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BACHELOR'S THESIS

The Word of Mouth Effect

André Fredberg Joakim Wiklund

Bachelor of Science in Business and Economics Business Administration

Luleå University of Technology

Department of Business, Administration, Technology and Social Sciences

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Preface

To write a thesis work takes a lot of time and patience, many hours has been spend to read articles and rewriting chapters over and over again. We have learned a lot about the word of mouth and how to work and conduct a thesis work. We would like to thank our supervisor Håkan Perzon for his help and support, to Mauritz Danielsson head of student service and to the students attending our focus group.

Luleå May 2011

Joakim Wiklund & André Fredberg

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Abstract

People tend to talk more and more about experience they have with an encounter with an organization or company. Depending on the encounter was satisfying people will talk to their family and friends about the experience and either put the organization or company in a good or a bad light. When people talks amongst each other about their feelings with an encounter it is called the word of mouth effect. The word of mouth affects an organization or company´s reputation in other words called goodwill. We have focused this thesis in how a university works to create positive word of mouth and thereby indirect goodwill and to see how this work is perceived by students at the university. We did qualitative case studies and the data was collected though an interview and a focus group.

The result shows that the work in this case Luleå University of Technology does in creating a positive word of mouth don´t match in all cases how student´s perceives it. We have from the result giving some suggestions for Luleå University of Technology in order to improve the word of mouth.

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Sammanfattning

Människor tenderar att prata mer och mer om sina erfarenheter ett möte med en organisation eller företag gav dem. Beroende på nöjd man blir efter detta möte så kommer man prata med familj och vänner och antingen ställa organisationen eller företaget i bra eller dåligt ljus. När man talar med sin familj eller vän om hur nöjd eller icke tillfredställd man var av detta möte kallas det the word of mouth. The word of mouth påverkar organisationens eller företagets rykte också kallat goodwill. Vi har valt att fokusera denna uppsats på hur ett universitet i vår uppsats Luleå Teknologiska Universitet jobbar med att skapa positiv word of mouth och hur detta arbeta uppfattas av studenter på universitetet. Vi har gjort kvalitativa fallstudier och materialet är samlat genom en intervju och en focus group.

Resultatet har visat att det inte alltid stämmer hur Luleå Teknologiska Universitet vill nå ut till studenter för att få dem att prata bra om universitetet och hur studenter uppfattar de. Vi har i kapitel sex lämnat förslag på förbättring och hur universitet kan jobba för att bättre skapa positiv word of mouth.

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Table of contents

1.0 Introduction ... 1

1.1 Background ... 1

1.2 Problem discussion ... 2

1.3 The first year for new students at a university ... 3

1.3.1 Information about a university sends out to new students ... 3

1.3.2 August – “Nolle P” begins ... 3

1.3.3 Septebember – December – First semester of studies ... 3

1.3.4 January – June- Second semester of studies ... 4

1.4 Research purpose and questions ... 4

2.0 Literature review ... 5

2.1 First impression – covers the section one and two in figure 1, time process, section problem discussion ... 5

2.2 Halo effect – covers the section two in figure 1, time process, section problem discussion ... 5

2.3 Generating positive word of mouth effect through qualities benefits – covers all sections in figure 1, time process, section problem discussion ... 6

2.3.1 How functional quality increases with benefits ... 7

2.3.2 How technical quality increases with benefits ... 8

2.3.3 How relationship quality increases with benefits ... 9

2.3.4 How to generate word of mouth with the qualities ... 9

2.4 The effects of word of mouth ... 10

2.4.1 Purchasing behavior effect ... 10

2.4.2 Repurchase effect ... 11

2.5 Conceptual framework ... 11

2.5.1 Framework research question 1 ... 11

2.5.2 Framework research question 2 ... 11

2.5.3 Framework research question 1 and 2 ... 12

3.0 Methodology ... 13

3.1 Research purpose ... 13

3.2 Research approach ... 13

3.3 Research strategy ... 13

3.4 Sample selection ... 14

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3.5 Data collection ... 14

3.6 Data analysis ... 15

3.7 Validity and reliability ... 16

4.0 Empirical data ... 18

4.1 Information about Luleå University of Technology ... 18

4.2 Research question 1: How does a university work to create a positive word of mouth during the first year for students? ... 19

4.2.1 First section – Perception about LTU before starting their education ... 19

4.2.2 Second section – The experience of “nolle p” ... 19

4.2.3 Third section – The study year ... 20

4.3 Research question 2: How are the efforts in the word of mouth creation perceived and what effect does it have on students? ... 20

4.3.1 First section – Perception about LTU before starting their education ... 21

4.3.2 Second section – The experience from “Nolle P” ... 21

4.3.3 Third section – The study year ... 22

5.0 Data analysis ... 24

5.1 Research question 1 - How does a university work to create a positive word of mouth during the first year for students? ... 24

5.1.1 Functional quality ... 24

5.1.2 Technical quality ... 24

5.1.3 Relationship quality ... 25

5.2 Research question 2 - How are the efforts in the word of mouth creation perceived and what effect does it have on students? ... 26

5.2.1 Purchasing behavior effect ... 26

5.2.2 Relationship building ... 27

5.2.3 Repurchase effect ... 27

5.2.4 First impression – Halo effect ... 27

6.0 Findings and Conclusion ... 30

6.1 Cross – case analyze ... 30

6.1.1 First section ... 30

6.1.2 Second section ... 30

6.1.3 Third section ... 30

6.2 Implications for theory ... 32

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6.3 Implications for management ... 32

6.4 Implications for future research ... 34

7.0 Reference ... 35

7.1 Internet references ... 35

7.2 Article references ... 35

7.3 Books references ... 37 Appendix 1 – interview guide

Appendix 2 – focus group guide

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1

1.0 Introduction

In this chapter we will provide a background following with a problem discussion. In the background we will discuss the word of mouth and then present a problem discussion. We will also present two research questions.

1.1 Background

Word of mouth means according to Procter and Richards (2002) that “we share the risk in what is increasingly a risk society” which means that in a society where there are a lot of different choices you will share your experience/risk of one product or service with other people so they don‟t have to take that risk. This is going on in our society right now and this is more trust worthy then some sales person or an ad.

