I NT E RNAT I ONE L L A HANDE L S HGS KOL AN

HGSKOLAN I JNKPING





Servi ce Tangi bi l i t y and
Cust omer Loyal t y:
I s t here a rel at i onshi p?


Master`s thesis within Business Administration
Author: Joanna Magnusson
Llin Sundin
1utor: Karl Lrik Gustasson
Jonkoping May 2005


J NKP I NG I NT E RNAT I ONAL BUS I NE S S SCHOOL
Jonkoping Uniersity










Servi ce Tangi bi l i t y and
Cust omer Loyal t y:
I s t here a rel at i onshi p?



Master`s thesis within Business Administration
Author: Joanna Magnusson
Llin Sundin
1utor: Karl Lrik Gustasson
Jonkoping May 2005


Masters Thesis within Business Administration
Title: Service Tangibility and Customer Loyalty: Is there a
relationship?
Author: Joanna Magnusson & Elin Sundin
Tutor: Karl Erik Gustafsson
Date: 200S-0S-3J
Subject terms: Service marketing, tangibility, customer loyalty.
Abstract
Background and problem: 1he serice industry is steadily growing and is today
contributing more to oerall growth in Sweden than the
manuacturing industry. Serices are dierentiated through
being heterogenic, perishable, inseparable and intangible. As a
result, they are more diicult or customers to assess on
beorehand. 1his also aects marketing o serices. A study
suggested that the relationship between intangibility and
loyalty would be interesting to inestigate because to make
serices more tangible, loyalty may also be aected.
Purpose: 1he purpose o this thesis is to inestigate i there exist a
relationship between serice tangibility and customer loyalty.
Irame of reference: In the rame o reerence, theory concerning serice
characteristics, tangibility o serices, serice quality and
loyalty will be presented.
Method: 1o ulil our purpose, we hae chosen a quantitatie method.
A questionnaire was carried out in Jonkoping where 240
respondents participated. 1he results was then calculated
employing the statistical program SPSS.
Conclusion: Our results show that there exist a signiicant relationship
between serice tangibility and loyalty in three o the six
inestigated serice industries: dentistry, trael agency and
restaurants. 1he relationships are negatie meaning but
deciding causality could not be done. In the others,
hairdresser, banks and the Swedish employment agency, no
signiicant relationship was ound.



i
Table of Content
1 Introduction .......................................................................... 4
1.1 Background................................................................................... 4
1.2 Problem discussion ....................................................................... 5
1.3 Purpose......................................................................................... 5
1.4 Previous Research........................................................................ 5
1.5 Definition of a Service Firm........................................................... 6
1.6 Delimitations.................................................................................. 7
1.7 Disposition..................................................................................... 8
2 Frame of Reference.............................................................. 9
2.1 Service Definition .......................................................................... 9
2.1.1 Service Classification.......................................................... 9
2.1.2 Service Characteristics..................................................... 10
2.2 The Tangibility Continuum........................................................... 11
2.3 Tangibility of Services ................................................................. 12
2.4 Service Quality ............................................................................ 13
2.5 Service Quality Model ................................................................. 14
2.6 Customer Loyalty ........................................................................ 15
2.6.1 The Service Profit Chain................................................... 16
2.6.2 Customer Satisfaction and Customer Loyalty................... 17
2.6.3 Customer Loyalty and Profitability .................................... 18
2.7 Theory Summary......................................................................... 18
3 Methodology....................................................................... 20
3.1 Positivism and Interpretivism....................................................... 20
3.2 Method for data gathering ........................................................... 21
3.2.1 Survey Method.................................................................. 21
3.2.2 Questionnaire Design ....................................................... 22
3.3 Sampling ..................................................................................... 23
3.4 Non Response ............................................................................ 25
3.5 Data handling.............................................................................. 26
3.6 Validity and Reliability ................................................................. 27
3.7 Criticism against used method .................................................... 28
4 Empirical Findings and Analysis....................................... 29
4.1 Method of Analysis...................................................................... 29
4.2 Restaurants................................................................................. 30
4.2.1 Tangibility ......................................................................... 30
4.2.2 Loyalty .............................................................................. 31
4.3 Hairdressers................................................................................ 33
4.3.1 Tangibility ......................................................................... 33
4.3.2 Loyalty .............................................................................. 34
4.4 Travel Agencies........................................................................... 35
4.4.1 Tangibility ......................................................................... 35
4.4.2 Loyalty .............................................................................. 36
4.5 Dentistry...................................................................................... 37
4.5.1 Tangibility ......................................................................... 37
4.5.2 Loyalty .............................................................................. 38

ii
4.6 Banks .......................................................................................... 40
4.6.1 Tangibility ......................................................................... 40
4.6.2 Loyalty .............................................................................. 41
4.7 The Swedish Employment Agency.............................................. 43
4.7.1 Tangibility ......................................................................... 43
4.7.2 Loyalty .............................................................................. 44
4.8 Overall Service Analysis.............................................................. 46
4.8.1 Loyalty and Intangibility Graph ......................................... 46
4.8.2 Tangibility Continuum....................................................... 48
5 Conclusions and Final Discussion.................................... 50
5.1 Conclusions................................................................................. 50
5.2 Final Discussion.......................................................................... 50
5.3 Suggestions for further studies.................................................... 51
6 List of references................................................................ 53
Appendices .............................................................................. 57

iii
Figures
Figure 1-1 Disposition. ................................................................................... 8
Figure 2-1 The tangibility continuum and customer evaluation (Rushton &
Carson, 1989).................................................................................. 12
Figure 2-2 Total perceived quality (Grnroos, 2000).................................... 14
Figure 2-3 A remodelled service-profit chain (Heskett et al., 1994).............. 16
Figure 4-1 Restaurants loyalty and intangibility rate.................................... 30
Figure 4-2 Hairdressers loyalty and intangibility rate................................... 33
Figure 4-3 Travel agencies loyalty and intangibility rate. ............................. 35
Figure 4-4 Dentists loyalty and intangibility rate. ......................................... 37
Figure 4-5 Banks loyalty and intangibility rate. ............................................ 40
Figure 4-6 The Swedish Employment agencys loyalty and intangibility rate.43
Figure 4-7 Loyalty and Intangibility Graph.................................................... 46
Figure 4-8 Tangibility Continuum. ................................................................ 48

Appendices
Appendix 1 Survey Swedish version......................................................... 57
Appendix 2 Survey English version........................................................... 59
Appendix 3 Correlation Outputs ................................................................... 61

Introduction
4
1 Introduction
1be ivtroavctiov cbater ae.cribe. tbe cbo.ev robtev, bac/grovva ava vro.e of tbi. tbe.i.. vrtbervore,
a ai.o.itiov of tbe .tva, i. re.evtea.
1.1 Background
1he importance o serices has increased during the last decades in deeloped countries.
Many actors underlie the change rom a dominating manuacturing sector towards a
society where serices dominate. Globalisation, changing patterns in goernmental
regulation, priatisation, technological innoations and growth o ranchising hae all
contributed to this dynamic moement ,Loelock, 1991,.
In 2003, the Swedish serice industry contributed more to growth than the manuacturing
industry. 1his was, according to NU1LK`s ,1he Swedish business deelopment agency,
general director, a araaigvatic .bift ava ove of tbe targe.t rerotvtiov. iv tbe reai.b ecovovic bi.tor,`
,cited in Petersen, 2005, p. 2,. 1he Swedish serice sector has indeed expanded rapidly in
recent decades. Currently, 5 o all employment is within this sector. Moreoer, i
adding serices that are parts o the manuacturing and constructing sectors, serice
employees account or around 85 o total employment in Sweden ,Sweden.se, 2005,.
1hese igures also show the importance o the steadily growing ield o serice marketing.
In addition, theorists mean that due to serices` speciic characteristics, it is necessary to
use serice oriented marketing approaches instead o creating and applying marketing
theories that are based on tangible products ,e.g. Gronroos, 2000, Rushton & Carson,
1989,. 1he most requently cited and widely used set o serice characteristics are
heterogeneity, perishability, inseparability and intangibility ,e.g. Gronroos, 2000, Kotler,
Armstrong, Saunders & \ong, 2002, Rushton & Carson, 1989,.
It is argued by theorists that intangibility is the most critical and unique character or a
serice, because intangibility is aecting customers` as well as management`s assessment o
a serice ,e.g. larte & Dale, 1995, Johns, 1999, McDougall & Snetsinger, 1990, Rushton &
Carson, 1989, Santos, 2002,. McDougall and Snetsinger ,1990, make a clear distinction
between the concepts o tangibility and intangibility by deining tangibility as tbe aegree to
rbicb a roavct or .errice cav roriae a ctear covcrete ivage` ,p. 2, and intangibility as tbe tac/ of
b,.icat eriaevce` ,p. 28,. 1hey mean that customers respond and translate a serice`s
intangibility as, or example, being riskier and diicult to ealuate. In turn, this
acknowledgement denotes that intangibility has a direct inluence on customers.
McDougall and Snetsinger ,1990, also imply that management addresses intangibility
through stressing tangible cues and making communications more iid. 1hus, serice
proiders are ocusing on making serices more tangible to inluence consumers` decision-
making so that they can grasp and ealuate a serice on beorehand ,Johns, 1999,
McDougall & Snetsinger, 1990, Rushton & Carson, 1989,. 1he concept o tangibility in
serice industry could then be considered as fvvaavevtat to tbe avat,.i. ava ractice of .errice
var/etivg` ,McDougall & Snetsinger, 1990, p. 39,. lence, to tangibilize the intangible
serice is to be considered as a key to success or serice proiders ,Reddy, Buskirk &
Kaicker, 1993,.
In connection to a serice`s intangibility, it is recommended, as a urther study, to
inestigate in the relationship between the leel o a serice`s degree o tangibility and
loyalty ,McDougall & Snetsinger, 1990,. 1his because not only is the serice industry
expanding, trends also indicate that customers are becoming increasingly sophisticated,
Introduction
5
inormed and demanding. lence, customers are looking or better alue in the serices and
the products that they purchase ,Gronroos, 2000,. Due to rapid technological
deelopment, irms are enabled to create serices more easily, which in turn intensiy
competition. In addition, borders between countries are ading because o globalisation and
trade liberalisation policies, which orces serice companies to compete also on the global
arena. 1here is an increased serice competition, which means that it is not enough in
today`s market to compete with just the core solution o a serice ,Gronroos, 2000,. In
order to become competitie, there is a need to proide a total serice oering ,Gronroos,
2000,. lence, a customer`s selection criteria are today based on both tangible and
intangible entities ,larte & Dale, 1995,.
1o attract and retain customers, some companies choose to inest and boast their
relationship with existing customers. According to Soderlund ,2003,, there has been a
deelopment within marketing, instead o putting customers in ocus, a serice
organisation is now placing loyal customers in centre o attention. 1he importance o
customer loyalty is urther emphasised by Cook ,1996, who means that if ,ov cav`t /ee tbe
cv.tover. ,ov bare, ,ov aov`t ae.erre av, ver ove.` ,p. xi,. 1his is a statement that coheres with
Reichheld`s ,199, notion that vvtvat, earvea to,att, i. a orerfvt, bv.ive..bvitaivg force` ,p. 19,.
lence, creating customer alue is becoming the centre o any business strategy ,Reichheld,
Markey & lopton, 2000,.
1.2 Problem discussion
Because competition or customers is now iercer than beore, being able to market
serices properly is becoming increasingly important. 1heorists indicate that companies
could strengthen their serice oer by attempting to decrease serice intangibility and
thereby making it easier or customers to ealuate and examine what has been bought ,e.g.
Johns, 1999, McDougall & Snetsinger, 1990, Rushton & Carson, 1989,. Such strategies are
needed in order to surie on the market and ulil customers` expectations o the serice.
In addition, a serice proider should also ocus on increasing customer loyalty since this
will increase reenues and proitability ,leskett, Jones, Loeman, Sasser & Schlesinger,
1994,. 1o boost loyalty and to increase a serice`s degree o tangibility thereore ought to
occur simultaneously within a serice organisation. Deried rom these ongoing trends,
could it be there exist a relationship between these two important aspects o serice
marketing I so, to enhance loyalty, serice companies must also market their serices with
the purpose o making them more tangible. Could it be that increasing the degree o
tangibility o a serice will enhance customer loyalty or ice ersa
1.3 Purpose
1he purpose o this thesis is to inestigate i there exist a relationship between serice
tangibility and customer loyalty.
1.4 Previous Research
Deried rom the problem discussion aboe, it is alid to claim that serice marketing, with
special ocus on serice intangibility, is currently being elaborated upon. In particular, three
researchers hae contributed to serice tangibility and customer loyalty. Since this thesis is
linking and making use o their deeloped sureys, the researchers and their studies will be
Introduction
6
introduced below. 1he actual usage o the sureys will be urther commented upon in
section 3.2.2.
1wo o the theorists that hae made an input to the ield o serice marketing are Gordon
l.G. McDougall, a Proessor o Marketing in the School o Business and Lconomics at
\ilrid Laurier Uniersity in Canada and Douglas \. Snetsinger, an Assistant Proessor o
Marketing in laculty o Management at Uniersity o 1oronto ,McDougall & Snetsinger,
1990,. 1heir preious works hae appeared in well-known academic journals such as
Journal o Marketing, Journal o Consumer Behaiour and Journal o Marketing Research
,McDougall & Snetsinger, 1990,.
McDougall and Snetsinger ,1990, made a study, which built on preious marketing
prescriptions on managing serice intangibility. 1his study made two distinctie
contributions to serice tangibility. lirst, it deeloped a system to measure the rate o
tangibility. Second, it extended the alue o tangibility to a more competitie leel. By
introducing a measurement system, McDougall and Snetsinger ,1990, were able to place
dierent kinds o products and serices along a tangibility continuum. 1heir studies
deeloped rom considering only product classes to inole company leel, brand leel and
segment leel. McDougall and Snetsinger ,1990, started their studies by generating a
sample o items that could be used to measure tangibility. Ater preliminary tests, reliability
o a tangibility continuum was o satisaction and 9 statements were selected to measure
tangibility. Using a quantitatie method, a conenience sample, consisting o 55
respondents, was drawn to test the reliability o this proposed scale. Lach o the
respondents were asked to ealuate nine products and serices at product class leel. In
accordance with was what expected, most serices were rated toward the intangible end.
1hese statements were later scaled down rom 9 to 5, to simpliy the continuum scale.
lurther, a second empirical study was made including 122 respondents employing a
conenience sample. 1he new results proed that the reduced amount o statements also
proided reliability and was consistent with preious results. It is suggested as urther
research, to inestigate i there exist a relationship between serice tangibility and loyalty.
In order to continue McDougall`s and Snetsinger`s ,1990, study, this thesis also makes use
o a surey that is created to measure customer loyalty, which was deeloped by lred
Reichheld. le is the ounder o Bain & Company`s Loyalty Practice, which helps clients to
improe customer, employee, partner, and inestor loyalty. lis pioneer work has quantiied
the linkage between loyalty, proits, and growth. Reichheld is well known within his ield o
research. In 2003, the Consulting Magazine recognized him as one o the world`s top 25
consultants. Reichheld created a tool to monitor and diagnose organisational relationships,
which is called the Loyalty Acid 1est Surey. 1his surey, using a quantitatie method, has
been administered to a large sample o customers and employees rom loyalty-leading
companies such as Vanguard, larley-Daidson and SAS. ,Bain & Company, 2005,
1.5 Definition of a Service Firm
Johns ,1999, means that words are a medium in which concepts orm and deelop.
Relating this notion to serices, Johns ,1999, states that tbe etev.ire v.e of tbe rora .errice`
aevov.trate. tbe ivortavce of tbi. etv.ire covcet ava .vgge.t. a raia rate of erotvtiov ava aeretovevt`
,p. 959,. 1hus, it means that it is hard to proide a general description that coheres with all
existing perceptions. loweer, it is required to proide a broad deinition so that the
purpose o the thesis can be ully understood. \ithin the theoretical ramework, there will
Introduction

