articles on Internet.
(2) Primary data
The primary data is necessary in order to find accurate answers to the research question. The main method to collect primary data for this research is through interview.
According to Butler et al (1994), customers evaluate goods and services differently and services are described as a distinctive group of offerings.
21 For services marketers, it is crucial to understand which attributes of service offerings are valued the most in the decision making process of customers.
Customers evaluate the service providers by evaluating overall combination of all offerings which are products and services attributes. And the result of this research would lead to customer decision-making strategies. (Ettenson and Turner, 1997)
Sample size
According to Fisher (2007, p. 189) sample size is the number of people which will be sampled as representative of the gross population. It has been concerned by researchers about the enough sample size in order to conduct survey. In fact, no sample can be guaranteed to be representative. Due to no matter how big the amount of sample size, the more errors could happen in the result. Therefore, sample size will be taken regarding in part on the size of the margin of the error that the conductors or researchers can accept.
As one of the authors for this research work in rental yacht industry for two years, she mentioned that the group of rental yacht customers is still small due to the price of the yacht charter. From her experience in working with Eniteative.net, one of the big and well-known yacht rental company, per year the closed deals of the company in the popular destination like South East Asia are in average 300. Also most of the charter customers are repeat customers. Per year in average, rental yacht customers tend to charter the yacht at least two times per years.
For this research, the authors aware the sample size, 10 people who were interviewed, is small in number. However as mentioned above, for yacht rental industry which still has the small group of customers, ten customers are considered a good sample size which would lead to the accurate result for this research. The standard variation in the findings and analysis part is used to show the variation of the answers from the interviewees for each selection criteria. Each answer from each interviewee is given the big impact to the result in this research.
4.5. The procedure of the interview
Ten customers, who have experience in booking yacht online, were contacted prior to the interview by email asking if they could participate in the interview. All the respondents replied back email and they were willing to dedicate their time in the interview for this research. The authors then set up the dates and time of the interview with each respondent via Skype, the online application which is used to make voice calls over the Internet.
The interviews were conducted by both of the authors during 3-10 of March 2010 due to the availabilities of the interviewees. Each interview took about 1 hour. Therefore the authors used several online recorder programs to record each of the interviews. As a result, during each of the interviews the authors were only concentrated on conducting the interview without got any distractions by writing the answers down. After the interviews the authors listened to those sound clips then wrote the answers of the interviewees down in order to evaluate the answers from the interviewees.
22 All interviewees whom the authors conducted the interview with are from England. There are many reasons authors choose to interview people from only England.
First, the interview will be in English.
Second, the authors choose to have only one nationality to avoid culture difference of customers’ behavior in booking yacht online. Culture difference might have an effect on the result.
Third, British is one of the major customers in private yacht chartering industry, number one is Germany. (Nguyan et al., 2009)
All the respondents were told prior to the interview to assume that the yacht itself is met their requirement and only the selection criteria would be valued.
The interview questions
The interview aims to understand the levels of each attributes rental yacht customers consider when evaluating and selecting online yacht sales agents. The selection criteria together with the responding levels are presented in the research.
Each question was discussed with interviewees in two different occasions as they are new customers (their first experience in booking yacht online) and as they are experienced customer (booking yacht for their next charter vacation.)
The questions are based on the theories and the propositions. For the first part of the interview, the questions are related to personal information and general information of the respondents. Then the 4P’s of Marketing Mix, Price, Place, Promotion, and Product which is service in this case, will be discussed. Finally the questions about the credence will be asked and discussed.
At the end of each factor questions, the respondents are asked to score how important each criteria is for them from 1 (the most important) to 7 (the less important.) And each number could be used only one.