Another definition comes from Oxford dictionary (2011-04-14) where they define word of mouth like it‟s a “spoken communication as a means of transmitting information” which according to File and Prince (1992) is something businesses really should take care of. Word of mouth can have a huge effect on people because they seem to trust other customers more than commercial ads. File and prince (1992) stated that marketers need to be more aggressive towards customer‟s satisfaction program because it is the most efficient methods to recruit new customers for the reduced overall investment. The result out of this method according to File and Prince (1992) is that satisfied customers will be more loyal and recommend that business before other competitors to their friends. Traditionally positive word of mouth have seen a side benefit and been viewed as a low budget promotion.

Now a day word of mouth can have a huge impact on business, let‟s give an example. The success of the first Harry Potter book was according to Procter and Richards (2002) almost entirely thanks to the word of mouth amongst children. Harry Potter books are very popular around the world. JK Rowling has sold more than 400 million copies of her book worldwide (news.bbc.co.uk, 2011) and all started with word of mouth amongst children.

Another example from word of mouth is the company Facebook Inc that came from a person whose name is Mark Zuckerberg who studied psychology at Harvard. Zuckerberg created “the Facebook” that it was first called. After 24 hours there were 1200 people who already had signed up for the community. After a month half of the undergraduate students at Harvard already signed up for Facebook. (guardian.co.uk, 2011) There had not been any advertisement for “the Facebook”. The word of mouth effect was the main source were people found out about Facebook and now Facebook have over 500 million users and 50% of them are online daily, people even spend over 700 millions of minutes per month on Facebook (facebook.com, 2011).

There are two examples that have been spread through word of mouth and are now one of the most read books and the biggest community in the world.

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2 1.2 Problem discussion

Word of mouth may be a powerful tool to use, it is very hard for the marketers to control the outcome because you never know what the customers will say about the company. The word of mouth is cheaper than regular advertising or broadcasting. If you manage to understand the tools of word of mouth the advantage can be huge compared to competitors. The word of mouth can be a result from the first impression, the core service or product, social benefits, relations etc. (Procter and Richards 2002)

Not many companies or organization have a defined strategy on how to create word of mouth neither do many follow up how customers are talking about the company or organization.

(Procter and Richards 2002) According to Ng, David & Dagger (2011) word of mouth is important to service providers like; hotels, restaurants, schools and universities etc. A university is relying on students to talk positively about the university in order to recruit new students. When you start at a university you´ll probably move away from home for the first time, have your first apartment etc. To make the decision and move will enhance if you hear positive things about the university you‟re considering.

Early in this section we said that the word of mouth can come be a result from different factors. Those factors contribute costumers to engage in positive or negative word of mouth.

For example the first impression can come from a lot of different factors, shopping at a new store, eating on a new restaurant or starts university etc. you will always get a first impression.

It could be both negative and positive depending on your preferences. As a business owner you always want to create a great impression for the first time and if you look at for example luxurious hotels always have personal parking your car, taking your bags and a very nice entrance, just to give you the best first impression for your stay in the hotel. If the hotel does something good and leave you with a good mood you may be more forgiving towards them in the future which some researchers call a halo effect (Oh and Ramaprasad 2003). The halo effect and the first impression could lead to a good reputation from the company. A company should always try to create a good reputation among the customers because that leads to a positive word of mouth, this means that the costumers are happy and gladly recommend the business to other costumers. The customers usually talk good if they feel like they have been treated good or received something in value like a good education at a university. A university is somehow different from a business or an organization since most of the universities

“customers” (students) lives around the campus area and spend most of their spare time at and around the campus. The main difference is that students are involved emotional in the university. For example if a customer‟s has bought a tv and is not happy with the service offered or product he can just change to another company for his next tv. For students the procedure is more complicated, he/she have to move, start at another university etc. A university also has more time to connect with the customers than for example an electronic shop.

The figure below is to show how a first year at a university is like and what time limit a university has to create a positive word of mouth amongst students.

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Information about a university sends out to new students

"Nolle P" begins

First semester

Second semester

1.3 The first year for new students at a university

Figure: 1, time process

1.3.1 Information about a university sends out to new students

A university sends out information to new students about the university and some practical information

1.3.2 August – “Nolle P1” begins

The time frame that a university has to create a first impression and give new students a good welcome have we estimated from the meeting with the registration and the rest of the “Nolle P”. The registration is an important step because this is when the students actually get to meet with the staff at a university. After the registration the students meet their “phösare2” and their classmates. Togeheter for the next two weeks of “Nolle P” they explore the university and encounter the different activities and opportunities there is on campus.

1.3.3 Septebember – December – First semester of studies

This is the period that students starts their education and get in touch with the courses and how it is to study at the university.

1 “Nolle P” is an orientation of the university and to meet with the new classmates for two weeks before the

2 Older students that take care of the new students

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4 1.3.4 January – June- Second semester of studies

The students are knows what it´s like to study and not everything is new and exciting anymore.

In this thesis the figure 1 will be divided in three sections with:

 Section one: Information been send out

 Section two: “nolle p” and the experience from “nolle p”

 Section three: Rest of the study year

1.4 Research purpose and questions

Based on the problem discussion our purpose with this thesis is to research a university‟s ways of building word of mouth during the first year for new students. We will also examine how that work is perceived by students. Based on problem discussion we have constructed two research questions:

- Research question 1 - How does a university work to create a positive word of mouth during the first year for students?

- Research question 2 – How are the efforts in the word of mouth creation perceived and what effect does it have on students?

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2.0 Literature review

Since our area of research is to see how a university works to create a positive word of mouth during the first year for new students our literature review will begin with theories about the first impression when the new students arrives to a university and meet the staff for the first time. We will then present a theory on the Halo effect which can be a direct effect of the first impression or encounter. After the Halo effect we will present theories about how to generate positive word of mouth and what effect the word of mouth may have.