be a more extensie discussion, which will touch upon dierent kinds o serices and their
characteristics.
As will be urther explained in section 2.2 when discussing serice characteristics, products
can hae intangible attributes and serice output can hae tangible components, which
makes it een more diicult to distinguish and deine a serice and a serice industry.
1hereore, to separate serice` and manuacturing` industries it is necessary to look at
the serice and manuacturing ideas. 1he serice` idea ocuses upon customer
relationships and aims to meet markets through actions. 1he manuacturing` idea ocuses
upon inputs and aims to meet markets through a tangible output ,Johns, 1999,.
Johns ,1999, means that the word serice is oten used to denote an industrial sector that
aoe. tbivg. for ,ov` ,p. 959,. lence, when urther reerring to serice industries we will
group serice organisations that proide similar core serices ,see urther chapter 2,. lor
example, banks are in a serice industry that proides inancial serices. According to
Gronroos ,1998,, serice irms do not hae roavct. iv tbe forv of reroavcea .otvtiov. to
cv.tover.` robtev.; tbe, bare roce..e. a. .otvtiov. to .vcb robtev.` ,p. 330,. Serice irm, serice
organisation, company and serice proider will be used interchangeably.
1.6 Delimitations
Due to the number and diersity o serice proiders present in the serice industry as a
whole, we hae chosen to limit our study to six serice industries: restaurants, hairdressers,
trael agencies, dentistries, banks and the Swedish employment agency. 1he reason or
selecting these speciic industries will be discussed in section 3.3.
Introduction
8
1.7 Disposition
Aboe, the background and problem discussion
hae lead to the purpose o this thesis. In the
ollowing chapter, the theoretical ramework or the
thesis will be introduced. \ithin this chapter,
serices` distinct characteristics will be discussed
with ocus on their intangible eature. 1his will lead
to a continuum that displays serices` degree o
tangibility. Dierent theorists` iews o tangibility
will also be presented. lurther, serice quality and
its links to customer satisaction and loyalty are
being elaborated upon.
In chapter three, our choice o method is presented.
Positiism and interpretiism are described in order
to establish and motiate our choice o method.
Reliability and related terms are linked to the study
in order to proe quality o deried results. 1he use
and ormation o questionnaires will also be
described and ealuated.
1he results deried rom questionnaires are
displayed in chapter our. 1hey are directly applied
to the theoretical ramework to orm the analysis o
the study. linally, conclusions will be drawn and
presented, which in turn will be ollowed by a inal
discussion that contains suggestions to urther
research on the subject.
ligure 1-1 Disposition.
lrame o Reerence
9
2 Frame of Reference
1be fottorivg cbater ritt re.evt tbe frave of referevce for tbi. tbe.i.. ir.tt,, b, v.ivg aifferevt tbeori.t.`
er.ectire., a .errice i. beivg aefivea iv oraer to aeeev tbe vvaer.tavaivg for tbe .vb;ect ava to ai.ta, tbe
covteit, of .errice.. 1o rore tbe rariet, of .errice., cta..ificatiov ava cbaracteri.tic. are re.evtea.
1bereafter, .errice.` ivtavgibte ava tavgibte featvre. ritt be ai.cv..ea, .ivce .vcb a ai.cv..iov teaa. to av
vvaer.tavaivg of tbe ravge of .errice. ritbiv tbe .errice ivav.tr,. 1bere are certaiv tiv/. betreev tavgibitit,,
.errice qvatit,, .ati.factiov ava to,att,. 1berefore, att tbe.e a.ect. are ivtere.tivg ritb referevce to tbe
vro.e of tbi. tbe.i..
2.1 Service Definition
Marketing methods hae historically been directed towards how tangible products best
should be promoted towards the inal customers. 1he reason or why serices were not
equally popular was that they were considered as add-on` to the real product and thus
added little alue compared to tangible products ,Gronroos, 2000,. As the serice sector
has grown increasingly larger in deeloped countries, marketing research now includes
many aspects o how serices best should be marketed related to subjects such as serice
quality, experiences, design and deliery ,Brown, lisk & Bitner, 1994,. Beore moing
deeper into serice marketing research, it is proper to start with deining what a serice is
and how it diers rom a tangible good. A serice can be deined as av, actirit, or bevefit
tbat ove art, cav offer to avotber rbicb i. e..evtiatt, ivtavgibte ava aoe. vot re.vtt iv tbe orver.bi of
av,tbivg` ,Kotler et al., 2002, p. 832,. loweer, een though serices are claimed to be
intangible, there are dierent degrees o how intangible a serice is. Gronroos ,2000, adds
that a serice is a roce.. cov.i.tivg of a .erie. of vore or te.. ivtavgibte actiritie. tbat |.| ta/e tace iv
ivteractiov. betreev cv.tover ava .errice evto,ee. ,p. 46,. 1ogether these two serice deinitions
proide a uller iew than each does separately. lence, both Kotler et al.`s ,2002, and
Gronroos`s ,2000, iews will be employed when urther reerring to serices.
It is suggested that we can examine goods and serices using the tangibility continuum
where each good or serice is placed along a horizontal axis based on intangible,tangible
dominant aspects ,McDougall & Snetsinger, 1990, Kotler et al., 2002,. In between these
extremes are serices and products that consist o both tangibles as well as intangibles. 1he
tangibility continuum will be urther described in section 2.2.
Gronroos ,2000, argues that the way serice is deined is outdated in that serices are
iewed as something proided by a certain organisation. I looking at serice in another
way than the deinition by Kotler et al. ,2002, aboe it is arguable that customers do not
buy goods or serices at all but offerivg. cov.i.tivg of gooa., .errice., ivforvatiov, er.ovat attevtiov
ava otber covovevt. ,Gronroos, 2000, p. 3,. Gronroos ,2000, means that by adapting this
deinition, a serice can be considered as something added to these oerings that creates
alue or costumers. Regardless o what a irm produces, it is crucial to make sure that
customers engage in alue-creating processes ater they hae purchased the sought-ater
solution. Beore alue is created, the serice oer has not proided anything to anyone,
thus, alue cannot be created until ater it is purchased.
2.1.1 Service Classification
As presented aboe, there are dierent ways to deine what a serice is. Gronroos ,2000,
distinguishes between three groups o serices, core serices, acilitating serices and
lrame o Reerence
10
supporting serices. A core serice is the reason or why a irm exists on the market.
Neertheless, simply oer a core serice is not enough, urther serices hae to be added
reerred to as acilitating serices since they acilitate the use o the core serice. I these are
not present, core serice cannot unction properly. Lastly, supporting serices are also
additional but ulil another purpose compared to acilitating serices. 1hey intend to
increase the alue o the serice and, hence, make it more competitie.
Gronroos`s ,2000, way o classiying serices, are deried rom a irm`s point-o-iew.
1aking the other perspectie, rom a customer`s standpoint, a serice can be classiied
dierently. Stell and Donoho ,1996, diide serices into our dierent categorises,
conenience serices, preerence serices, shopping serices and speciality serices.
Conenience serices are inexpensie, purchased requently and with little inolement.
Preerence serices dier rom conenience serice because they hae been more
dierentiated through marketing actiities. 1he two last categories engage customers in
higher inolement when purchasing serices ,Stell & Donoho, 1996,.
By displaying these dierent serice classiications, it is clearer shown that the word serice
is dierse. Moreoer, as seen aboe, serices can be deined dierently depending on what
kind o serice implied and which perspectie taken ,Gronroos, 2000, Stell & Donoho,
1996,. \ithout going any urther into these dierent kinds o classiications and
perspecties, it is an acknowledgement to be aware o. Researchers hae also attempted to
distinguish serices rom products by bringing orth serice characteristics.
2.1.2 Service Characteristics
Many characteristics o serices hae been discussed in the literature. 1hese discussions
hae mainly eoled rom comparison with tangible goods. Stell and Donoho ,1996, argue
that as many as 19 attributes hae been used when attempting to classiy serices. 1he most
requently discussed are serice intangibility, heterogeneity, perishability and inseparability
,e.g. Gronroos, 1998, Kotler et al., 2002, Rushton & Carson, 1989,. Intangibility means that
serices can neither be touched nor ealuated beore consumption as with tangible goods.
Moreoer, depending on who consumes the serice, it will be perceied and experienced
dierently. 1his leads to the characteristics o heterogeneity. A serice perishes ater
consumption and it can neither be produced nor stored beore consumption, hence, it is
being consumed and produced simultaneously ,Rushton & Carson, 1989,. 1his leads to the
problem o unused capacity and the reerse problem i demand exceeds supply when no
inentories can be stored as a backup ,Loelock, 1991,. 1ranserring o ownership cannot
take place when purchasing a serice because o its intangibility aspect ,Gronroos, 2000,.
Intangibility and heterogeneity are not just speciic or serices while perishability and
inseparability deries rom the most important characteristic o serices, the process nature
,Gronroos, 1998,.
Loelock ,1991, adds some urther characteristics o serices: personnel, time and
distribution channels. le says that people are a part o the product in that they do not
simply come in contact with the serice personnel but also with other customers. 1ime also
play a crucial role in serice deliery because customers hae to be present or the serice
to be deliered, thus, waiting times cannot be too long. lurthermore, serices employ
dierent distribution channels compared with physical goods. Because o the intangible
characteristic, electronic channels are used largely it can also be that serice actory, retail
outlet and point o consumption are bundled together into one channel. ,Loelock, 1991,
lrame o Reerence
11
Gronroos ,1998, 2000, argues that serices are produced in processes consisting o series
o actiities where customers interact with production resources, which lead to a solution
to the customer`s problem. As a result, consumption o serices is a process rather than
outcome consumption since consuming the serice does not inole any direct outcome in
the same way as when a more tangible good is purchased. Conersely, consuming serices
is a process o producing the serice and the customer act as a participant. Adapting this
iew o serices also leads to other characteristics o the marketing mix o serices. Rust,
Zahorik and Keiningham ,1996, state that the marketing mix or serices adds three P`s to
the existing 4 ,product, price, place and promotion,, people, physical eidence and process.
People reer to the inseparability aspect in that personal interaction has to take place
between the customer and the employee. Physical eidence addresses the tangible eatures
o serices such as physical surroundings and other isible cues in the serice enironment.
Serice intangibility is the characteristic that has been most widely discussed ,e.g. larte &
Dale, 1995, Johns, 1999, McDougall & Snetsinger, 1990, Rushton & Carson, 1989, Santos,
2002,. Gronroos ,1998, argues that een tangible products can hae certain intangibility
eatures connected to them, hence, it is said that intangibility is not exclusiely a serice
characteristic. 1he dierence is that products can hae more or less tangible eatures
attached to them and that the proportion o intangibles ersus tangibles diers ,Rushton &
Carson, 1989,. Despite this, intangibility is connected to how pure goods and pure serices
dier rom each other.
Intangibility leads to problems when communicating to potential customers what the
serice can oer. 1hus, by ocusing on marketing tangible cues to customers, the insecurity
connected to intangibility can be reduced ,Rust et al., 1996,. Intangibility diers a lot
between dierent serices and thereore this problem poses greater challenges or some
but less or others. Santos ,2002, argues that ew products are completely tangible or
intangible. 1hus, a distinction between manuactured products and serices becomes less
clear. 1hereore, the statement rom Payne ,1993, that a serice has a tevaevc, towards
intangibility, heterogeneity, inseparability and perishability. lrom similar ideas, the
tangibility` continuum was deeloped, which will be urther described in the next part.
2.2 The Tangibility Continuum
As mentioned aboe, there is a belie that products as well as serices hae certain elements
o intangibility and tangibility ,Gronroos, 1998, Leitt, 1981, Santos, 2002,. Leitt ,1981,
adds that haing a higher proportion o tangibles will reduce risk when trying to
communicate the serice towards prospectie customers. larte and Dale ,1995, agree with
this notion and mean that tangibility and intangibility eatures are weighted dierently,
depending on what kind o serice or product that is concerned. lence, iewing a serice
as purely intangible and a product as tangible is not a suicient distinction. Shostack ,cited
in Santos, 2002, deeloped a tangibility continuum ,see igure 2-1, based on this idea. It
was ormed to be able to classiy arious industries rom tangible dominant to intangible
dominant. It also displays that the serice industry itsel is not a homogenous group, it does
exist a ariation in their intangible eatures ,Johns, 1999,.
lrame o Reerence
12