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5. Findings and Analysis
The findings and analysis are presented according to conceptual framework of this research. The interview results which begins with personal information, general information, pricing, place, promotion, services, word-of-mouth and company’s reputation will be used together with secondary data in order to link to conceptual framework and answer the research question. To answer the research question, in the findings and analysis part of this research, the authors have conducted the primary data by the online interview with 10 British customers who have booked yachts online before. While the secondary data of the findings and analysis is conducted through the reliable articles on websites. The findings and analysis part of this research can be found here:
5.1 Personal information of the interviewees
All of the interviewees are male and from England. Their occupations are various but most of the interviewees, 3 persons, have their own business. The ages of the interviewees are also different (Table 3, Appendix 2)
As mentioned before the authors chose to interview people from England only to avoid the culture differences and the misunderstanding in language which might effect on the result of this study. Moreover, there are other aspects which could explain why the authors chose to interviewed only customers from England.
British as an online customer
The center of retail research has found that British customers shopping online more than any other countries in Europe. In 2009, British shopped online in average GBP 1,120 per person. There are two advantages that drive British customers to shop online which are the convenience and price-saving that generally offered by the online shops. Nowadays, all kind of products and services can be found online in England from basic grocery shopping to big and luxury product. According to the research, women used to be the demographic group of online shoppers in the past. They shopped mostly on clothing, accessories and footwear. However, recently men have become the key demographic group instead. The products which men buy online are various compare to women. Moreover, the research also predicts that in 2010 the online shopping rate of British will increase since shopping online has now become a part of British culture already. (British customers, 2010)
Nowadays, there are wide range of products and services to buy online in order to satisfy customers’ needs in more convenience way. For British, shopping online is not a new thing. In other word, British are use to shopping online which means they have no doubts or problems buying products or services online. As a result, it could refer that British will not have problems booking yacht online as well.
British tourist destination
British tourists prefer to go to warm weather countries for their vacation. Due to the unpredictable weather England has, British tourists generally choose sunny and warm
24 destination. There are many destinations which British prefer to visit during their vacation such as Spain, Cyprus, Turkey, Dubai, Morocco, Costa Blanca, Egypt and so on. (British tourists, 2010) Yacht charter could be one of the activities which British could do in their sunny and warm favorite destinations.
Due to the recently recession which has happened in 2008, pound sterling has declined in value so as other currencies. Therefore, the travelling rate for British tourists was slightly decreased. People spend money more carefully. However, according to the statistic of the first of 2010, the British tourists travelling rate has increased a little. British tourists are now continue to go abroad to spend their vacation but they more likely to choose cheaper destination in order to save money. (Travel and tourist, 2010)
All in all, the information mentioned above shows the aspects which make British market to be one of the potential markets for online yacht booking companies. According to their online shopping behavior, average income and British favorite traveling destination, British show that they have all the potentials and possibilities to book yacht online. Hence, the authors chose to interviewed British customers to conduct the primary data in this research.
5.2 General information
The interview was discussed in two ways for all ten interviewees.
First, this group of the respondents typically booked a yacht for their charter vacation in average 3 times per year through websites, therefore they could be considered as experienced customers in booking yacht online. Their evaluation on selection criteria of the website as the repeat yacht online booking customers is highly important in this research. To understand what criteria are considered as the most important all ten respondents were asked to tell their process and discussed in detail about the criteria of the sales agent they would evaluate when they book a yacht for their next yacht charter vacation.
Second, all ten respondents in this study were also asked to tell the story of their first experience in booking yacht online and discussed how they knew about the websites and/or yacht sales agents.
As a new customer, most respondents (8 persons) mentioned that the booking process for them started from the search engine. (Table4, Appendix 2)
While one person mentioned his searching for information process started from checked yacht charter forums and web boards from people who have been to that charter destination before. And another one person said he chose to go to the well-known big company with good image when he first booked the yacht online.
Five out of eight people who booking process started from the search engine, as the new customers, they did not have yacht model in mind before started to search. So, their search was aiming for the sales agents who have yachts in the target destination not the yacht model. After they found sale agents’ websites then they started to look for yachts’ details and other information to evaluate each sale agents.