2.1 First impression – covers the section one and two in figure 1, time process, section problem discussion

The first impression is often a matter of seconds or even milliseconds, according to Lindgaard, Fernandes, Dudek and Brown (2006) you have only 50 milliseconds to make a first impression. Boe (2008) states that humans are divided into four different behavioral styles: aggressive, expressive, passive and analytical. Although these four different approaching styles Boe (2008) gives a theory for how to give the costumer a sense of satisfaction after your encounter for all four styles. You should always smile, keep good eye contact, show the costumer the palms of your hands and not fold your arms or legs. Boe (2008) also mentioned the “matching and mirroring” which means that you copy your costumer‟s body language gestures; subconsciously this tells another that you like them and agree with them. At all times keep your focus on what the customer is saying and do not interrupt, argue or try to dominate the conversation. Boe (2008) also state that companies or organizations that fail to implement an effective service for their costumer leaves the door open to competitors. John Andrews head concierge at the Goring is on the same line when he states "If you get the warm welcome and the fond farewell right, the bit in the middle looks after itself". Witschger (2011) says that “If you take care of your customers, they will take care of you” and the he extends that into “If you make a partnership level commitment to your customers, they will make a partnership level commitment to you.” (Thomas, Daniel. (2010 p.30). If you managed to get the first impression right it could lead to a Halo effect.

2.2 Halo effect – covers the section two in figure 1, time process, section problem discussion

Nisbett and Decamp Wilson (1977) states that the general definition of halo effect is “the influence of a global evaluation on evaluations of individual attributes of a person.” but Nisbett and Decamp Wilson also states that this definition is imprecise with respect to the strength and character of the influence. In an extreme way the halo effect can depend on extrapolation of a general impression to the unknown attribute. These specific attributes can be affected by the global evaluation and information, like if we like a person we assume other persons that we have known for a little time also have these attributes. Like Politian‟s who make them self look warm and friendly but say little about the issue. This comes from the theory “nice people tend to have nice attributes and less nice people have less nice attributes” (Nisbett and Decamp Wilson,1977) This can also be twisted through word of mouth by someone told you that a person who is warm and friendly is impetuous. But people

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will think in different ways if someone says that a person who is impetuous is angry and hostile.

In 1977 Richard E. Nisbett and Timothy DeCamp Wilson from University of Michigan have presented a research about the halo phenomenon, they conducted interviews with two different persons which both spoke English with an European accent, one of them were warm and friendly and the other were cold and distant. The persons who got interviewed by the warm and friendly person thought that his attributes like appearance, mannerisms, and accent as appealing but with the cold and distant person these attributes where annoying. (Nisbett, &

DeCamp Wilson, 1977)

In this experiment an impression is make it or break it for a person and the same thing is for a business. In business if you make a good first impression the companies attributes is looking good but if the impression is not good then your attributes can be seen as annoying.

Tim Foster (Professor at Luleå university of Technology) describes the halo effect like a person or an organization that get´s a halo around their head, like an angel. Simply means that if you get it right the first time, people will look more kindly towards you when you screw up.

If a person or organization have failed to impress you in the beginning and are doing something really good later, they still won‟t look as good. Coombs and Holladay (2006) states the halo shield is to protect the stakeholder‟s view of the organization reputation.

If a company or organization managed to get a halo around the company‟s name people will start to talk about that company or organization in a positive way. When costumers are talking good or bad about a company or organization with their friends and relatives it´s called the word of mouth effect.

2.3 Generating positive word of mouth effect through qualities benefits – covers all sections in figure 1, time process, section problem discussion Ng, David, & Dagger (2011) present a theory where they show that with confidence-, special treatment- and social benefits can improve a customer‟s perception of a company‟s three qualities. The three qualities are; functional-, technical- and relationship quality.

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7 Figure 2: Generating positive word of mouth Source: Ng, David, & Dagger (2011) p. 135

2.3.1 How functional quality increases with benefits

Relationship benefits are considered an important variable that influence how customers perceive the service a business offers and the interactions. Ng, David, & Dagger (2011) categorized the different relationship benefits like, Confidence-, special treatment- and social benefits. According to Ng, David, & Dagger (2011) the impact of these three types of benefits is different and can change a costumer´s behavior and intentions. Ng, David, & Dagger (2011) states that the benefits will provide the customers with an additional value when they have a relationship with the business; it is likely that the businesses offerings will be enhanced thanks to the perceived service quality.

(Figure 2 H1) Bell (2005) states that “functional quality refers to the process of core service delivery and the interactions that take place between a customer and service provider” (Bell 2005 p. 135). Ng, David, & Dagger, 2011 states with the increasing competition in industries today it‟s getting more important to focus on both the core service offering as well as the processes that may lead to improved customer perception in service delivery. According to Ng, David, & Dagger (2011) a way to improve a customer‟s perception of functional quality is to hire employees with customer service training. If companies where to improve the relationship benefits it may according to Ng, David, & Dagger (2011) improve the perception of the core service offered by the company.

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(Figure 2 H2) Special treatment benefits are according to Ng, David, & Dagger (2011) benefits a business offers customers who is in a relationship with the business. It can be both monetary and non monetary offerings, like special price, discounts, quicker service or specialized services offered beyond the core service. These offers are according to Ng, David,

& Dagger (2011) functional orientated and may be driven by the special benefits thanks to the service quality which includes functional elements like friendly and engaging staff.

(Figure 2 H3) Social benefits is according to Ng, David, & Dagger (2011) the relationship you build with your customers and more on the emotional way, like try to build a friendship with the customers by recognize the customer‟s name or know what they like. Ng, David, &

Dagger (2011) states that with relationship in functional quality you should show the customers respect, be friendly, be accessible and empathetic.

2.3.2 How technical quality increases with benefits

Bell (2005) states that “technical quality refers to the actual outcome resulting from an encounter with a service provider” (Bell 2005 p. 136). This means the result a customer perceived talking to an employee, if the costumer felt is as a helpful advice or if the customers perceived the service to meet their demand. Reliability is an important factor in technical quality because of the customers‟ expectations of what they want to receive and the expertise of the service personal. (Ng, David, & Dagger 2011)

(Figure 2 H4) Confidence benefits are according to Ng, David, & Dagger (2011) known to improve the relationship with customers and it is likely that confidence benefits have an impact on the customer‟s perception of technical quality.