ligure 2-1 1he tangibility continuum and customer ealuation ,Rushton & Carson, 1989,.
In addition to the continuum thoughts, theorists mean that serices and products each
contain a certain number o search, experience and credence qualities ,see igure 2-1,,
which in turn contribute to the degree o tangibility ,e.g. McDougall & Snetsinger, 1990,
Moorthia, 2002, Zeithaml, 1991,. lence, these qualities indicate that it is not possible to
make a complete separation o products and serices.
Search qualities reer to a serice`s ability to be seen, touched and tasted. lor this reason,
these are attributes, which can be determined beore the actual purchase ,Zeithaml, 1991,.
Lxperience qualities are more intangible than search qualities. Because o the higher leel
o intangibility, serices or goods with experience qualities cannot be assessed until they
hae been purchased. Credence qualities consist o the most intangible eatures, which
might not be ealuated een ater the actual purchase. 1hus, what might dierentiate a
serice rom a tangible product in this case is that a serice contains less search qualities
,Moorthia, 2002,.
2.3 Tangibility of Services
According to McDougall and Snetsinger ,1990,, tangibility is deined as tbe aegree to rbicb a
roavct or .errice cav roriae a ctear covcrete ivage` ,p. 2,. 1hey inestigate in the deinition
urther and state that tangibility has both a physical and a mental component. Larly
discussions were more concerned with the physical component because theorists were
more interested in a customer`s examination and ealuation beore purchasing a serice.
1he mental component reers to customers` ability to grasp mentally what they will receie
i they purchase the serice. In turn, tangibility within the continuum ,see igure 2-1,, is
reerring to what extent a serice can proide a clear and concrete image. ,McDougall &
Snetsinger, 1990,
It is also claimed that there is a need to make a distinction between the terms tangibles and
tangibility. 1angibles are deined as tbe b,.icat eriaevce of tbe .errice` ,McDougall &
Snetsinger, 1990, p. 31, and tangibility eatures ocus more on the ability to isualise the
serice. In addition to McDougall`s and Snetsinger`s ,1990, tangible deinition, Rushton
and Carson ,1989, mean that there are two kinds o tangibles, the tangible surrogate
eatures and the tangible beneits. 1he tangible surrogate is the surrounding o the
intangible serice and the tangible beneits could be seen as the physical result, which the
customer receies rom the serice perormance. loweer, deried rom Rushton`s and
Carson`s ,1989, research, this diision is not clear or practitioners in the serice-marketing
ield.
lrame o Reerence
13
1he aboe-mentioned tangibility deinition will be used within this thesis. loweer, using
this deinition does not mean that serices` tangibles will be neglected. Because it is claimed
that tangibles hae an inluence on customers` ability to create a mental picture o a serice
on beorehand. McDougall and Snetsinger ,1990, mean that tangibles contribute in part to
the oerall tangibility o the serice. Consequently, they are inluencing customers`
ealuation o a serice prior purchase.
1here is a general notion that key to success is to make the serice intangibility more
tangible ,Reddy et al., 1993,. By knowing the degree o a serice`s tangibility, irms can
become aware o their competitie position in the market. Deried rom this
understanding, the company can ocus more thoroughly on strengthening the serice oer
,McDougall & Snetsinger, 1990,.
By making the serice more tangible, the customer is able to make an ealuation o it
beore and ater the purchase ,Rushton & Carson, 1989, McDougall & Snetsinger, 1990,.
lence, there seems to be a general understanding that customers ocus their assessment o
a serice upon a serice`s dierent kinds o tangible eatures. 1his coheres with the
statement that tbe tavgibte a.ect. act a. .igvifier. of .errice qvatit, ava tbat ivtavgibte .errice a.ect.
cav be a..e..ea tbrovgb tbev` ,Johns, 1999, p. 962,.
2.4 Service Quality
Beore making a serice more tangible, an organisation should identiy customer
expectations regarding desired serice quality ,Reddy et al., 1993,. 1his because there is a
certain trade-o between an ideal serice leel and costs inoled in proiding such leels
o serice. On the one hand, to gie exemplary treatment to a patient in a hospital can be
too costly and impossible due to lack o skilled personnel. On the other hand, oering
basic serices without any additional extras might perpetuate a negatie image o a
company, which in turn could lead to market ailure ,Reddy et al., 1993,. 1hereore, being
aware o what customers expect gie organisations opportunities to inest the right amount
o resources to proide serices o good quality.
1he relationship between serice alue and tangibility is ound in studies by Santos ,2002,.
Deried rom her empirical indings, it was concluded that the degree o tangibility or
intangibility does hae a signiicant eect on consumers` perception o serice quality. 1he
intention with Santos`s ,2002, research was to test the hypothesis that there exist a positie
relationship between tangibility and perceied alue. 1his hypothesis was put orward
because tangibles can be seen as a airect eo.itiov ava eticit re.evtatiov of .errice qvatit,`
,Santos, 2002, p. 295,. By making reliable questionnaires concerning serice quality and
inestigations in managerial implications through qualitatie interiews, Santos ,2002, came
to accept the hypothesis.
Santos ,2002, urther argues that consumers might actually recognise the tangible aspect o
the serice as more important than the actual consumed serice. 1he researcher supports
this notion by presenting a restaurant example, where tangibles ,such as ood, might be
considered more important than the actual intangible serice. It is also stated that the more
tangible components a serice has, the more do the tangibles contribute to serice quality
,Santos, 2002,. loweer, Santos ,2002, also detected that the opposite is equally true,
when serices inole actions, which are directed towards intangible assets such as
insurances, consumers might perceie alue o a serice as more important.
lrame o Reerence
14
2.5 Service Quality Model
Serice quality could be deined as rbaterer tbe cv.tover erceire. it to be` ,Gronroos, 2000, p.
63, or as ove forv of ratve cov.vver. receire iv cov.vvtiov. erevt.` ,Olier, 1993, p. 6,.
\hicheer deinition that is preerred, the customer`s role in the quality assessment is
emphasised. 1here are also indications that serices` characteristics ,inseparability,
perishability, intangibility and heterogeneity, make quality o a serice unique to the
customer ,Gronroos, 2000,. In turn, this means that all customers experience serices
dierently and all hae dierent expectations on serices` outcome.


ligure 2-2 1otal perceied quality ,Gronroos, 2000,.
1he quality that the customer perceies consists o technical and unctional quality ,see
igure 2-2,. 1echnical quality is what` the customer receies in the interaction with the
serice proider and unctional quality is how` the customer receies the serice. 1hese
two dimensions are claimed to aect experienced serice quality. 1he company`s image is
acting as a ilter between the two quality dimensions and the experienced quality and can
thereore aect the perception o quality. Gronroos ,2000, means, on the one hand, that i
the company or example makes a minor mistake, can a aourable image lessen the
damage. On the other hand, i an image is negatie, the mistake can hae a greater impact
on the experienced quality than it otherwise would hae. Moreoer, an organisation, which
is competing with a technical quality strategy, is only successul i no competitor is able to
copy the same technical solution. 1his is diicult, since many organisations are able to
produce similar kind o technical quality. lence, an organisation must ocus on how the
actual serice is deliered. By deeloping a serice`s unctional quality, the organisation
adds some extra alue to the customer, which increases its competitie edge. ,Gronroos,
2000,
In addition to Gronroos`s ,2000, notion o perceied serice quality, Santos ,2002, indings
also proe that the degree o tangibility is inluencing customers` ealuation o serice
lrame o Reerence
15
quality. In turn, this would mean that by making serices more tangible, serice proiders
could make an impact on the expected or experienced serice quality. lor example, being
aware o how technical and unctional quality can appear more tangible might inluence
customers` serice ealuation.
Gronroos`s ,2000, perception o serice quality has been urther elaborated upon by or
example Bitner ,1992,. Bitner ,1992, wishes to add where` to the two serice quality
dimensions, what` and how`. She means that the physical enironment, in which the
serice is deliered and consumed, has an impact in customer`s iew o the serice
experience. Bitner ,1992, labels this dimension as the sericescape`.
1he diision o experienced and expected quality indicates that i the customer has no
presumptions concerning the serice, technical and unctional quality will orm the
perceied quality. loweer, a customer, who is being inluenced by dierent channels on
beorehand, is expecting some kind o quality. Marketing communication, sales, image,
word o mouth, public relations and customer needs and alues are, according to Gronroos
,2000, aecting expected quality. 1otal perceied quality is thereore the link between
experienced and expected quality ,Gronroos, 2000,. Gronroos ,2000, means that tbe teret of
totat erceirea qvatit, i. vot aetervivea .ivt, b, tbe teret of tecbvicat ava fvvctiovat qvatit, aivev.iov.,
bvt ratber b, tbe ga betreev tbe eectea ava eerievcea qvatit,` ,p. 68,.
1he perceied serice quality model also indicates that there is a certain balance between
what serice the customer actually receies and what serice the customer expected. So, i
promising or example excellent quality through dierent kinds o communication
channels this is what the customer is expecting. In turn, this would then mean that i the
company cannot ulil the promised leel o quality, the expectation o the serice is not
met and the customer will perceie low quality ,Gronroos, 2000,. 1his could be linked with
the so called gap model`, explored by Zeithaml, Berry and Parasuraman ,1988,. It shows
that there is a gap between the expected and experienced serice i they are not consistent.
1he result o this gap could be negatiely conirmed quality, bad word o mouth, negatie
impact on corporate or local image and lost business ,Gronroos, 2000,. Bergman and
Klesjo ,2003, think that this determination o good and bad quality is een more complex.
1hey mean that i a customer was expecting low quality, a company that succeeds in
meeting the customer`s expectations would still proide low quality. loweer, i
succeeding to ulil customers` expectations by proiding quality o satisaction, customer
loyalty can be enhanced ,leskett et al., 1994,.
2.6 Customer Loyalty
A general deinition o loyal customers is tbo.e rbo rebovgbt a brava, cov.iaerea ovt, tbat brava,
ava aia vo bravaretatea ivforvatiov .ee/ivg` ,Olier, 1999, p. 2,. Olier ,1999, criticizes such
deinitions, he means that they suer rom the problem o recording what the consumer
does and do not go urther into the psychological meaning o loyalty, which is equally
important. \hile reerring to a widely stretched concept o loyalty, Soderlund ,2003, agrees
with Olier`s ,1999, notion that it is not easy to deine. Soderlund ,2003, explores the
concept o loyalty urther and means that there are certain denominators o loyalty. lirstly,
loyalty is deried rom an actor with a will. Secondly, loyalty is assuming some kind o
object that the actor directs towards. linally, loyalty is concerned with a relationship oer
time. Soderlund ,2003, means that this relationship is detected in two dierent worlds, the
physical and the mental. In the physical world, an indiidual`s behaiour in relation to the
lrame o Reerence
16
object can be obsered. In the mental world, an indiidual`s attitudes and intentions in
relation to the object are concerned.
Olier ,1999, captures in his loyalty deinition, the aboe-mentioned relections and
perspecties o loyalty. le deines it as a aeet, beta covvitvevt to rebv, or reatrovie a
referrea roavct,.errice cov.i.tevtt, iv tbe fvtvre, tbereb, cav.ivg reetitire .avebrava or .ave brava.et
vrcba.ivg, ae.ite .itvatiovat ivftvevce. ava var/etivg effort. barivg tbe otevtiat to cav.e .ritcbivg
bebariovr ,Olier, 1999, p. 2,.
2.6.1 The Service Profit Chain
Organisations, which are acting on ree markets, are encountering intense competition and
demanding customers ,Gronroos, 2000,. 1o be able to surie and create a long-term
growth and proit, it is acknowledged by theorists that organisations need to build and
nourish mutual and earned loyalty ,e.g. Gronroos, 2000, Reichheld, 199, Reichheld et al.,
2000, Soderlund, 2003,.
1o proe that loyalty is indeed something or organisations to inest resources in, there are
certain linkages between customer satisaction and loyalty ,see igure 2-3 link 1, and
between customer loyalty and proitability ,see igure 2-3 link 2, that need to be
inestigated. Soderlund ,2003, supports this notion by claiming that proitability is one o
the most central reasons or why organisations ocus on customer loyalty. In addition,
these linkages are being identiied in a so-called serice-proit chain deeloped by leskett
et al. ,1994,. 1his chain includes many ariables and linkages and stretches rom internal to
external conditions, rom employees to customers. One o the reasons or creating the
serice-proit chain was to proe the importance or serice-oriented organisations to put
customers and employees irst. leskett et al. ,1994, mean that when organisations manage
to prioritize these two stakeholders, a shit will occur in the way they manage and measure
success.
1he serice-proit chain establishes relationships between proitability, customer loyalty
and employee satisaction, loyalty and productiity. 1hus, it is claimed that proit and
growth are stimulated by customer loyalty, which in turn is a result o customer
satisaction. Satisaction depends on the customer`s perception o serice alue. Moreoer,
since it is employees together with customers that are producing and creating serice alue,
their satisaction, loyalty and productiity are also inluencing the alue generating process.
\ithin this section, more ocus will be put on the external aspects o the chain, the
relationships between an organisation and its customers ,see igure 2-3,. 1hereore, the
chain is not shown in total. 1his is done since the purpose o the thesis is partly to study
customer loyalty not employee loyalty. Len though the internal employee-oriented
linkages are not being urther examined, it is important to be aware o their existence
because they are inluencing the external customer-oriented linkages ,leskett et al., 1994,.