25 On the other hand, the three out of eight respondents who booking process started from the search engine, they first mentioned they had a yacht model in mind. So, the keywords they used when they were searching on search engine were containing the yacht models with the destination. This group of customers however had the same behavior of the group of people who didn’t have yacht model in mind. After they found sales agent websites then they started to look for yachts details and other information to evaluate each sales agent.
According to the result of the interview, the majority of the interviewees as the first time customers chose to start their booking processes from the search engines. The other two of the interviewees chose to start their booking from forums and web boards and company’s reputation. From the result we can separate the way interviewees using search engine into two groups. Interviewees with yacht model in mind and with no yacht models in mind. These two groups will use the words in order to put in search engines differently. The first group will use destinations to search for yacht agents which have yachts in those particular destinations. On the other hand, the second group will use yacht models and destination to search for sales agents in preferable destination.
Search engines are used by the majority of the interviewees as new customers to search for online yacht booking companies. As the new customers usually do not have knowledge or information about online yachts companies in specific and lack of knowledge in charter destination. Besides, search engines are the easiest way to search or find the name list of online yacht companies no matter how big or small they are.
5.3 Marketing Mix
The findings and analysis in this part will be related to price, place, and promotion as selection criteria for rental yacht online customers.
5.3.1 Price
The online yacht market is a competitive market; so, the prices for the same yacht model between different companies are more or less almost the same. (Table 5)
Table 5: Prices comparison in Euro from different websites conducted by authors
Table 5 shows that the prices of the same yacht models from three different yacht online companies are not much different or cost exactly the same prices. The chosen three companies are Boatbooking.com, Charter-yacht.com and Asia-marine.net. They are well-known yacht online companies according to one of the authors for this research who has been working in rental yacht industry for two years. The yacht models used in the comparison are the basic models in rental yacht market which most of the companies provide for their customers. According to the table above, it is clear that prices from different companies are almost the same.
26 For new customer, pricing was almost never mentioned as one of the top 3 most important criteria used in selecting sales agents from the interview. And none of the interviewee stated that they would book the cheapest yacht without considering other criteria. (Table6, Appendix 2) Nine interviewees said they do not set budget for a yacht before searching online or contacting the sales agents and only one interviewee set budget before searching for a yacht.
As a new customer, all 10 respondents said that for them pricing was not the most important criterion and they started to compare the prices of a yacht from different companies after they found sales agents they wanted by evaluating other criteria. Those criteria are such as word of mouth, service encounter, and company’s reputation.
As an experienced customer, all 10 respondents also agreed that pricing is not the most important criterion.
Two interviewees think pricing is the second most important criterion after the services the sales agents provides which they have experience with before in the past. And six interviewees think pricing is the third most important criteria.
According to the result of the interview, price is not considered as the most important selection criterion for customers whether they are new customers or experienced customers in order to book yachts online. The majority of the interviewees do not set budget for yachts before searching online. Due to the competition in this market, the prices from different sales agents for the same model of yachts are not much different and most of the time they cost exactly the same.
For the first time customers, all the interviewees agreed that the price is not the most important criteria. In fact, other criteria such as word of mouth, services of the company and its staff, and company’s reputation are more important. Those other criteria will be used in order to evaluate and decide which sales agent interviewees will book yachts from. For experienced customers, pricing is not the most important selection criterion neither when the interviewees booking yacht online for their next charter vacation. According to table 7, price is considered more important for experienced customers compared to first time customers. As the majority of the experienced customers are considered price as the third most important criteria.
5.3.2 Place
Place in this research is referred to two different things – the information provided on website and the representation office in charter destination.
(1) The information provided on website
The ranking in how important the information provided on website as evaluative criteria for online rental yacht customers. (Table7, Appendix 2)
As a new customer, the result clearly shows that most respondents (8 persons) considered the information provided on websites of the sales agents as the most important aspect which made them consider the website and the sales agents.