(Figure 2 H5) Off all the relationship benefits the special treatment is the more tangible. That is why it is more likely that special treatment service will improve the perception of the outcome of the service according to Ng, David, & Dagger (2011). Ng, David, & Dagger (2011) talks about the social exchange theory that states that; “customer’s makes a cost- benefit analysis in their mind when compeering alternatives” (Ng, David, & Dagger 2011 p.137). When customer´s feel they getting special treatment it is more likely to consider the company when they are doing their cost-benefits analysis. (Ng, David, & Dagger, 2011) (Figure 2 H6) Social benefit is according to Ng, David, & Dagger (2011) the reflection of the relationship a customer have with company and employees. The attribution theory states that

“customers that are satisfied as a result of the social benefits offered by a firm are then likely to attribute positive feelings towards that firm and have positive perceptions of the core offering (Ng, David, & Dagger 2011, p. 137).

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2.3.3 How relationship quality increases with benefits

Ng, David, & Dagger (2011) see the relationship quality as “consisting of satisfaction, trust, and commitment” (Ng, David, & Dagger 2011 p.137). Ng, David, & Dagger (2011) mean that satisfaction, trust and commitment are an appropriate measure of relationship quality. The relationship quality theory reflects the relationship between the provided service and the customer.

(Figure 2 H7) The confidence benefits by customers are according to Ng, David, & Dagger (2011) one of the key variables that influences relational responses from customers. When customers receive confidence benefits it will reduce the perceived risk, anxiety and increase the trust. That is why confidence benefits are considered to be one of the most important of all relationship benefits. Some examples of confidence are the feeling of security in knowing what the outcome will be with the service encounter. To increase confidence the company needs to adapt to the customer´s expectations of the service. (Ng, David, & Dagger, 2011) (Figure 2 H8) In the relationship theory with special treatment the benefits are according to Ng, David, & Dagger (2011) often tangible. Some examples of benefits that may result in better perception of relationship quality are; price breaks and quicker service than expected.

Recent studies show that tangible aspects of the service offering like special prices or services are positively related to relationship quality. (Ng, David, & Dagger, 2011) (Figure 2 H9) Interaction between customers and employees has shown according to Ng, David, & Dagger (2011) to increase the satisfaction among customers. According to Ng, David, & Dagger (2011) previous research has shown that a positive relationship between social benefits and relationship quality will increase the customer‟s satisfaction and commitment to the service provider. Henning-Thurau (2002) states that “commitment mediates the relationship between social benefits and word of mouth.” This mean according to Ng, David, & Dagger (2011) that if customers feel a social bond with the employee it is likely that it will increase the trust and thereby social benefits may directly enhance relationship quality.

2.3.4 How to generate word of mouth with the qualities

Studies in Ng, David, & Dagger (2011) report suggest that trust and loyalty is an outcome of a positive impact on the behavioral intentions. Also word of mouth is considered an outcome of services. It is therefore very important that companies understand that relationship and service quality have an impact for a positive word of mouth among the customers. (Ng, David, &

Dagger, 2011)

(Figure 2 H10) Functional quality is related to the service encounter process. With a high functional quality it is more likely that customers get encouraged to engage in a positive word of mouth behavior. This is because customer‟s talks with each other about their experiences with the service, this can determine the customer‟s perception and action. (Ng, David, &

Dagger, 2011)

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(Figure 2 H11) The technical quality which is the customer‟s perception on the service encounter, could lead to customer telling others about their experiences. If the customer‟s perception of the experience is good it can lead to a positive word of mouth. (Ng, David, &

Dagger, 2011)

(Figure 2 H12) According to Ng, David, & Dagger (2011) a positive word of mouth amongst customer can be reached by customers-employee relationship. This has made firms to focus more on building relationship with customers in order to enhance their positive word of mouth. (Ng, David, & Dagger, 2011)

2.4 The effects of word of mouth

Forming an impression is an active process and starts when people organize the information that is available (Hamilton, & Katz, 180). Miller (1970) conducted an experiment with photographs; he gave out photographs of attractive and unattractive persons and asked the subjects to rate the personality of people in the photograph. The result Miller (1970) got was that persons who were attractive got rated better then the person who were unattractive. This goes for businesses too, companies and organizations needs to look attractive because then you seem to have better attributes then your competitors.

Boe (2009) talk about a ripple effect, the ripple effect is when you throw a stone in a pond and the waves ripples expands over the surface. Boe (2009) states that the best way to generate a ripple effect is to continuously trying increase the quality of the service they offer. Boe (2009) also mentioned that many short minded salespeople view customer service and treatment as an administrative burden and that may hit back to a negative ripple effect/word of mouth effect. Godes (2004) believes that costumers are most likely to be influenced by their social interaction when making a decision.

2.4.1 Purchasing behavior effect

Positive word of mouth has been identified as an important post purchase behavior.

Costumer‟s often talks amongst each other about a products or services that are “new, exciting, noticeable, personally experienced, complicated and expensive products and services” (Rosen 2000). The word of mouth interactions often take place with friends, partner, relatives and strangers. Home is the most frequent location (39.7 percent), followed by work (21.6 percent), and commercial settings (13.7 percent) (Carl, 2006 in Nikbin, Ismail, Marimuthu, Abu-Jarad (2011). In Nikbin, Ismail, Marimuthu, Abu-Jarad (2011) report Mangold et al. (1999) says that interaction with; friends, partner, relatives and strangers have a big impact on costumer´s purchasing behavior because the information is viewed as credible (Yi, 1990 in Nikbin, Ismail, Marimuthu, Abu-Jarad 2011). For example the differences between a satisfied customer and an unsatisfied customer are of big difference since customer are most likely to talk with friends about the experience.