ligure 2-3 A remodelled serice-proit chain ,leskett et al., 1994,.
lrame o Reerence
1
2.6.2 Customer Satisfaction and Customer Loyalty
Satisaction is closely related to serice quality. It has een been claimed that the two
concepts are so entangled that there is actually no dierence between them ,Gronroos,
2000,. Olier ,1993,, contrastingly, means that in order or customers to be able to ealuate
satisaction, it has to be experienced, which distinguishes satisaction rom quality. Another
actor that separates the two terms is that setting standard or satisaction is harder
compared to quality. Gustasson, Nilsson and Johnson ,2003, state that satisaction is the
customer`s oerall ealuation o the consumption experience. 1his coheres with Kotler`s
and Armstrong`s ,2004, deinition o satisaction. 1hey propose that customer satisaction
with a purchase depends on how well the serice`s perormance lies up to the customer`s
expectations. Being able to customize the serice to the needs o the customer can increase
satisaction ,Gustasson et al., 2003,. 1hey imply that employee management, process
orientation and customer orientation are together inluencing customers` satisaction. A
manager must thereore understand customers` needs and expectations to make an impact
on satisaction.
1wo distinct actors drie customer loyalty. lirst, there are actors that satisy customers`
needs and thereby enhance their desired relationship. Secondly, actors that limit a
customer`s alternaties to the chosen supplier drie customer loyalty ,Soderlund, 2003,.
1his diision coheres with Butscher`s ,1998, statement that tbe ovt, ra, to bvita tovgterv
retatiov.bi i. to e.tabti.b reat retatiov.bi. ba.ea ov evotiov. ava trv.t, b, offerivg vviqveve.. ava bigb
erceirea ratve iv ,ovr to,att, rograv` ,p. 4,. lence, the customers who are most satisied are
the ones who stay loyal ,Gronroos, 2000, Soderlund, 2003,. Moreoer, i outcome o a
serice is more aourable than expected, satisaction can increase ,Gronroos, 2000,.
Linked to quality, it is necessary or a company to realise that a customer could be satisied
with low quality because this could also lead to customer loyalty. In turn, this would mean
that disloyal customers are discontent with the serice. loweer, there are cases where
customers, despite dissatisied with the supplier, stay loyal. 1his state o loyalty is reerred
to as alse loyalty` ,Soderlund, 2003, p. 4, and exists due to dierent kinds o barriers
such as budget restraints and inormation barriers. 1hus, the connection between high
satisaction and high loyalty is questionable, since there are customers who are satisied but
yet switch between suppliers ,Soderlund, 2003,.
Customers that will stay loyal are those that gie satisaction top scores ,Gronroos, 2000,.
According to leskett et al. ,1994,, leading companies are currently trying to quantiy
customer satisaction. An analysis, perormed by a serice organisation called Xerox, ound
that the relationship between scores and actual loyalty diered greatly depending on
whether customers were ery satisied or satisied ,leskett et al., 1994,. It was urther
detected that customers who gae satisaction top scores were six times more likely to
repurchase ,leskett et al., 1994,. Deried rom this study, a graph was deeloped that
displayed the relationship between satisaction and loyalty. It indicated that there is a
positie relationship between the two ariables, which means that i satisaction increases
so will loyalty and ice ersa. Very satisied customers that held a 100-percentage loyalty are
considered as apostles and the ones who are most dissatisied with the serice are
considered as terrorists, which reer to customers that are so discontented that they speak
badly o the serice. In between the two extremes is the so-called zone o indierence`
,Gronroos, 2002, leskett et al., 1994,. As the label indicates, customers within this zone
are neither to be considered as apostles nor as terrorists.
lrame o Reerence
18
2.6.3 Customer Loyalty and Profitability
As preiously mentioned, a major reason or inesting in dierent kinds o customer
loyalty programmes is the notion that loyalty leads to proitability ,Soderlund, 2003,. In
addition, most executies iew proitability as the most important actor in surial o their
business ,Reichheld et al., 2000,. It is claimed that companies, which do not realise the
importance o loyalty, are aoovea to av vbitt .trvggte agaiv.t torgrortb ecovovic. of ai.to,att, ava
eretvat cbvrv` ,Reichheld, 199, p. 19,. Soderlund ,2003, means that the customer`s
willingness to return to the supplier and its accumulation o knowledge and experience o
the organisation and its oerings, are actors that also strengthen the connection between
loyalty and proitability. 1here are estimations, which proes that a : ercevt ivcrea.e iv
cv.tover to,att, cav roavce rofit ivcrea.e. frov 2: ercevt to : ercevt` ,leskett et al., 1994, p.
639,. 1his means that companies should consider their quality o market shares as much as
the quantity o market shares, when measuring customer loyalty.
lurthermore, it seems as the aerage proit per customer actually grows oer the irst years
o a company`s and a customer`s relationship ,Gronroos, 2000,. 1he reasons or this
increase can be explained by reerring to the economic eects o customer loyalty,
acquisition costs, reenue growth, cost saings, reerrals and price premiums ,Gronroos,
2000,. Reichheld et al. ,2000, also detected the linkages between customer loyalty, alue
and proits. 1he irst eect is between loyalty and retention rate. According to the
researchers, loyalty reliably measures whether superior alue has been deliered. Next,
loyalty initiates economic eects such as reenue and market share growth, customer
acquiring costs decrease and employee retention rate increases. 1he third eect implies that
when costs go down and reenues up, proit increases.
2.7 Theory Summary
1here are aspects that theorists seem to emphasize and agree upon, when trying to
establish what actually separates a serice rom a tangible product. 1he most requently
discussed eatures are serices` heterogeneity, perishability, inseparability and intangibility
,i.e. Gronroos, 1998, Kotler et al., 2002, Rushton & Carson, 1989,. Serice deinitions,
classiications and characteristics hae eoled, been modulated and been ealuated upon.
Bringing up these kinds o discussions in the thesis will, thereore, gie a deeper
understanding or serices` complexity and diersity.
Intangibility has been most emphasized and is the characteristic that separates pure
products rom pure serices. Inserting this speciic characteristic in a continuum scale,
display serices wide range. 1he tangibility continuum also distinguishes serices with
credence, experience and search qualities.
Moreoer, it has been accentuated within the theoretical ramework that pure intangible
serices can neither be touched nor ealuated beore consumption. 1his challenges
marketers, since already established marketing approaches, ocusing on pure tangible
products, need to be reormed to suit serices ,Gronroos, 2000,. In addition, trying to
make a serice more tangible could acilitate ealuation o perceied quality, thus, narrow
the gap between experienced and expected quality ,Gronroos, 2000, Santos, 2002, Zeithaml
et al., 1988,. Studies perormed by Santos ,2002, indicate that there is indeed a positie
relationship between tangibility and quality. lence, serice proiders could choose to ocus
on making serices more tangible and thereby inluencing either expectations or
experiences o a serice. 1he perceied quality model outlines what is inluencing a
customer`s serice quality perception. I using these actors to make serices more tangible,
lrame o Reerence
19
the customers become more aware what to expect rom the serice and can easier ealuate
the experienced serice. In turn, serice quality can be reached since customers`
expectations are ulilled.
In turn, satisaction and quality are closely intertwined ,Gronroos, 2000,. Connecting this
notion to the serice-proit chain creates an understanding or the linkages between
customer satisaction, loyalty and proitability. It also proides an understanding or why
proit-oriented serice organisations should ocus on loyal customers as well as creating
good quality serices. Striing ater loyalty also points to that organisations should establish
what customers wish or and ulil such requests ,Gronroos, 2000,.
Methodology
20
3 Methodology
1bi. cbater ae.cribe. o.itiri.v ava ivterretiri.v iv oraer to votirate tbe cboice of vetboa. t i.
ivortavt to aaot vetboa. accoraivg to rbat i. beivg .tvaiea. Moreorer, tbe vro.e of tbi. tbe.i. .bovta
aetervive tbe cboice of vetboa. t .bovta tberefore carefvtt, be cov.iaerea rbev eratvativg rbetber to v.e a
qvatitatire or qvavtitatire vetboa.
3.1 Positivism and Interpretivism
Depending on what perspectie employed when conducting research, dierent results can
be reached. 1hereore, it is important or eery researcher to clearly state his or her iew o
the world. It can be assumed that people obsering the same thing would come to the same
conclusion but it is not the case ,Chalmers, 1999,. 1his is because we interpret things
dierently depending on our glasses used. \e will here discuss the most requently
employed glasses, positiism and interpretiism, and thereater state which one we will
make use o when conducting our research.
Positiism was irst deeloped rom the philosopher Comte`s thoughts ,cited in Lgidius,
1986,. le argued that scientiic knowledge should be deried by using mathematical
methods and through this method enabling production o objectie data ,Lgidius, 1986,.
Positiism rests on three basic principles, the social world exists externally and should
thereore be obsered objectiely, research is alue-ree and the researcher is independent
rom the object under study ,Blumberg, Cooper & Schindler, 2005,. In positiism, theory is
generated by irstly stating hypotheses concerning undamental laws and by obserations
either support or reject the hypotheses. Research is done through obsering the external
world objectiely and thereby sees how a undamental law its with society. 1he aim is to
generalise indings so that they are applicable to the rest o the world. Research is alue-
ree because acts are external and remain uninluenced by the researcher. 1hus,
researchers examining simultaneously the same phenomenon should arrie to the same
conclusion ,Blumberg et al., 2005,. Criticism against positiism has pointed at weaknesses
such as the act that organisations and groups are social units which cannot ully be
inestigated by only using numbers to describe how actors are aecting people`s
behaiour in certain situations. Critics, such as Popper and Kuhn ,cited in Lgidius, 1986,,
argued that this leads to alienation o humans since they are not treated as people but more
like data without belies or opinions. As a result, interpretiism deeloped as a substitute
or positiism.
Unlike the positiistic researchers, interpretiists hold the iew that the social world cannot
be inestigated by employing the same methods used in natural science and, hence,
propose another way to conduct research. Interpretiists iew the world as socially
constructed and it is only gien meaning by people interacting in this social world. lurther,
researchers must be part o the social world under study, thus, interact with people in the
situation rather than simply obsering. As opposed to positiistic researchers,
interpretiists are largely drien by interest ,Blumberg et al., 2005,. 1heir arguments against
positiism are that simply employing undamental laws is not enough or understanding a
complex phenomenon. Gien that people construct their social world, the researcher has
to engage in it in order to understand it properly. I research was to be repeated, it would
not necessary generate the same result because people might do arious interpretations.
Instead, research will deelop and deepen when understanding o a certain phenomena
increases ,Lgidius, 1986,.
Methodology
21
1he reason or discussing these dierent approaches is that how research is conducted will
depend on which perspectie that is chosen. I deciding on positiism, research ocuses on
inestigating objectie acts and in practice construction is usually done by employing
quantitatie methods ,Blumberg et al., 2005,. Research conducted rom an interpretie
angle would put more emphasis on interpretations and subjectie meanings in order to
detect what is going on in the inestigated situation.
Our standpoint will be somewhere in between the discussed iews. By applying a
quantitatie method, we will gather data concerning many people`s iews without doing any
deeper inestigation on a smaller sample. loweer, since collected data will derie rom
people`s belies and attitudes, we can argue that we do not apply positiism to its extremes.
Blumberg et al. ,2005, state that the realism iew is somewhere in between positiism and
interpretie iew. Principles are taken rom both iews, the statement that research can be
conducted as within social science is taken rom positiism. Realists also hold the iew that
in order to understand people`s behaiour we hae to acknowledge the subjectiity
inherent in humans which deries rom the interpretie iew. 1hus, we will conduct our
research rom a realism point o iew because we are neither ully positiists nor
interpretatie.
3.2 Method for data gathering
Method is a broad deinition, which can be seen as a ramework or how to engage with
empirical material ,Alesson & Deetz, 2000,. As stated aboe, we hae decided to employ
the quantitatie method or our primary data collection. A qualitatie method is oten
employed when interpretations and non-statistical data is aailable ,Ghauri, Gronhaug &
Kristianslund, 1995,. Contrastingly, quantitatie methods oer better conditions or strict
scientiic testing ,Ruyter & Scholl, 1998,. Quantitatie method is used when data is
collected and processed analytically. Data is numerically coded and the researcher is
orming statistical results ,Lekall & \ahlbin, 2001,. 1he quantitatie method is
appropriate to use when there is a need to generalise and apply the sample data to the
population in order to ind patterns and trends ,Daidsson & Patel, 2003,. Because the
purpose o our thesis is to generate theory by sureying people`s opinions concerning
serice tangibility in connection to customer loyalty, we hae chosen to inestigate a larger
sample rather than just a ew, and beliee that the quantitatie method is most suitable or
our purpose.
In order to collect secondary data, we hae conducted a literature reiew. Blumberg et al.
,2005, mean that an accumulation o preious knowledge within the ield o interest is o
importance so that the study can be embedded in the context o current research. In
accordance with the suggestion rom Blumberg et al. ,2005,, we hae searched or literature
within databases where academic articles can be ound and in textbooks. By using prior
research, we hae ound a method or how we, by using existing theories, can generate new
theory in order to ulil our purpose.
3.2.1 Survey Method
In order to conduct an inestigation with scientiic alue, it is important to choose a
suitable method to assure that correct data will be gathered or the chosen purpose
,Backham, 1998, Lriksson & \iederheim-Paul, 1999, Ljegard, 1996, Lundahl & Skrad,
1982,. \hat data to use, which method to use or collecting data and how it should be
analysed are important decisions, which will be discussed in the ollowing paragraphs.
Methodology
22
1he most suitable method or primary data gathering was the surey method, applied rom
a quantitatie perspectie. Lmploying the surey method or primary data gathering can
inole dierent ways o conducting the questioning. Depending on what kind o
inormation is required, desired data type and the characteristic o the sample unit will
decide how the surey is conducted ,Blumberg et al., 2005,. 1he main strength o sureys
or collecting primary data is its ersatility, it can be perormed in a number o ways.
Cooper and Schindler ,2003, state that when researching opinions or attitudes about
something, sureying gies the best results. 1he two most requently employed surey
methods are communication and obseration. Due to time restraints, we chose to surey
people`s attitude using the communication approach. It requires less time and eort
compared to the obseration method ,Blumberg et al., 2005,. Communication with
sampled units can be done either through personal interiews, phone interiews or sel-
administered questionnaires ,Cooper & Schindler, 2003,. Because time as well as costs is
limited, the most beneicial method or us to use is sel-administered questionnaires, which
are handed out to the sampled respondents. It gies us adantages such as rapid data
collection, possibility to reach respondents otherwise unreachable and the costs inoled
are low ,Cooper & Schindler, 2003,. Sel-administered questionnaires can be deliered to
respondents both electronically or personally. 1he interiewer usually distributes the
questionnaires personally in a pre-determined enironment ,Cooper & Schindler, 2003,,
which was the procedure we chose.
3.2.2 Questionnaire Design
In order to gather and compare data in an eicient way, a highly standardised and
structured questionnaire with close-ended questions and answers was constructed. 1his is
in line with Andersson ,1995,, who states that close-end questions are appropriate to use in
a questionnaire. Additionally, close-ended questions tend to hae a higher response rate
than open-ended ones. All questions except one are rating questions. 1his is suitable when
collecting data concerning opinions ,Saunders, Lewis & 1hornhill, 2003,. 1he irst
question, relating to gender and age, is more o a category question since the respondents
are asked to choose the category to which they belong.
1he questionnaire consists o 3 parts and 16 questions
1
. \e aimed at keeping the number
o questions as ew as possible to acilitate collection o responses and to keep the
respondent`s interest throughout the questionnaire. Still, the questions are in line with
McDougall`s and Snetsinger`s ,1990, and Reichheld`s ,Bain & Company, 2005, used tests.
lirstly, we wanted to collect some inormation about the respondents. 1his is done to
acilitate or the respondents to answer the initial questions and capture their interest
,Andersson, 1995, Christensen, Andersson, Lngdahl & laglund, 2001,. Respondents were
asked general questions concerning gender and age. Because questioning a person`s age can
be perceied unpleasant or some people, it is suggested to create classes o age in order to
make it easier or the respondents to answer the question ,1rost, 2001,. loweer, since the
aim is not to exactly know age o each respondent, we beliee it acilitates or the
respondents i age was diided into pre-determined classes ,see section 3.3,.
1he second part is related to intangibility o serices and the third relates to loyalty. \e
hae used questions suggested by theorists working in these areas. McDougall and
Snetsinger ,1990, conducted a study concerning intangibility o serices by using dierent