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11 2.4.2 Repurchase effect

Repurchase intention is when a customer is satisfied with the product or service provided and wishes to establish a relationship with the product or service (Jones and Taylor, 2007 in Nikbin D, Ismail I, Marimuthu M, Abu-Jarad I.Y 2011). To preserve the existing customer stock is of great concern though the cost to obtain new customer´s is relatively high (Spreng et al., 1995 in Nikbin D, Ismail I, Marimuthu M, Abu-Jarad I.Y 2011). A company or organization with a positive reputation has a larger account of repurchase than companies or organization with an average reputation it is also less likely that customers´ spread negative word of mouth (Hess 2008 in D, Ismail I, Marimuthu M, Abu-Jarad I.Y 2011).

Summary: The theories presented in the section above will we use when analyzing the data we will collect. We will show in our conceptual framework which theories we will work with for research question one and two.

2.5 Conceptual framework

A conceptual framework explains, either graphically or in narrative form the main things to be studied (Miles & Huberman 1994). This conceptual framework will be the base for analyzing the data we will collect.

2.5.1 Framework research question 1

We have based our research for our research question on (How does a university work to create a positive word of mouth during the first year for students?) on the theory generating a positive word of mouth. The theory generating a positive word of mouth is from Ng, David, &

Dagger (2011) and we will use this theory because it is relatively new and serves our purpose.

Generating positive word of mouth

Functional quality

Technical quality

Relationship quality

Table 1: Framework RQ 1

2.5.2 Framework research question 2

In research question 2 (How are the efforts in the word of mouth creation perceived and what effect does it have on students?) have we chosen Nikbin, Ismail, Marimuthu, Abu-Jarad (2011) and the theories purchasing behavior effect and repurchase effect because these are the most recent studies. We will use a small part of the relationship section in Ng, David, &

Dagger (2011). The halo effect theory by Nisbett and Decamp Wilson (1977) will we use because their study came up with conclusions about the Halo effect.

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12 Effects of word of mouth

 Repurchase effect

 Purchasing behavior effect

 Relationship theory

First impression - Halo Effect

 Perception about the first impression

Perceived attributes of the employee

Table 2: Framework RQ 2

2.5.3 Framework research question 1 and 2

Our research is to examine how a university works to create a positive word of mouth effect and to see how that work is perceived and what effect that work have on students. In the two sections above have we presented what we will base our case analysis on in each research question. Here we will present how we will use those theories for a cross case analyze in the final chapter findings and conclusion to see if the work from a university match the students perception.

University Students

Functional quality First impression perception

Technical quality Halo Effect

Relationship quality

Repurchase effect Purchasing behavior effect Relationship perception Table 3: Framework findings and differences

In the cross case analyze we will take how a university works with functional quality which is the service encounter process according to Ng, David, & Dagger (2011) and we will put that against how the students perceived the first impression and which effects it had. Next we will examine how a university is working with the technical quality which is the customer‟s perception on the service encounter against the halo effect theory. We will then examine how a university works with relationship quality which includes confidence against the theories purchasing behavior effect and the repurchase effect.

Summary: In this chapter have we presented theories and a conceptual framework to rely on when analyzing our data. In the next chapter will we present how we will collect data.

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3.0 Methodology

In the previous chapter we presented theories and a conceptual framework. In this chapter we will present our research strategy for collecting- and analyzing data in order to answer our research questions.

3.1 Research purpose

Our purpose with this study is to research a university‟s ways of building word of mouth during the first year for new students. There is a lot of existing research that have been done in this field of research and that is why we will use a descriptive study.

In a descriptive study there have been previous studies in the field of research and your research will be an extension of that research (Saunders Lewis and Thornhill 2003). The things that differ can be the aspect, perception, level, concept or terms (Eriksson and Wiedersheim 2006).

3.2 Research approach

Qualitative research is a deeper deception of people‟s attitudes, value and perception (Lundahl

& Skärvad 1992). The research shows an overall picture and gives the researcher an understanding in the social processes and connections (Holme & Solvang 1997). The questions you want to be answered will have a deeper meaning, like why people do one thing or not. The analysis of qualitative data is more complex because there are no numbers in qualitative data.

We have chosen a qualitative research because our research purpose is descriptive. We want to get a deeper understanding of how a university works to create positive word of mouth and how that is perceived and which effects it may have during the first year for new students.

3.3 Research strategy

According to Yin (2009) there are three conditions that need to be met when you are conducting a research, these are:

The type of research question posed

the extent of control an investigator has over actual behavior events

the degree of focus on contemporary as opposed to historic events

Also according to Yin (2009) there are five key methods to collect the data which are experiment, surveys, archival analyses, history and case study.

When you conduct a research there are a numerous question that can be asked, like “how,”

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“why,” “what,” “where” and “who,” these are from the first condition “The type of research question posed.” Yin (2009) also states that if you use “how” or “why” it is more of an exploratory question and are more appropriate to use case studies, histories and experiments as research method. Furthermore Yin (2009) states that there are two different “what”

question´s, one is quantitative and one is qualitative.

We have based our research on more in-depth questions like, how and what. As stated above we are conducting a qualitative study which is why we have chosen to work with case study (studies). This is to find out how a university works to create positive word of mouth and how that is perceived and which effects it has.

3.4 Sample selection

Sample selection is something you have to do because it would be too time consuming, expansive or difficult to have access to everyone (Saunders 2003). The method of sample technique will provide you with a reduced amount of data from the population but it should be representative for that sample. In order to pick out respondents we have chosen a non- probability sampling because in the interview we need a specific persons to do the interview with, the same with the focus group. We have chosen to use the technique, self-selection.

University

We have chosen Luleå University of Technology (LTU) for this research as we both are students at LTU and will have an easier way to collect data.

Interview

We have decided to do interview with staff employees at LTU to see how the school is working to create a positive word of mouth for new students.

Focus group

We will conduct a focus group with six students from the business program. This focus group will examine if the methods LTU are using to creating a positive word of mouth works and which effects it may have on students.

3.5 Data collection

There are two types of data you can use when conducting a research, primary data and secondary data. According to Eriksson and Wiedersheim (2003) the secondary data is mostly used in the beginning.

A case study is a good way to get information because the data comes from many different sources according to Yin (2009). Furthermore Yin (2009) states that when you are conducting a case study there are six different sources which are the most common ones, these are:

Documentation

Archival records

Interviews

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Direct observations

Participant observation

Physical artifacts

This list can be very extensive with tape recorders, photos, video tape and so on (Yin 2009).

In this study we will rely on two different types of data collection, interview and focus group.

According to Yin (2009) interview is one of the most important sources of information in a case studies. Yin (2009) states that there are three different types of interview´s, in-depth, focused interview and a structural one that are outlined as a survey. In-depth interview is when you ask about facts about the subject and their opinion (Yin, 2009). To go even further is to ask the reason behind their answers. An in-depth interview should according to Yin (2009) be during a longer period of time and not just with one sitting, it doesn‟t have to be the same person. The interview will be recorded by voice recorder because it will be easier to collect the data. It will also exist a structural interview guide which will help the interviewer with what is needed to be asked (Appendix 1).

A focus group is a number of mixed people that sitting in a group and discussing the subject.

To keep the conversation alive and within the boundaries there will be a moderator in the group. The ideal number of people for a focus group is according to Krueger (1994) from six to nine people, but even a group from four to twelve people. There are two different reasons why you should consider the number of the group. When the group is small all will have the opportunity to express what they have to say and when the group is large it will bring diversity in the discussion Krueger (1994). We have chosen to use six students in our focus group so everyone that wants to talk gets the chance. See Appendix 2 for our focus group questions.

3.6 Data analysis

According to Yin (2009) data analysis is when you; examine, categorizing, tabulating, testing or recombining evidence to draw empirically based conclusions. Yin (2009) also states that there are four different strategies relying on theoretical propositions, developing case descriptions, using both qualitative and quantitative data and examining rival explanations.

There are five way´s you can take in a case study; pattern matching, explanation building, time-series analysis, logic models, and cross-case synthesis.

In this case we have chosen that the best way to analyze our data is to use pattern matching in a within case analysis. We will use the theories that are stated in chapter two and compare them with the data we collected. After we have compared the theories to the data we have collected we will use Miles and Hubermans (1994) theory of collecting and showing data.

According to Miles and Huberman (1994) there are three parts of process in analyzing data.

The first process is data reduction which contains summarizing and simplifying data and/or selecting some part of the data. The second one is data display which includes the reduced

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data put into an organized and/or visual way for an easier way to draw conclusions. The last part is conclusion drawing and verifying where the researcher finds pattern, regularities, relationships and trends in the data display.

3.7 Validity and reliability

When you conducting a case study Yin (2009) states that there are four tests that are usually done in any empirical social research to define the trustworthiness, the credibility, the conformability and the data dependability. The four tests are shown in the table below.

Test Case Study Tactic Phase of Research in which

Tactic Occurs Construct Validity -Use multiple sources of

evidence

-Establish chain of evidence -Have key informants review draft case study report

-Data collection -Data collection -Composition Internal Validity -Do pattern-matching

-Do explanation-building -Address rival explanations -Use logic models

-Data analysis -Data analysis -Data analysis -Data analysis External Validity -Use theory in single case

studies

-Use replication logic in multiple-case studies

-Research design -Research design

Reliability -Use case study protocol -Develop case study database

-Data collection -Data collection Table 4: Case study tactics for four design tests

Source: Yin (2009), p. 41

To construct validity when you make the data collection and to increase the validity we have chosen to use a voice recorder in both the interview and the focus group. To enhance the internal validity we will use pattern matching as suggested by Yin (2009).

External validity is the generalization beyond the case study, which means that with high external validity you should be able to apply the result to a lot of other studies. Our case study will be weak in the external validity because we will conduct a single case study. To reduce the weakness in our study we have chosen to pick out respondents that are involved in the work with students and the work with creating word of mouth.

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With the last reliability test you need to make sure that if someone else would do the same case study they would get the same conclusion and result. We will conduct the interviews the same way with all the participants and also the focus group.

Summary: In this chapter we have shown how we will collect and analyze the data for the best result on our questions from the interview guide. In the next chapter are we going to present the data we collected.

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4.0 Empirical data

In the previous chapter were we discussed how to collect and analyze data. In this chapter we will present the collected data from an interviews and a focus group. First we will present information about the University of Choice then present the data from the interview for our research question one and the data collected from the focus group for our research question two.

4.1 Information about Luleå University of Technology

Luleå University of Technology (LTU) was established in 1971, it started as a technical oriented college in the newly built D-house on campus. There was only one program in the early years which was a machine technical program. In the year of 1972 LTU started a one year basic technology program so people who studied social science in high school could attend a technical program.

In the year of 1975 the first engineers received their degree and the year after that the first mountain engineers graduated. LTU got a two year program called “middle engineers”, a program called “build the society in the technical department”. In the social science LTU started to graduate kinder garden and middle school teachers and started an economic- and secretary-program.

During the 80s many new programs started at LTU and one program, the road and water building program was filled right away. The economic program got modified to 3.5 years and the teacher program got reduced because the government though it would be an overflow with teachers. LTU got their first exchange program with Colorado school of mines and expand the library to twice the size of what it was. The foundation Aurorum started to achieve a development village of companies in connection to the college and in the late 80s the first company moved in to the Aurorum complex.

During the 90s the college started to develop new programs in Luleå but also in Kiruna and Skellefteå. The college started to give summer courses in 1993 and in 1997 Luleå became Luleå University of Technology as we know it today and was the first technological University in Sweden. In 1999 LTU passed the 10 000 student maker.

The beginning of 2000 three students from LTU conquered Mont Blanc with a flag from LTU, also that year the king of Sweden initiated the multimedia studio at LTU. In 2001 LTU celebrated 30 year and within that year seven Nobel Prize winners held an open lecture at LTU. As in the 80s and 90s the university developed more programs and was the first university to connect them self with high speed internet. During the year of 2003 there was a huge down fall of students who applied to LTU which made the university to put in a lot of recourses in marketing to bring up the of LTU as a brand. In 2007 LTU innovation started to help students with support of their ideas and the year after LTU start career center.