1
See Appendix 1 and 2
Methodology
23
statements ,see section 1.4,. Respondents were asked to choose the statement which best
itted with the serice they were asked to ealuate. lie dierent statements were used on a
so-called`tangibility scale` ,Rushton & Carson, 1989,. 1his is in line with the suggestion
rom Saunders et al. ,2003, not to include more than 5 categories to choose among. In the
questionnaire, the statements hae been directly translated. Some problems occurred or
the respondents regarding how the statements should be interpreted. Due to the
complexity o the subject under inestigation, we expected this and thereore assisted them
by explaining the meaning o tangible` and intangible` to acilitate or the respondents.
1angibility is in the questionnaire cohering with McDougall`s and Snetsinger`s ,1990,
deinition mentioned in section 2.3.
In the third part, where loyalty was the main topic, we used the Loyalty Acid 1est ,see
section 1.4, deeloped by Reichheld ,Bain & Company, 2005,. Because we are not
inestigating a speciic company, we decided to exclude one question that we thought was
too hard or the respondents to answer. Company has a winning strategy` was the
question we decided to exclude due to the diicultness inoled in answering this question.
Apart rom that, the test was applicable to our surey. low many alternaties to include in
a questionnaire is one question to consider when respondents are asked to rate statements.
Reichheld ,Bain & Company, 2005, included 10 alternaties in his loyalty test and we hae
decided to adapt to this since we want to change the test as little as possible. By giing the
respondents 10 alternaties, they were obliged to choose side. \e also deliberately decided
to exclude alternaties such as no opinion` to compel the respondents to state their
opinion. Acknowledging that this may also be a disadantage i some questions are
perceied hard to answer by the respondents but they hae to proide an answer anyhow.
Despite this, we decided not to include the no opinion` alternatie. lor each respondent,
we calculated a mean loyalty alue based on the questions in the third part. In addition, a
mean was also calculated on some speciic questions to highlight certain aspects o loyalty
and intangibility in the analysis part. Both physical and mental world o loyalty, discussed
by Soderlund ,2003,, will be reerred to in the questionnaire. 1he physical world relates to
indiidual`s behaiour while the mental world is concerned with attitudes and intentions
,Soderlund, 2003,.
Beore the questionnaire is conducted, it is important to do a pilot study ,Saunders et al.,
2003,. 1he purpose o this is to reine and test the questions so that they are ully
understandable and ensure that proper data is collected. lor smaller research studies, a
sample o 10 is suggested to be enough or a pilot study ,Saunders et al., 2003,. 1hus, we
handed out a drat o our questionnaire to 10 persons and asked or eedback. 1his
resulted in some small language corrections to acilitate understanding o the questions. \e
also changed the intangibility,tangibility arrow and added some ading eatures to acilitate
urther the understanding o tangible and intangible, aware that these are complex terms.
lurthermore, a pilot study also gae the possibility to test the data in the statistical
program, SPSS, to check i the ariables were adequately chosen. A test o our 10 collected
samples did not result in changes with SPSS.
3.3 Sampling
\hen the goal is to determine and inestigate something speciic concerning a population,
a sample is usually made ,Lind, Marchal & Mason, 2001, 1rost, 2001,. It is preerred to
include all the elements in the population in order to produce true results about the
population. loweer, due to problems such as the impossibility to check all elements in
the population, time restraints and costs inoled, it is more conenient to draw a sample
Methodology
24
,Swit, 2001,. 1he result rom the selected sample is assumed representatie or the whole
population and hence conclusions can be drawn rom the calculated sample estimators
,Cooper & Schindler, 2003,. loweer, it is important to acknowledge the act that when
sampling the population we cannot tell eactt, what the population thinks but rather e.tivate
eatures o the target population ,Swit, 2001,. 1he main adantages with using sampling
inole lower costs and a aster way o collecting data ,Cooper & Schindler, 2003,.
\hen reerring to the population, we imply the totat cottectiov of etevevt. abovt rbicb re ri.b to
va/e .ove ivferevce ,Cooper & Schindler, 2001, p. 163,. 1hus, in this thesis, the population
consists o all people in Sweden that hae used a serice rom one o our selected serice
industries. \e also chose to limit the population and only include persons between 18 and
9 years old. 1he lower bound was set because this is when persons in Sweden are
becoming o age. 1he upper bound was set because o getting proportionate groups o 15
year interals in each age group.
\hen selecting what serices to use, we employed the tangibility and intangibility
continuum discussed in chapter 2.2 and shown in igure 2-1. \e wanted to hae serices
that were considered high in experience or credence qualities. 1he reason or not including
serices with search qualities is that these are more similar to tangible products than
serices. \e also beliee that respondents would hae been conused about the dierence
between products and serices characteristics in these cases. In addition, it was decided that
all serices connected to the selected serice proiders was to be used. 1his because our
intention was to inestigate the relationship between tangibility and customer loyalty and
thus separating serices would make results more diicult to interpret. 1his also coheres
with the Loyalty Acid 1est, which consider all serices within a serice industry ,Bain &
Company, 2005,.
Lxamples o serices with experience qualities are restaurant meals, holidays, haircuts and
childcare ,Rushton & Carson, 1989,. lrom this section, we hae chosen to include
restaurant meals, holidays and haircuts because these are serices that most people hae
experienced. loweer, we are reerring to restaurants, trael agencies and hairdressers to
capture all serices proided. I including childcare, the population would hae decreased
substantially, which is why it was decided not to inestigate this sector. Serices with
credence qualities include teleision repair, legal and inancial serices, dentistry, car repair
and medical diagnosis. \e hae selected dentistry and inancial serices rom this category.
Again, the reason or this is that we beliee that most people hae been in contact with
these serices compared to teleision repair, car repair, medical diagnosis and legal serices,
which will thus acilitate sampling o the population. As aboe, we will reer to banks
instead o inancial serices.
In addition, we hae also decided to include the Swedish employment agency because we
ound it interesting to include a serice company, which is monopolistic and state-
controlled. \e beliee this will add a urther dimension to our study since it proides us
with the opportunity to inestigate a serice proider that diers rom the others in the
study. Another way to conduct the study could hae been to simply inestigating or
instance the banking industry and look at the dierent serices they oer. loweer, we
decided to look at dierent serice industries to see i there are similarities in the
relationship between tangibility and customer loyalty. 1he act that not all respondents
might reer to the similar serice may lead to less alidity. 1he same questionnaire was used
in all chosen serice sectors een i some questions were less releant or some sectors.
loweer, since we used tests deeloped by prominent researchers within the inestigated
areas, it was decided more correct not to change the test between the sectors.
Methodology
25
Systematic probability sampling was used when sampling the population. 1his entails
selecting samples at regular interals rom the sampling rame ,Saunders et al., 2003,. Since
we are not aware o exactly how large the total population is, we are not able to calculate
the sampling raction, which would hae decided how large proportion o the total
population we would hae to select. Instead, we asked eery 10
th
person to aoid biases in
the sampling. \hen collecting samples or banks, hairdressers, trael agencies, dentistry
and restaurants, we decided not to go to a speciic bank or restaurant since this would hae
led to biases in our results. 1hus, we decided to sample in a more general enironment,
were we could ind respondents that had isited dierent types o serice proiders. 1he
largest shopping centre in Jonkoping, A6, was decided to be the best place or conducting
our surey. It was conducted between the 14
th
and 18
th
o April during daytime and on the
same place on all occasions. \hen sampling respondents that hae been using serices
rom the Swedish employment agency, we decided that it was best to do the sampling there
due to the potential unpleasantness inoled i asking people elsewhere. Since the
population there was relatiely small, we decided that because o time restraints not to
sample eery 10
th
person but instead eery person entering the employment agency. 1his is
instead a conenient sample since we included eeryone who was conenient or our study.
1rost ,2001, states that this sample method is used to gain a strategic sample. 1he sampling
was done on the 15
th
and 18
th
o April.
low many samples to draw rom each selected industry also had to be decided. Because
our study is quantitatie and more towards positiism, the aim is to make generalisations
rather than more deeply inquiring a smaller sample. Aczel and Sounderpandian ,2002,, state
that a surey consisting o more than 30 respondents is considered a large sample. Beore
conducting the surey, we had determined to hae a ixed number o respondents in each
serice industry. It was agreed upon that 40 was an adequate number and thus we sampled
240 questionnaires. \e ound it diicult to appreciate how many respondents that would
be reluctant to answer but we alued 240 answers to be enough or our statistical analysis.
Because we wanted to make comparisons between industries, we sought to hae ixed
number o respondents in each class.
3.4 Non Response
Non-response occurs when a sampled element does not respond to the request o
participating in a surey ,Groes, Dillman, Lltinge & Little, 2002,. 1his is one o the
potential errors, which can occur when conducting a surey and can lead to less reliable
result i the non-response percentage is too large. Because our surey was conducted in a
stressul enironment, some approached respondents declined to participate, mainly
because o time restraints. loweer, we decided not to calculate the number o people
neglecting to take part in the surey. Persons neglecting to take part in the surey did
probably not hold iews signiicantly dierent rom those that decided to take part. 1his
because gender as well as age is o less importance. Instead, the population is all people
that hae used a serice rom one o our selected serice industries. Moreoer, een i they
did hold signiicantly dierent iews, we had no opportunity to surey the people
neglecting to respond aterwards. 1he main reason or declining answering was not due to
lack o interest but lack o time and at the Swedish employment agency some did not hae
any preious experience with their serices.
Methodology
26
3.5 Data handling
\hen analysing collected data, our aim was to ind i a relationship exists between
tangibility and loyalty. 1hus, we could only hae one alue o each ariable. 1angibility
already consisted o one alue while loyalty was decided using seeral questions. 1hereore,
we had to calculate a single alue rom the questions relating to loyalty. It was decided that
neither mode ,the most requently occurred alue, nor median ,the middle alue in the
data, was adequate or our data analysis. Mode gies no indication o central tendency and
median is the middle alue, which can be misleading depending on how the other alues in
the series are ,Swit, 2001,. 1o calculate the aerage alue, mean is requently employed
and we considered that the mean would gie us the most adequate alue when adding the
loyalty questions. In addition, Reichheld ,Bain & Company, 2005,, McDougall and
Snetsinger ,1990, used mean in their data analysis. A sample mean was calculated as an
unbiased estimator o the population mean, ,. loweer, due to the number o means
employed ,240,, we decided not to calculate spread around each o these mean alues.
Because o this decision, some statistical errors may be included in the mean calculation.
Neertheless, we do not consider this to aect our results substantially since the range was
only between 1 and 10.
Ater calculating the mean alue o loyalty, we had one alue o tangibility and loyalty or
each respondent. Graphically, we wanted to see i there were any patterns in the data and
decided to employ scatter plots. 1his is a sketch o data on to ariables, which acilitates
isualising trends and patterns in data ,Aczel & Sounderpandian, 2002,. Scatter plots are
suggested to be most suitable when data occurs in pairs and we wanted to plot the pairs as
co-ordinates on a graph. By displaying our data in a scatter plot graph, we could easier
decide i the two ariables appeared to be correlated ,Swit, 2001,. Sample correlation is
measuring the strength o a relationship between two ariables and lies in between -1 and
-1. A correlation coeicient o -1 indicates a straight line with a positie slope while -1
shows a negatie line where all data are exactly on the line ,Swit, 2001,. 1he closer the
correlation coeicient alue is to any o these extremes, the stronger positiely or
negatiely correlated they are. It is assumed that both ariables are random and normally
distributed ,Aczel & Sounderpandian, 2002,. 1he sample correlation coeicient is denoted
by r, which is an estimate o p, also reerred to as the Pearson product-moment correlation
coeicient ,Aczel & Sounderpandian, 2002,. In addition to this, correlation can also be
done on data, which is not normally distributed. Spearman rank correlation coeicient can
be employed when data is not normally distributed and data pairs are in orms o ranks
rom smallest to largest. It is similar to Pearson`s correlation coeicient but adjusted or
ranked data. Gien these explanations, we ound it most appropriate to apply Pearson`s
correlation to our data since we did not rank our data and assumed normal distribution.
1o ind out i the calculated correlation ariable was signiicant or not, we had to choose
what leel o signiicance to utilize. Signiicance leel is used in statistical hypothesising to
decide i alues are statistically signiicant or not. 1he signiicance leel is denoted by - and
to reject the null hypothesis, l
0,
the -alue has to all below - ,Aczel & Sounderpandian,
2002,. 1he hypotheses are stated as ollow:
l
0
: r 0
l
A
: r ~ 0
I we accept l
0
, no correlation exists and ice ersa, i rejected, we can conclude that the
ariables are correlated.
Methodology
2
1he -alue is a sort o credibility rating` o the null hypothesis. A alue o i.e. 32
implies that there is roughly a chance o 32 that l
0
is true. I we set - to 5 , l
0
will be
rejected when the -alue is below 5 and we can conclude that the correlation alue is
signiicant. In our data analysis, we will employ a signiicance leel o 5 and thus we can
be 95 conident that l
0
is alse beore we reject it. A signiicance leel o 5 is
according to Aczel and Sounderpandian ,2002, one o the standard alues.
Neither intangibility nor loyalty can be said to depend on the other, which is why a
regression analysis was seen as unsuitable. loweer, by calculating Pearson correlation, we
could see i a linear relationship existed without the intention o deciding which ariable is
dependent or independent.
3.6 Validity and Reliability
Validity reers to whether indings really are about what they appear to be about ,Saunders
et al., 2003,. In addition, it explains to what extent the estimators o the population are a
true alue or not and how good the precision is in what we are supposed to measure. 1he
quality o alidity depends on how the sample, data collection, data analysing was done and
to what extent errors are included or not ,Christensen et al., 2001,. Robson ,cited in
Saunders et al., 2003, lists some threats to alidity including ambiguity about causal
relationship, maturation, testing and history. I, or example, research is done ater a big
change has occurred in an organisation this history may inluence alidity. Ambiguity
concerning relationship reers to when relationships are inestigated between two ariables
and it is diicult to decide i either o them causes the other. Maturation inoles
participants in a study dropping out during a longer inestigation and testing can reduce
alidity i the respondent acts dierently because o being tested.
\e can dier between external and internal alidity. 1he external alidity o research
indings reers to the ability to generalise data across the target population. Internal alidity
is to what extent a research instrument measure what it is supposed to measure ,Cooper &
Schindler, 2001, Collis & lussey, 2003,. In this research, when we are employing a
quantitatie method, we are also interested in testing statistical alidity ,\elman & Kruger,
2001,. \e want to know i the relationship between loyalty and intangibility is statistically
alid. 1his is done by examining the leel o signiicance, discussed in 3.4.
Reliability is concerned with the indings o the research ,Collis & lussey, 2003,. It can be
ealuated by answering the ollowing questions: \ill the measures gie the same result i
redone \ill others studying the same subject reach the same results Is there transparency
in how sense was made rom raw data ,Saunders et al., 2003,. I a study is claimed to hae
high reliability, replication o the study should generate same results. 1hreats against
reaching high-quality reliability are or instance participant error, participant bias, obserer
error and obserer bias. Participant error can exist i it matters rbev people are asked to ill
in the questionnaire. Biases o participants can arise i participants eel that somebody want
them to answer in a certain way or example i sureying in a authoritarian oice where the
respondents answer in a way they think their boss would hae liked them to answer.
Obserer error and bias exist i many dierent people are conducting interiews and thus
biases can rise since dierent people will interpret answers dierently ,Saunders et al.,
2003,.
Validity and reliability are connected concepts since or a research to be alid, the reliability
also has to be o irst-rate ,Christensen et al., 2001,. loweer, a study can hae high
Methodology
28
reliability and simultaneously low alidity ,Collis & lussey, 2003,. \hen ealuating
reliability and alidity, it is essential to consider potential errors and systematically identiy
them and estimate how they aect alidity and reliability ,Christensen et al., 2001,.
3.7 Criticism against used method
\hen critically ealuating i our results are alid and reliable, we examine i sampling, data
collection and data analysing was correctly done without the existent o any biases, which
would aect our results. A larger sample would hae made generalisations more alid,
howeer, as mentioned earlier, time restrictions made it uneasible. In turn, we did not
speciy rbicb serice in each serice industry that each respondent reerred to when illing
in the questionnaire. 1hus, we cannot make generalisations to dierent serices within the
inestigated serice sectors, which aect external alidity. loweer, this was not the
purpose o this thesis and thus not regarded to be a problem in this speciic case. I a
replication will lead to the same results or not is dependent on which serice the
respondents were considering when illing in the questionnaire. lence, the reliability o our
results is slightly questionable because o participant error. I respondents are asked to
participate at another time, when they hae experienced another serice within the sector,
their results may be dierent. 1he act that all, except or the Swedish employment agency,
questionnaires were conducted at the same place during dierent times is belieed to raise
the possibility o getting a representatie sample o the population.
One actor that might hae aected the alidity o our results is the stressul enironment
where the data collection was conducted. Some respondents appeared to be stressed and
gae less thought when illing in the questionnaire. Another actor, which might hae
inluenced alidity, could be that the respondents were asked to recall their last experience
rom the inestigated serice proider. lence, they were more amiliar with the serice
than they would hae been i not preious experience was required. Our reason or this
method is that it acilitated or the respondents to ill in the questionnaire. I scenarios o
speciic serices were to be used instead, it is assumable that the respondents would hae
reerred to their last experience anyway.
1he reason or including six serice industries was to get a wider picture. \e could also
hae chosen to look only at one industry but we decided that it was more interesting to
include seeral in order to ind dierences between them.
Gien the purpose o this thesis, to inestigate i there exist a relationship between serices`
intangibility and customer loyalty, the quantitatie method was most suitable since it
enabled us to achiee results that could to some extent be applied to the whole population.
I instead employing a qualitatie method, we would hae been proided with deeper
insight in people`s mind concerning this subject but we would only hae had the possibility
to surey a ew respondents. 1hereore, we beliee that gien our purpose, we applied the
most appropriate method een i alidity as well as reliability could hae been enhanced by
speciy what serice the respondents reerred to. loweer, our intention was to get an
oerall iew in the attempt to generate new theory within this area. lrom this, elaborations
can be done by perorming the same study in another way.
Lmpirical lindings and Analysis
29
4 Empirical Findings and Analysis
1bi. cbater re.evt. tbe re.vtt aerirea frov tbe .vrre,. t at.o covvect. tbe tbeoreticat fraveror/ re.evtea
iv tbe .ecova cbater ritb tbe eviricat fivaivg. to forv av avat,.i.. 1be retatiov.bi betreev tavgibitit,
ava to,att, ritt be eratvatea ava ivre.tigatea.
4.1 Method of Analysis
Beore presenting and analysing the results deried rom the empirical indings, the method
or analysing is discussed. Lmpirical indings will be linked to the theoretical ramework.
loweer, to make the analysis more graspable and clear, some assumptions are made
based on common knowledge. 1his is done because relating complex concepts such as
tangibility and loyalty to practical examples will acilitate reading this chapter. 1he choice o
including such assumptions in the analysis instead o in the inal discussion is made because
the analysis will be more interesting to take part o.
In the analysis, serices are not separated into the classiications mentioned in section 2.1.1.
1his is because the surey reers to all serices proided and not to any speciic serice.
lence, core serices, acilitating serices and supporting serices mentioned by Gronroos
,2000, are grouped together. Moreoer, conenience, shopping, preerence and specialty
serices are not diered in between. As mentioned in the method chapter, this was not in
line with the purpose o this thesis. 1he serice industries were distinguished based on the
core serice proided. loweer, it is signiicant to be aware o that the respondents could
be reerring to dierent kinds o serices when asked to recall the preiously experienced
serice.
1o deepen the analysis part and to detect similarities between serice industries, we also
decided to include comparisons between the selected serice industries. By separately
analysing tangibility and loyalty within restaurants, hairdressers, trael agencies, dentistries,
banks and the Swedish employment agency, the chapter will be more structured.
Lmpirical lindings and Analysis
30
4.2 Restaurants
Intangibility rate
6 5 4 3 2 1 0
L
o
y
a
l
t
y
10
8
6
4
2