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We will refer Luleå University of Technology as LTU in this thesis.

4.2 Research question 1: How does a university work to create a positive word of mouth during the first year for students?

In order to know how LTU are working to create positive word of mouth among students we interviewed Mauritz Danielson, chief of student service. Mauritz main task is to take care of the student while they are studying at LTU. We interviewed Mauritz at his office 2011-05-18 at 11.00 am. The interview was an open question interview and we let him explain what he is working with and what the university is doing in our area of research. Due that the interview was in Swedish we have translated the answers to English. We have divided the interview on three sections.

4.2.1 First section – Perception about LTU before starting their education

The first question we asked was how the university is working to give the best impression as possible for new students. First of all Mauritz said that LTU tries to keep the website loaded with materials with information about the courses and the different program that LTU have.

The homepage also contains information about what the first week will give you, how to rent an apartment and a check list of what students should think about when being accepted at LTU. As Mauritz explained LTU have one website only for new students called “new students at us”. This website contained more practical information about student life and so on. Mauritz explained what the university did after the student have been accepted by the university. LTU wants the new students to feel welcome which is why LTU send out a welcome brochure with information about being a student at LTU and also information about the program the student have chosen to study. The information sheet brochure is a new event and has only been in use for one year which is why older student‟s haven´t received this information sheet. LTU also tries to call the new students to remind them that they should accept their spot at LTU. This is also a good chance for the new students to ask questions about the university and the student life.

4.2.2 Second section – The experience of “nolle p”

Mauritz said that before “nolle p” starts the service staff have one week of preparation and training. The service staff learns how to think when facing students, like there is no such thing as a stupid question and be happy and smile. When “nolle p” begins, the first the students will receive is a speech from the principal of the university and one from Mauritz Danielsson who explains what student service LTU is offering. During “nolle p” all the service staff is wearing red shirt to stick out of the crowd in order to make it easier for new students to get a hold of them. Mauritz said that new for this year is that they placed service staff out on the main walk way through campus called “regnbågs allén.” This was to make sure that students find where they are going and to ask questions. This is also only for this year‟s students and the older students would not have experiences from this. All the service staff has a degree in hosting and this was according to Mauritz because the staff should make a good impression and make the students feel like a guest at LTU.

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We asked Mauritz about the relationship building LTU are trying to make with the new students during the first year at LTU. Mauritz said that the university will, for the next year (autumn 2011) make sure that the coordinators for the program will meet the class during the whole year. This is to make sure that students get information and to ask questions. Also new for the autumn 2011 is that there will be fifteen new mentors for the first year students. The mentor‟s task will be to answer questions and talk to students about the education. Students have in the past complained about that they are not having courses that match their program, especially the technical programs where there are a lot of math and chemistry. That is why LTU have started to change the course order in programs so it will be more program oriented in the beginning. The next question was about the students and teachers and what the university is doing for their relationship. Mauritz said that LTU doesn‟t have a policy for how teacher´s should interact or be available for students in their office. In this section LTU are working to create a teacher culture that the students should always be able to see their teachers if they have trouble with something.

Mauritz said that the university has noticed that most students that dropout their education does that during summer break between year one and two. That is why LTU will start in the autumn of 2011 something called “ettning” which is when the previous first year student‟s return for their second year have something that resembles “Nolle P”, in order to keep the students at the university.

In the end we asked if LTU continuously worked with following ups regarding word of mouth from students. Mauritz answered that they don‟t do a follow up regarding the word of mouth.

LTU have a student evaluation which takes part every year in September with questions about the satisfaction to students. Every third year there is a larger evaluation and the last one was in May 2009.

4.3 Research question 2: How are the efforts in the word of mouth creation perceived and what effect does it have on students?

For our second research question we conducted a focus group 2011-05-16 02.00 pm and it was supposed to contain six persons from Malmö in the south to Piteå in the North (four from southern Sweden3 and three from Northern Sweden4). Due to illness it was only four students attending the focus group but with complementary focus group 2011-05-18 03.00 pm of the remaining two we felt we extracted enough information. The focus group was in Swedish and we started off by explaining how the focus group was meant to work and what function it had in our thesis. We wanted the group to talk freely and just not answer the question but to discuss within the group about the questions. We acted as moderators and lead the discussion into the question we wanted answered. At first the group where a little quiet but when we started to ask more deeply from the question the discussion took off. We divided the focus group into three sections, the first one cover´s the theory purchasing behavior effect and we

3 Not from Norrland

4 From Norrland

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asked students about their perception about LTU before starting their education at LTU, the second covers theories about first impression where we asked questions like how they experienced “Nolle P” and what confidence and perception they received from LTU during their first weeks here and the third section covers questions about the rest of the year and covers the theories halo effect, repurchase effect and the relationship- and confidence building that the students experienced during their first year.

4.3.1 First section – Perception about LTU before starting their education

First of all we wanted to know what perception the students had about LTU before starting their education, first there was mumbling but after a couple indicative questions the students started to talk. The first thing that came up was that all of the students from the south of Sweden had a negative view on LTU as a university. It was mainly the education offered that was viewed with skepticism. All had heard about LTU before but mainly about the student life and not about the education and the university. Some of the students had been on the website and searched for information about programs. The students from the North of Sweden had a slightly different view about LTU, there was not the same skepticism and one had heard only positive things from his friends about LTU. One said that the only reason chosen LTU was because it was close to home and had heard from relatives that it was a good university but didn´t had any real perception about LTU herself. A majority of the students applied to LTU because they considered it be too hard to get in to another university.

Sum up: The majority of the students had a negative view on LTU but had heard about LTU from friends. Most of the students did not have much information about the university and had mainly chose LTU because of the level of entering another university was too high.

4.3.2 Second section – The experience from “Nolle P”

After had heard about their perception about LTU before starting their education at the university we now wanted to know about the first impression and what effects that may have had on the students. The first question we asked was about the staff encounter, which is when the students for the first time meet staff from LTU for their registration. The general perception about the encounter was positive. The students felt like they were being well treated and that the staff knew what they were doing and that is was a pleasant. The students also said that the registration gave them a warm welcome at the university which was very nice.

Next question we asked was how students perceived the service and treatment that LTU offered during “Nolle P”. Overall the students were more than satisfied with the service offered by LTU during “Nolle P”. The students discussed that they were a little disappointed at the small portion of information about the program and courses they were about to take and felt that it was only party and not relative information about the education.

Sum up: The students was very satisfied with the encounter with the staff at LTU during the registration, they felt well treated and very welcome at the university. The “Nolle P” was

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overall very satisfying but the students felt that there should have been more information about the education. The students talked to their family and friends positively about LTU and their experiences during “Nolle P”.

4.3.3 Third section – The study year

Too start the discussion about the third section we started to discuss how the first semester was and how they perceived it. Some students felt that the first courses they took were slightly off topic and not very interesting. Still the student felt there was too little information and about the program and especially why study the subject they had chosen. The students felt they were just thrown in too the worlds of study without really know what they were studying too or what you job you could get by studying their subject. The overall impression for the first semester was more positive and the confidence for LTU had not been strengthening. The students discussed that the first impression had made them more positive towards LTU and they more or less overlooked the fact that the courses did not meet up to their expectations and that that first impression was one of the reason´s to repurchase LTU´s services by attending another semester at LTU. We asked the students if the first impression made them be more forgiving to LTU and they all agreed that that was the case.

We also discussed the employee – customer relation meaning staff at LTU and students during the first year. A majority of the students were satisfied with the relationship the developed with the staff at LTU especially with the service offered by “studenttorget” and the staff at the library. They also liked that you could go and talk to the teachers at any point and not have to have an appointment with them to discuss difficulties in the courses etc. However the students still felt that there was too little information and some suggestion were too have a supervisor for every program that you meet with during the year and explains about the courses and the program and why it is important to read the specific courses. One person was very disappointed at the staff relationship because he felt that the staff didn´t know what they were talking about and often gave wrong suggestions and indications about courses. That discussions lead us into the discussion about the confidence for LTU and how that had felt.

Still the students didn‟t feel much confidence for the university. The students explained this with the lack of information to read certain courses, the information about the courses and the university in general and some had one course that really made them mad because of problems with the teacher.

We asked the group was if they ever recommended anyone to attend at LTU and if yes which time period they recommended people. From the students from the south of Sweden it was only one that had recommended LTU too friends back home to attend at LTU but the rest felt it was too far away, not an exciting university and not high standard. The students from the northern part of Sweden had recommended people to attend at LTU at their first semester because they had a more positive view of LTU and Luleå and felt it was exciting at LTU.

The last and final question was; “how their perception about LTU was after their first year”

and that will sum up the focus group. The perception after the first year was for two students overall positive about LTU, one of the students still saw LTU as a university less attractive because of the standard on the education, one and two students were not positive at all. The

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confidence for LTU as a university was the most negative part and was linked to the education but mostly towards the information about courses and the program. A majority of the students felt satisfied with the first impression they received. The first impression had an impact on students and all of the students became more forgiving about LTU and the students were most satisfied in the start of their education and they felt most positive about LTU at the beginning of their education. Seen below is a summary of how the positive word of mouth had changed for students during the first year.

Figure 3: Word of mouth from students during the first year

Although the positive word of mouth changed during the year all of the students did or will repurchase LTU services again by attend another year at LTU. The students that were most negative about LTU were the students from the south of Sweden whilst the students from the North of Sweden were less likely to talk bad about LTU.

Summary: In this chapter we have presenter the data we have collected throw an interview and a focus group. In order to answer our research questions we have to analyze the data collected and we will do this in the next chapter.

Nolle P First semester Christamas break

Second semester

summer break

Word of mouth from students

Word of mouth from students

Positive word of motuh

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5.0 Data analysis

In the previous chapter we presented the data we have collected. In this chapter will we analyze the data compared to our conceptual framework. We will present one within case analyze for each of our research question. In this chapter we will answer our research questions.

5.1 Research question 1 - How does a university work to create a positive word of mouth during the first year for students?

To analyze data for our research question one we chose the theory generating a positive word of mouth by Ng, David, & Dagger (2011) and compare it to the data we collected. We will start by analyzing the functional qualities, technical qualities and then relationship quality.

5.1.1 Functional quality

Ng, David, & Dagger (2011) states that with the increasing competition in industries today, it‟s getting more important to focus on both the core service offering as well as the processes that may lead to improved customer perception in service delivery. For LTU this means that they have to give new students a good perception before starting at LTU. To create an improved perception LTU have on their website created a folder called “new students at us”

where there is a lot of information about the student life and practical information. On the website there is information on how you can apply for housing, student life, checklists and information about LTU. From a one year period LTU also sends out brochures with more specific information about the program the student have applied for and more information about the university and Luleå as a city. LTU tries to call all of the new students to see if they have any question, that the information they have received was correct and to remind them to accept their spot at the university. According to Ng, David, & Dagger (2011) this calls should be made by employees with customer service training which the staff at LTU have. All of this is to make sure that the students are confident about their choice in education and university.

The website and personal calls are according to Ng, David, & Dagger (2011) social benefits in functional quality which mean friendly and engaging staff and should lead to a better perception. The functional quality should have the effect that students feel confident and get a positive impact from LTU according to Ng, David, & Dagger (2011).

5.1.2 Technical quality

Bell (2005) states that “technical quality refers to the actual outcome resulting from an encounter with a service provider”(Bell 2005 136), which is in our research when students meet the staff and see LTU for the first time. Ng, David, & Dagger (2011) states that customers (students) makes a cost-benefit analyze when meeting or comparing options and

“customers that are satisfied as a result of the social benefits offered by a firm are then likely to attribute positive feelings towards that firm and have positive perceptions of the core offering Ng, David, & Dagger p. 137(2011). To improve the feeling the students get during the service encounter, LTU service personal have taking a hosting course to make them all feel welcome. The service personal is licensed hostesses and one week before “nolle p” LTU

References

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