ligure 4-1 Restaurants` loyalty and intangibility rate.
Lxamining the results rom restaurants, the Pearson indicator is -0.394
2
, which proes a
negatie correlation between loyalty and intangibility ratio. lurther, the signiicant alue or
restaurants is 0.012
2
, which is well below the signiicant leel o 0.05. 1his igure indicates
that the relationship between loyalty and intangibility ratio is signiicant. 1he negatie
relationship is iable when considering the downward sloping line in the graph displayed
aboe ,see igure 4-1,. Negatie correlation means that i loyalty towards a restaurant
increases, intangibility o the serice will decrease and ice ersa. In other words, i a
restaurant`s serices become more tangible, the loyalty ratio is expected to increase.
loweer, important to consider is that the Pearson correlation coeicient implies that
neither loyalty nor intangibility is dependent on the other.
4.2.1 Tangibility
1he mean tangibility ratio o restaurants is 1.9. Using the tangibility continuum, this igure
indicates that restaurants` serices are more tangible than intangible ,McDougall &
Snetsinger, 1990,. 1hus, in a scale ranging rom 1 to 5, where 5 is purely intangible and 1
purely tangible, these kinds o serices are more towards the tangible side. Restaurants are
considered experience goods, hence, they hae more experience qualities than search or
credence qualities ,McDougall & Snetsinger, 1990,. 1he igure 1.9 indicates that
respondents are in between haing a clear picture o the serice and being able to picture
the serice immediately. 1he more search qualities a serice consists o, the easier it is to

2
See Appendix 3
Lmpirical lindings and Analysis
31
assess ,Rushton & Carson, 1989,. Based on this notion, it could be that a restaurant`s
customers ind it easy to ealuate the serice proided since tangibles enhance customers`
pre-purchase assessment ,McDougall & Snetsinger, 1990,. 1he degree o tangibility also
aects serice quality ,Santos, 2002,. 1hus, quality could be argued as being highly
perceied in this serice industry. 1he rather low degree o intangibility could indicate that
customers know what to expect rom the serice on beorehand. 1his assumption can be
drawn rom the notion that the more tangible a serice is, the easier can a customer
ealuate the serice beore and ater consumption ,McDougall & Snetsinger, 1990,
Rushton & Carson, 1989,. lence, restaurants hae succeeded in making intangibility o
their serices more tangible ,Reddy et al., 1993,.
1here are dierent kinds o tangibility eatures that theorists mean that one should take
into consideration. McDougall and Snetsinger ,1990, mean that it is important to make a
distinction between tangibles and tangibility. In the questionnaire, respondents were asked
how well the serice proided a clear and concrete image, this is according to McDougall
and Snetsinger ,1990,, reerring to both the physical and mental component o the serice.
In turn, this means that when picturing a serice receied rom preious experience with a
restaurant, physical eidence o the serice as well as the mental picture o the serice was
taken into consideration. Moreoer, the tangibility rate o 1.9 captures both tangibility o
surroundings and tangible result o the serice, since tangibility is inluenced by tangibles
,Rushton & Carson, 1989,. lence, when measuring tangibility o serices, taste o the ood
being sered, milieu and location o the restaurant and many more eatures could hae
inluenced ealuation o serice`s tangibility. 1his notion coheres with Gustasson et al.`s
,2003, claim that satisaction is the customer`s oerall ealuation o the consumption
experience.
4.2.2 Loyalty
Getting expectations o the serice ulilled proe that serices` perceied quality is o
satisaction. loweer, this depends on what expectations a customer had beore
consuming the serice and what the customer is comparing it to. lence, it is important to
be aware o that ealuation o the preious experienced serice is depending on what
preerences and experiences customers had on beorehand ,Gronroos, 2000,.
Satisaction is closely connected to quality ,Gronroos, 2000,. Mean satisaction o
restaurants` serices is .6. 1his number is deried rom question 4, which asks how
satisied the respondent was with the serice. In turn, satisaction is related to the degree o
loyalty ,Gustasson et al., 2003,. 1hereore, the mean o satisaction could imply that the
restaurants` customers are rather loyal. loweer, when looking at the answer to question 1,
which asks how great the probability o continuing buying the serice rom the same
organisation, the mean is 6.8. 1his lower igure supports Gronroos`s ,2000, claim that it is
only customers that gie satisaction top scores, who are truly loyal. lence, it is not
suicient simply to analyse the mean o satisaction, one must also consider the top scores.
Six respondents o 40 gie satisaction a ten, which means that, i accepting Gronroos`s
statement, 15 o the respondents are truly loyal. A possible reason or the two dierent
igures could be that actors are limiting the customer to a speciic serice or restaurant by
which the respondent is not ully satisied with ,Soderlund, 2003,. lor example, i
expecting high quality o certain dish but is not receiing what is expected, the customer
might be dissatisied but may continue being a customer i the restaurant is the only
proider o that speciic dish. 1his coheres with the result deried rom question number 1
that asks about the probability o continuing buying the serice rom the preious isited
Lmpirical lindings and Analysis
32
restaurant. 13 out o 40, 32.5 mean that it is highly likely and gae a top score to the
likelihood.
1here are many aspects to take into consideration when ealuating the relationship
between tangibility and loyalty. As mentioned aboe, not only are there many tangibility
eatures that could aect perceied quality o serices, there are also dierent perspecties
o loyalty that needs to be relected upon. Despite many inluencing actors, the graph
displayed in igure 4-1 points to the act that as tangible eatures o restaurants` serices
increase, loyalty increases and ice ersa. 1his support and linkage theories o or example
Gronroos ,2000,, that is relating tangibility to quality and theories o leskett et al. ,1994,
that relate quality satisaction with loyalty.
It can be concluded, ater reiewing the results deried rom restaurants` serices, that
loyalty and tangibility are signiicantly negatiely correlated. lence, attempting to get more
loyal customers, restaurants could ocus on making serices more tangible. 1he high
tangibility rate might imply that customers ind it easy to ealuate the serice beore and
ater consumption, since they ind it easy to picture the serice. Since the probability o
continue buying serices is graded lower than satisaction, there are ew customers, which
are ound truly loyal. 1his might indicate that een though tangibility and loyalty are
negatiely correlated, there are other actors than eatures o tangibility that are inluencing
a customer`s choice o restaurant.

Lmpirical lindings and Analysis
33
4.3 Hairdressers
Intangibility rate
6 5 4 3 2 1 0
L
o
y
a
l
t
y
12
10
8
6
4
2
0

ligure 4-2 lairdressers` loyalty and intangibility rate.
1he scatter plot deried rom sureying hairdressers` intangibility and customer loyalty
shows a downward slope in the igure aboe ,see igure 4-2,. lence, a negatie relationship
between loyalty and intangibility rate can be assumed. 1he graph`s appearance is supported
by a Pearson correlation coeicient o -0.246
3
. loweer, because the alue 0.126
3
is rising
aboe the signiicant leel o 0.05, correlation between the two actors is insigniicant.
lence, there is no alid correlation between loyalty and intangibility rate in this serice
industry.
4.3.1 Tangibility
Mean tangibility ratio or hairdressers is 1.. Placing this igure in the tangibility continuum
indicates that serices proided by hairdressers are more tangible than intangible
,McDougall & Snetsinger, 1990,. As mentioned aboe, respondents o the questionnaire
are not restricted to any speciic eatures o tangibility when rating serices` perceied
tangibility. Despite dierent perspecties o tangibility, a rate o 1. proes that the
respondents had a clear image o the physical or mental components ,McDougall &
Snetsinger, 1990,. One reason or inalid correlation could be that the tangibility eature o
a serice does not inluence loyalty to a hairdresser since hairdressers proide the same
core serice. 1his also support Gronroos` ,2000, claim that technical quality o a serice
,what a customer receies, is oten similar within the same industry and is thereore hard to
compete with. lence, key to success is not only being dependent on tangibility o the
serice as Reddy et al. ,1993, point out. 1he same goes the other way around, or example,

3
See Appendix 3
Lmpirical lindings and Analysis
34
increasing loyalty does not necessarily make a hairdresser`s serices more tangible. Santos
,2002, ound that degree o intangibility,tangibility does hae a signiicant eect on
customer`s quality perception. It could be that that quality is perceied as high because o a
low degree o serice intangibility.
Moreoer, theorists ,i.e. McDougall & Snetsinger, 1990, Rushton & Carson, 1989, claim
that the more tangible a serice is, the easier it is to ealuate the serice beore and ater its
consumption. lence, expectations and experiences o a serice are inluenced by a
serice`s tangibility. 1he rather low intangibility that hairdressers` serices receie could
thereore mean that customers ind it easy to know on beorehand what they are buying.
4.3.2 Loyalty
1he insigniicant correlation might also indicate that satisaction or loyalty o the serice is
not high enough. According to Gronroos ,2000,, a customer perceie bad quality i
expectations o a serice are not being met. lence, i satisaction o a serice is low,
customers easily swap serice proider and loyalty decreases. 1he insigniicant correlation
between tangibility and loyalty might indicate that tangibility is not inluencing serice
ealuation. \et, this does not reject the claim that satisaction o the serice is related to
loyalty, as the serice proit chain indicates ,leskett et al., 1994,.
I accepting Gronroos`s ,2000, theory concerning apostles, only the ones who are most
satisied will stay loyal. 1he mean satisaction o hairdressers` serices is 8.1. loweer,
considering Gronroos`s ,2000, notion, this relatiely high igure does not proe high
loyalty. 12 o 40 respondents did howeer gie their oerall satisaction o the hairdressers`
serices top score. 1hus, hairdressers hae indeed some loyal customers, but this is not
correlated to tangibility ratio according to the Pearson`s correlation coeicient. Since
satisaction is linked to serice quality and since quality is linked with tangibility, it could
imply that quality is not ealuated with reerence to the tangibility o hairdressers` serice
,Gronroos, 2000, Santos, 2002,. 1his is questioning Santo`s ,2002, assumption that the
more tangible components a serice has, the more do tangibles contribute to serice
quality.
It can be concluded, summing up the results deried rom hairdressers, that the
relationship between tangibility and loyalty is insigniicant. lence, it is not alid to claim
that there exists a correlation between the two ariables. 1his result indicates that loyalty
might not inluence tangibility. A reason or that could be that customers are able to
picture a hairdresser`s serices but since most hairdressers proide the same kind o core
serice, tangibility is not inluencing loyalty. Another reason or the insigniicant result
could be that respondents do not relate satisaction to a serice`s tangibility. lence, other
actors than tangibility might inluence loyalty. In turn, it could be that quality, which is
closely intertwined with tangibility, is not ealuated upon when ranking satisaction.
Lmpirical lindings and Analysis
35
4.4 Travel Agencies
Intangibility rate
6 5 4 3 2 1 0
L
o
y
a
l
t
y
12
10
8
6
4
2

ligure 4-3 1rael agencies` loyalty and intangibility rate.
1he signiicant alue o 0.026
4
is below the signiicant leel in Pearson correlation test,
which in turn indicates that the relationship between loyalty and intangibility rate is
signiicant. 1he Pearson correlation coeicient is -0.352
4
, which points to an increase in
loyalty will decrease the intangibility rate and ice ersa. 1he downward sloping line in the
graph aboe ,see igure 4-3, urther displays the negatie relationship between the two
ariables. As mentioned beore, it is important when interpreting the result deried rom
Pearson`s correlation test not to claim that one ariable is dependent on the other. lence,
it is not alid to claim that any causality exists between the ariables.
4.4.1 Tangibility
1he mean tangibility ratio o the serices proided by the trael agencies is 1.. Placing this
igure in the tangibility continuum proes that the serices are tangible dominant
,McDougall & Snetsinger, 1990,. In turn, this means that customers o trael agencies are
able to picture the serice they receied, which coheres with McDougall`s and Snetsinger`s
,1990, deinition o serice tangibility. lurthermore, it might be alid to state that trael
agencies hae succeeded in making their serices` intangibles tangible.
1rael agencies are considered, according to theory, to hae more experience qualities than
search and credence ,McDougall & Snetsinger, 1990,. loweer, when placing trael
agencies in the tangibility continuum they seem to contain more search qualities than
experience. Since theory presented by Rushton and Carson ,1989, indicates that trael
agencies should be high in credence qualities, it has an unexpected placement in the

4
See Appendix 3
Lmpirical lindings and Analysis
36
tangibility continuum. 1his could be explained by the questionnaires` ormulation. It is
reerring to the preious experienced serice receied rom the trael agencies, which in
turn could lead respondents to think about the preious taken trael. lence, emotional
actors and experiences o traelling might then hae inluenced the serice ealuation. lor
instance, i the destination or weather o the speciic journey did not ulil expectations, the
serice proider might suer rom low satisaction results een though the actual serice
was perceied as good. loweer, in this speciic case, i the serice had been marketed
accurately customers might not hae had such high expectations and would then rank
satisaction higher. 1his reasoning coheres with Gronroos ,2000, notion that serice
proiders jeopardize serice quality, i building up too high expectations that cannot be
ulilled.
4.4.2 Loyalty
1aking into consideration the notion that a serice`s tangibles are a direct presentation o
serice quality would mean that the rather high tangible scores make trael agencies`
serices o satisactory quality ,Santos, 2002,. In turn, since tangibility and loyalty are
signiicantly correlated, it is alid to accept Gronroos`s ,2000, notion that satisaction is
closely linked with quality. In addition, leskett et al.`s ,1994, belie that satisaction oten
leads to loyalty is in this case adequate. According to Gronroos ,2000,, there are other
quality aspects to take into consideration as well. le states that serice quality is
indiidually ealuated and that each customer experience serices uniquely. In turn,
customers` presumptions about dierent kinds o serices are inluencing judgment o
whether or not the experienced serice quality is perceied as good ,Gronroos, 2000,
Zeithaml et al., 1988,. lunctional quality as well as technical is also inluencing experienced
quality o serices. In the questionnaire, the reerral to the preious experience with a trael
agency`s serices will capture both o these aspects. lence, technical and unctional quality
o the serice, are to be relected in the questionnaire`s subsequent questions.
Deried rom the questionnaire, oerall satisaction ratio o trael agencies serices is .9
and 10 o 40 respondents gae satisaction top scores. 1his means that, i accepting
Gronroos`s ,2000, and Soderlund`s belie that it is only customers who gie top scores that
are truly loyal, 25 o trael agencies` customers are to be considered as truly loyal. Being
loyal means, that customer will continue buying the serice rom the same serice proider
,Olier, 1999,. 1he result deried rom question 1, which concerned the probability o
continuing buying serices rom the same serice proider, proes that this loyalty
deinition is acceptable in the case o trael agencies. 1his is an important question to
enlighten since loyalty is concerned with a relationship oer time ,Olier, 1999,. 1he mean
probability was .3, which is not ar rom the result o oerall satisaction.
1o conclude, the results deried rom the trael agency industry proe that there is a
signiicant relationship between loyalty and tangibility. lence, there exists a alid negatie
correlation, which means that an increase in one ariable will lead to a decrease in the
other. In turn, this means that i a serice becomes more tangible, loyalty will increase and
ice ersa. Moreoer, what urther point to this relationship is the similar rating o oerall
satisaction and probability to continue buying the serice. 1his since loyalty indicate that a
customer is returning to the same serice proider and since satisaction indicate that trael
agencies hae succeeded to narrow the gap between serice expectations and experience.

Lmpirical lindings and Analysis
3
4.5 Dentistry
Intangibility rate
6 5 4 3 2 1 0
L
o
y
a
l
t
y
10
9
8
7
6
5
4
3

ligure 4-4 Dentists` loyalty and intangibility rate.
Results rom sureying serices related to dentists show that a relationship between loyalty
and intangibility exists ,see igure 4-4,. Pearson correlation gies a negatie alue o -0.32
5
,
which means that as intangibility decrease, loyalty increases. 1he relationship can also be
reersed, higher loyalty leads to lower rate o intangibility. 1he leel o signiicance is
0.044
5
, which imply that the negatie relationship is signiicant. lence, it is arguable that in
the dentistry industry, there exist a negatie relationship between loyalty and intangibility.
4.5.1 Tangibility
Mean leel o tangibility or the respondents in this group is 1.8, which implies that most
respondents would agree with the statement that they hae a clear image o this serice.
loweer, it is not clear i this created image is positie or negatie, in turn this means that
both could be related to the serice. Neertheless, in the case o this serice industry, a
possible negatie picture will not disappear by changing to another serice proider, since
the core serice and the technical quality is similar ,Gronroos, 2000,.
According to theorists, dentistry is considered high on credence qualities, meaning that the
serice consists mainly o intangible eatures that cannot be ealuated beore the purchase
,e.g. Moorthia, 2002, Rushton & Carson, 1989, Zeithaml, 1991,. 1hereore, it was expected
that the intangibility rate would be higher than 1.8. Locating this igure in the tangibility
continuum indicate that the serices proided by dentists hae more tangible than
intangible eatures. loweer, the degree o tangibility depends on what serice is

5
See Appendix 3
Lmpirical lindings and Analysis
38
conducted at the dentist. Most people hae experienced a regular examination while it can
be assumed that a more complex serice may be perceied as intangible i the respondents
hae not been in contact with it.
It has been stated that serice proiders can beneit rom making their serices more
tangible ,Reddy et al., 1993,. It is argued that this would acilitate ealuation or the
consumer before the purchase is done and thus expected serice quality would increase.
Depending on what serice we consider, the amount o preious experience can dier.
Some are irst experienced at young age while others are not encountered until later in lie
,i.e. bank serices,. Dentistry could be an example o a serice used rom early age, which
thus could make it easier to ealuate since many persons hae experienced it during a
longer time.
1angibility consists o both a physical and a mental component where the physical part is
the eidence o the serice ,McDougall & Snetsinger, 1990,. 1angibles in this discussed
example are improed teeth but can also be the dentist`s surgery and how the consumer
perceies the serice. Rushton and Carson ,1989, reer to these kinds o tangibles as
surrogate eatures, since it is not a tangible that is deried rom serice perormance but
rather a complement to the actual serice. loweer, or the oerall experience, it is equally
important to hae physical surroundings that adds to the oerall serice quality. 1hus, to
make dentistry more tangible, ocusing on enhancing the enironment is also o
importance.
4.5.2 Loyalty
1he mean loyalty alue or dentistry was . out o 10. 1hus, it can be concluded that
loyalty in this serice industry is rather high. As preiously highlighted, loyalty is oten
interlinked with satisaction meaning that i a consumer o a serice is satisied, the degree
o loyalty should in general be higher. In question 4, the respondents were asked how
satisied they were with this particular serice, which led to a mean o 8.2. 1hus,
satisaction was higher than oerall loyalty. Satisaction is also interlinked with serice
quality ,Gronroos, 2000,. I satisaction is high, it is assumable that the experienced quality
also is considered high.
Despite the high scores on satisaction, Gronroos ,2000, argues that it is only customers
who gie satisaction the highest score, who will be ully loyal. lence, een i a consumer
scores high on the scale, it is not alid to claim that they are completely loyal to that serice
proider. leskett et al. ,1994, state that customers ranking satisaction highest are six times
more likely to repurchase the serice than those scoring lower on the scale. 1hereore,
serice proiders must strie towards receiing high satisaction scores. In our surey, 42.5
ranked the highest score on the satisaction question. Customers with a bad serice
quality experience are reerred to as terrorists since they tend to speak badly about their
experience ,Gronroos, 2000, leskett et al., 1994,. 1o aoid this bad word-o-mouth,
satisaction must be raised or dentists that get low on satisaction. 1o do this, it has been
suggested that both employee management as well as customer orientation has to be
improed since both these aect satisaction ,Gustasson et al., 2003,. 1he importance o
being serice minded is equally important as perorming a high quality serice. \ithin
dentistry, many respondents expressed that they always went to the same dentist and had
done so or seeral years. 1hus, it might be harder or serice proiders in this industry to
attract new customers since many o them are already attached to a speciic dentist and
might be reluctant to change.
Lmpirical lindings and Analysis
39
Summing up, it is to be concluded that a signiicant relationship between serice tangibility
and customer loyalty was ound. 1he main part o the respondents rating loyalty high, also
rated the serice to be low on the intangibility scale. lence, by making the serice more
tangible, loyalty is expected to increase. Possible reasons or high leels o loyalty and
tangibility is that most people hae a long experience rom these types o serices and that
many hae used the same serice proider or many years.
Lmpirical lindings and Analysis
40
4.6 Banks
Intangibility rate
6 5 4 3 2 1 0
L
o
y
a
l
t
y
12
10
8
6
4
2
0

ligure 4-5 Banks` loyalty and intangibility rate.
Results rom sureying bank customers show a ery small negatie correlation between
intangibility and loyalty o -0.024
6
,see igure 4-5,. loweer, the leel o signiicance is
0.883
6
, which implies that our results are insigniicant. 1hereore, it cannot be argued that a
relationship exists in this serice industry. 1he scatter plot displays a wide spread o
answers and a wide spread o loyalty.
4.6.1 Tangibility
Mean leel o tangibility is 1.8, which thus mean that the respondent`s picture o the serice
is more tangible than intangible. 1his is not in line with theory suggesting that inancial
serices consists mainly o credence qualities and should thus be rated high on intangibility
,Moorthia, 2002,. Contact with inancial serices might dier between the respondents.
Since they were asked to think about the ta.t isit to a bank and not a speciic serice, this
might hae aected the result. I instead sureying a speciic bank serice, the results might
hae looked dierently. I going to the bank or simple transactions, such as money
transactions or depositions, a lower degree o intangibility could be a result than i other
serices were used. loweer, this was not in line with the purpose o this thesis and thus
not urther examined into.
1angibles are deined as being the physical eidence o the serice and aect tangibility
,McDougall & Snetsinger, 1990,. In the case o banking, tangibles could or example
include employees, enironment and money. loweer, when banks are directing their

6
See Appendix 3
Lmpirical lindings and Analysis
41
customers towards using internet or some serices preiously conducted in bank oices,
contact with the bank is decreasing which may lead to higher degrees o intangibility in the
uture when tangibles are not experienced in the same way as beore. 1hus, een bank
serices such as transactions and depositions may be intangible in the uture when
perormed at home and not in bank oices. 1hus, uture lack o tangibles might inluence
customer examination and ealuation o serice quality. In turn, this may aect customer
loyalty in the uture ,leskett et al., 1994, Santos, 2002,. Customers will hae less contact
with tangibles and may thereore ealuate banks on other criteria than today.
4.6.2 Loyalty
Mean alue o loyalty was calculated to 6.8, which is a relatiely low alue o loyalty. \hen
questioning how satisied the respondents were, the mean was ..
As mentioned in the theoretical ramework, loyalty is hard to deine and people can oten
reer to dierent things when talking about loyalty. Soderlund ,2003, states that loyalty can
be both o a physical and o a mental nature. In the physical world, indiidual`s behaiour
is highlighted while their attitudes and intentions are ocused on when talking about the
mental world. 1hus, the behaiour o bank customers might dier with their attitudes.
Customers may be loyal in their behaiour towards the bank but disloyal when examining
their attitudes towards the same bank. 1his could be a case o when customers are engaged
in alse loyalty` ,Soderlund, 2003,. 1hey may continue employing the same bank without
being completely loyal in the mental world. loweer, since changing serice proider in
this industry can be assumed more complex than in other, dissatisied customers are less
prone to change despite engaging in alse loyalty. Customers might ind it hard to spot
dierences between banks. Banks oer serices that are more or less the same and all try
to maintain a high quality enironment where serices are deliered. 1his coheres with
Gronroos`s ,2000, notion that a serice organisation ind it hard to compete with
unctional quality.
Butscher ,1998, suggested that loyalty must be built through real relationships based on
emotions and trust by oering high-perceied alue. In the banking industries, where many
serices are now conducted through the internet, building and maintaining loyalty in the
way Butscher ,1998, suggestions might be less easible in the uture. 1o keep customers
loyal, simply using the internet as a tool or increasing loyalty will be diicult.
Gronroos ,2000, argues that only respondents giing the highest mark will stay completely
loyal to the serice proider. Based on this statement, 32.5 o the respondents are ully
loyal to their bank. loweer, ew will probably change bank due to the complexity
inoled. Still, banks hae to work continuously with attempting to attract new customers
and trying to increase loyalty and satisaction with the existing ones. 1he serice-proit
chain displays the importance o increasing loyalty since it aects reenue growth ,leskett
et al., 1994,. It is claimed that satisaction leads to loyalty and thus higher proits. In the
banking industry, it is perhaps easier to maintain customers since many people use the
same bank through their lie than trying to increase loyalty with the existing customers.
lence, eort has to be put on customers, who are about to choose bank or the irst time.
loweer, it might be assume that people rom the same amily generally use the same
bank, which renders diiculties when trying to attract new customers. As a result,
increasing market share in this industry can be considered harder compared to other serice
industries.
Lmpirical lindings and Analysis
42
1o conclude, our results rom the banking industry did not point towards any relationship
between intangibility and loyalty. 1he answers were largely spread and respondents haing
a clear picture o the serice diered in loyalty. 1hus, it cannot be concluded that a lower
degree o intangibility would necessary lead to higher degree o loyalty. 1his may be
because people in this serice industry are less likely to change proider in spite o
dissatisaction with the bank.
Lmpirical lindings and Analysis
43
4.7 The Swedish Employment Agency
Intangibility rate
6 5 4 3 2 1 0
L
o
y
a
l
t
y
12
10
8
6
4
2

ligure 4-6 1he Swedish Lmployment agency`s loyalty and intangibility rate.
1he last serice proider diers rom the others in that it is a public authority with state
unding. 1hus, the proit motie existing in the other industries is not present here. In
addition, they are less inoled in competition with other serice proiders. loweer,
arising job agencies on the Swedish market hae gien the Swedish employment agency
some competition. Still, i people become unemployed, they hae to notiy the Swedish
employment agency in order to get access to unemployment compensation. Despite these
dierences with the other inestigated serice industries, it is interesting to surey people
using these kinds o serices to see i it diers and i a relationship can be ound between
tangibility and loyalty.
1he results show that correlation is slightly negatie with a alue o -0.024

. 1he leel o
signiicance is howeer ery high, 0.883

implying that the negatie correlation is not alid

and thus it cannot be decided i a relationship exists between tangibility and loyalty.
Answers are spread and both people with a clear picture as well as unclear picture o the
serice hae rated both high and low on loyalty ,see igure 4-6,.
4.7.1 Tangibility
Mean leel o tangibility is 2.3, which shows that the respondents in this category hae a
less clear picture o the serice proided by the Swedish employment agency. Lxactly what
serice the respondents used was not inestigated. 1hus, depending on what serice the
jobseeker used when answering our surey probably also inluenced the answers.

See Appendix 3
Lmpirical lindings and Analysis
44
It was not known on beorehand whether the Swedish employment agency consisted o
mainly experience or credence qualities when trying to place it on the tangibility continuum
,Moorthia, 2002,. Laluating the results, it can be concluded that it is probably somewhat
more intangible and consist o mainly credence qualities since many respondents ealuated
the serice to be less clear. Perhaps this is a result o ambiguity inoled in the serice. Is it
the potential proided job that is the serice or is it education, help or compensation that is
the core serice On the one hand, i considering the main serice to be proision o a job,
then intangibility would probably be higher since the picture o this will be ery unclear
beore employment has started. On the other hand, i the serice before employment starts
is considered the core serice, it is probably more clearly perceied. 1angibility o the
serice will be higher in this case compared with the irst mentioned iew because it
consists o more physical eidence ,McDougall & Snetsinger, 1990,.
Santos ,2002, has suggested that i a serice is more tangible, perceied alue will be
higher. 1hus, in this case perceied quality should be low. loweer, this may also be hard
to claim due to the speciic eatures o this serice proider. 1he undesired aspect o this
serice can lead to lower perceied quality than in other industries. It may also be linked
with the characteristics o serices being inseparable, perishable, intangible and heterogenic
,Gronroos, 1998,. Because o these characteristics, each person perceies serices
dierently and thus, perception o quality will dier.
Deeloped theory concerning serice marketing and problems deriing rom the
intangibility aspect has been deeloped with proit-making organisations in mind ,leskett
et al., 1994,. 1hereore, the suggestion to make a serice more tangible in order to increase
proits is less applicable on the Swedish employment agency. Since they are not dependent
on proits or surial, they might be less prone to deelop strategies to make the serice
more tangible. Moreoer, beore customers hae been proided with a job, it can be harder
to ealuate the results rom the serice proided by the Swedish employment agency.
Asking people now employed how they perceied the serice would probably hae led to a
lower mean o tangibility since they can easier ealuate the results.
4.7.2 Loyalty
Loyalty will also be dierent compared with other serice proiders since customers do not
hae the choice in the same way as with other serices. Lately, there are more job proiders
on the Swedish employment market than beore. \et, all unemployed people are more or
less obliged to hae some contact with the Swedish employment agency, i requesting
unemployment compensation.
1he mean alue o loyalty was calculated to be 6.1, which can be argued to be quite low.
Considering that the number o serice proiders in this industry is ew, the loyalty alue
would hae been expected to be higher. Maybe it is a result o the serice inoled being
sensitie and unwanted. Most likely, people are not satisied with being unemployed, which
automatically lead to giing the Swedish employment agency low ratings in the surey.
People are loyal when they repurchase the same brand without any consideration o buying
another ,Olier, 1999,. loweer, in the case o the employment industry, adapting this
deinition is not easible since there are not many brands to choose rom and the serice is
not purchased in the same way as other serices. Jobseekers will remain loyal as long as
they are unemployed and thereater be completely disloyal, reerred to as terrorists by
Gronroos ,2000,.
Lmpirical lindings and Analysis
45
Loyalty has been connected with satisaction and is stried ater due to its aect on
proitability ,Gronroos, 2000, leskett et al., 1994,. 1hese are also more applicable to
proit-making industries. 1he Swedish employment agency will not try to increase loyalty
because they want to increase proits. Instead, they hae the reerse wish, i people become
employed and thus less loyal, their goal has been ulilled. lence, it can be argued that job
seekers at the Swedish employment agency are engaged in alse loyalty ,Soderlund, 2003,. It
has been argued that loyalty is strongly interlinked with satisaction ,Gronroos, 2000,.
loweer, een i customers are completely satisied with a serice, they may change
proider. Conersely, dissatisied customers do not necessarily change serice proider
,Soderlund, 2003,. Applying this on the Swedish employment agency, customers might be
dissatisied but continue using their serices. loweer, this behaiour can take place in
proit-making organisations as well but may be more common when proiders are ew.
Reiewing the results rom the Swedish employment agency, there is no relationship to be
ound between the leel o intangibility and loyalty. 1hus, attempting to make this serice
more tangible would probably not increase loyalty. It is likely that the results are aected by
the ambiguity inoled in job seeking. People using this serice hae not yet experienced
the result in orm o being employed, consequently, the serice is perceied to be
intangible. Loyalty is also iewed dierently since the wish rom the serice proider is that
people should become less loyal. I so, their primary goal has been reached, to decrease
unemployment in Sweden.

Lmpirical lindings and Analysis
46
4.8 Overall Service Analysis
4.8.1 Loyalty and Intangibility Graph
Loyalty-Intangibility graph
5
5,5
6
6,5
7
7,5
8
1,5 1,6 1,7 1,8 1,9 2 2,1 2,2 2,3 2,4
Intangibility
L
o
y
a
l
t
y
Employment agency
Restaurants Banks
Dentistries
Travel agencies
Hairdressers

ligure 4- Loyalty and Intangibility Graph.
1o enable comparison between the inestigated serice proiders, we calculated a mean
alue rom intangibility and loyalty in order to get one point or each industry. By
displaying the alues in a diagram ,see igure 4-,, it can be discoered whether dierences
exist. loweer, the relationship between loyalty and intangibility is not shown here.
Loyal customers hae been deined as those who repurchase the same brand consistently
without considering other brands ,Olier, 1999,. According to Gronroos ,2000,, it can only
be argued that customers giing loyalty top scores will be completely loyal. In the surey,
loyalty alue ranges in between 6.1 to .. 1he Swedish employment agency got the lowest
loyalty result while dentistry receied the highest. lairdressers got the second highest rate
o .2. Banks, trael agencies and restaurants got close rates and the dierences cannot be
claimed to be ery large.
As argued, customer loyalty leads to higher proitability, which most serice proiders
strie ater ,leskett et al., 1994, Soderlund, 2003,. I loyalty is not in ocus, Reichheld
,199, argues that companies will experience a struggle to uphold growth. 1he Swedish
employment agency lacks the goal o increasing proitability compared to the other serice
proiders. loweer, what is interesting is that the national dental health serice also lacks
the monetary goal. Since the respondents were not asked i they were isiting a priate
dentistry or not, it cannot be decided to what extent the goal o proitability is present or
not. It can be argued that banks, hairdressers, trael agencies and restaurants always are
drien by proitability and the results shows that they also receied about the same loyalty
alues.
Lmpirical lindings and Analysis
4
Low loyalty alue receied by the Swedish employment agency might be explained by the
strong connection between serice quality, satisaction and loyalty ,Gronroos, 2000,. It is
howeer not necessary that serice quality must be high as long as it surpasses expectations
rom the customer ,Gronroos, 2000,. Customers at the Swedish employment agency may
perceie quality as low and thus satisaction will decrease as well. Neertheless, i
expectations were low rom the start and surpassed, satisaction will be higher than
expected. Satisaction might not occur until ater the goal o employment has been
achieed. 1hus, to ask people ater they hae been employed would probably hae lead to
higher loyalty results.
Serice intangibility is one characteristics leading to problems when marketing and
assessing serices. Marketing through employing similar strategies as with tangible product
marketing is not easible and instead Rust et al. ,1996, propose three P`s, people, physical
eidence and process. Personal interactions and the surroundings were interactions take
place are important when marketing serices. In this thesis, the respondents were asked to
consider the last time they made use o a speciic intangible serice. Intangibility,tangibility
ratings aried between 1. and 2.3, which all are more towards tangibility than intangibility.
1his could be a result o the serice already being experienced and thus people haing a
clearer picture o people, physical eidence and processes. Serices experienced at the
hairdresser and the trael agency was perceied as most tangible while the Swedish
employment agency got the highest alue o 2.3. Bank and dentistry got a mean o 1.8 and
restaurant 1.9 that can be claimed to be ery close to hairdressers and trael agencies.
McDougall and Snetsinger ,1990, argue that tangibility has both a physical and a mental
component. Applying this on the Swedish employment agency, the physical and mental
picture o a potential job might be blurred and not as clear as with the other serices. 1he
serice also diers rom the others in that it is not purchased but used as means to reach
something. Looking at the other extreme o hairdresser and trael agency, people`s picture
o the serice is clearer when they think about the last journey or haircut purchased.
Summing up the results receied when calculating a mean o both loyalty and
intangibility,tangibility on all inestigated serice proiders, small dierences were ound.
All the proiders, which hae proitability goal, are grouped together and only small
dierences exist. 1he only proider with results that diers is the Swedish employment
agency ,see igure 4-,. 1he reason or this can be that the serice proided is aguer than
the others are since the respondents had not yet experienced the result as within the other
industries. I asking people that had receied a job through using the Swedish employment
agency`s serices, the results might hae diered.








Lmpirical lindings and Analysis
48
4.8.2 Tangibility Continuum

ligure 4-8 1angibility Continuum.
Intangibility is the serice characteristic that has been most extensiely brought up to
discussion by theorists ,e.g. larte & Dale, 1995, Johns, 1999, McDougall & Snetsinger,
1990, Rushton & Carson, 1989, Santos, 2002,. It is also argued that serices should not be
seen as a homogenous group and that the intangibility eature does not clearly separate
serices rom products ,Johns, 1999, Leitt, 1981, McDougall & Snetsinger, 1990, Santos,
2002,. Deried rom these discussions, it is interesting to elaborate urther with the analysis
and to place the selected serice industries along the tangibility continuum in order to
detect any possible similarities or dierences ,see igure 4-8,.
1here are indications that the more search qualities a serice has, the more tangible the
serice is ,larte & Dale, 1995, Rushton & Carson, 1989, Zeithaml, 1991,. 1he same goes
the other way around, the more credence qualities a serice has, the more intangible it is.
lurthermore, intangibility orces serice marketing to part rom traditional marketing and
to deelop new marketing practises, which are more in line with serices distinct
characteristics ,Gronroos, 2000,. Since a serice-oriented organisation should strie
towards tangibilize serices through marketing, it could be claimed that the serice
industries inestigated hae succeeded with their marketing approach ,Reddy et al., 1993,.

According to Rushton and Carson ,1989,, serices proided by restaurants, trael agencies,
and hairdressers, are considered high in experience qualities while dentists and banks are
high in credence qualities ,Rushton & Carson, 1989,. lence, it was expected that the
chosen serice industries would be located more in the middle and upper hal o the
tangibility continuum. loweer, neither did the study proide such results nor did it
separate experience dominant rom credence dominant serices. Restaurants were in act
ranked more intangible than both banks and dentists, which do not support Rushton`s and
Carson`s ,1989, grading. 1his means that the respondents ound it in general relatiely easy
to picture the serice. In turn, there are indications that hairdressers, trael agencies, banks,
dentists and restaurants in general possess serice attributes that can be ealuated beore
the actual purchase ,Zeithaml, 1991,. \hen it comes to the Swedish employment agency,
there were no such expectations. loweer, due to its serices nature ,or example that it
proides adices or job seeking, there were indications that i not being more credence
dominated it would be more experience dominated. Such belies cannot be accepted when
considering the low intangibility rate.
2
,
3

L
m
p
l
o
y
m
e
n
t

A
g
e
n
c
y

1 2 3 4 5
1
,
9

R
e
s
t
a
u
r
a
n
t
s

1
,

l
a
i
r
d
r
e
s
s
e
r
s
,

1
r
a

e
l

A
g
e
n
c
i
e
s

1
,
8

B
a
n
k
s
,

D
e
n
t
i
s
t
s

Lmpirical lindings and Analysis
49
\hen ealuating a serice degree o tangibility the respondents could hae considered
many aspects. Due to the questionnaire`s design, it is neither possible to draw any
conclusions rom what kind o tangibility each serice industry is generating nor what kind
o serice that each respondents is relecting upon. loweer, since tangibility is a concept
that does take into consideration the tangibles` inluence on tangibility and its physical and
mental components, it is still interesting to compare the dierent serice industries
tangibility ratings ,McDougall & Snetsinger, 1990, Rushton & Carson, 1989,.

Conclusions and linal Discussion
50
5 Conclusions and Final Discussion
1bi. fivat cbater ritt re.evt covctv.iov. aerirea frov tbe avat,.i.. . fivat ai.cv..iov ritt ai.ta, tbovgbt.
covcervivg tbe .tva, vaae. 1bere ritt at.o be .vgge.tiov. of area. for fvrtber re.earcb.
5.1 Conclusions
1he purpose o this thesis was to inestigate i there is a relationship between serices`
tangibility and customer loyalty. In order to examine such matters, graphs that isibly
display any possible relationships, hae been presented and so hae results rom Pearson`s
correlation test. Due to the ariety o results deried rom dierent serice industries, it
cannot be concluded that there is a relationship between serices` tangibility and customer
loyalty in the serice industry as a whole. loweer, when analysing dierent serices
industries separately, three hae a signiicant relationship between the two ariables and
three hae not.
\hen reiewing results rom the six chosen serice industries, it can be concluded that
there are dierences in Pearson correlation coeicients` signiicant leels between loyalty
and tangibility. lence, it is necessary to look at each serice industry separately and not as a
homogenous group. \hile the Swedish employment agency, banks and hairdressers had an
insigniicant relationship between loyalty and tangibility, the dentists, trael agencies and
restaurants had a signiicant relationship between the two ariables. 1he irst group`s
signiicant alues range rom 0.012 to 0.044 while the second group has alues that range
rom 0.0126 to 0.883, igures which are well aboe the chosen signiicant alue o 0.05.
1he signiicant correlations are all negatie. Restaurants had a correlation o -0.394,
hairdressers -0.246 and dentists -0.320. Being ully correlated would show alues o -1 or -
1, hence, een though correlated, the igures indicate that loyalty and tangibility are not
ully correlated. loweer, negatie correlation coeicients denote that a decrease in serice
intangibility will increase loyalty and ice ersa. In other words, i serice proiders within
these industries attempt to increase serices` tangibility, loyalty will increase. 1hereore, by
inluencing customers` ability to picture serices, dentists, trael agencies and restaurants
will be able to aect their customer loyalty. \hen it comes to the insigniicant correlation
alues o the Swedish employment agency, banks and hairdressers, there are graphical
tendencies towards this negatie relationship. 1he correlation coeicients ranges rom -
0.024 to -0.246, which conirms that een though ery small correlations they are negatie.
loweer, in these cases, it is not alid to claim that attempting to make serices more
tangible would increase loyalty. 1hus, it cannot be concluded that a lower degree o
intangibility would necessary lead to higher degree o loyalty and ice ersa.
5.2 Final Discussion
\hen perorming a study that has primarily ocused on customer loyalty and serice
tangibility, it has been noticed that customers hae diiculties in both deining loyalty and
tangibility. As a result, measuring these ariables based on customers` perception might
aect the results deried rom the questionnaire. In turn, it is important to be aware that
emotions and attitudes could be captured inaccurately. Moreoer, there might be customers
who consider themseles as being loyal, een though not loyal as theorists deine. 1he
same goes or the other way around, customers might not see themseles as loyal, but their
actions indicate the opposite.
Conclusions and linal Discussion
51
\hen presenting our results rom the surey, we decided not to look at the age spread o
the respondents. It was not in line with our purpose and thus excluded. loweer, because
o this, the age spread in each serice industry is not known. I a larger surey was to be
conducted, this aspect could also hae been included to ind possible dierences between
age groups.
Some results deried rom the empirical indings may be questionable. It was ound that
people are more loyal to their hairdresser than their bank, which may not be the case in
reality. 1his can be a result o asking the respondents to consider their ta.t experience with
a bank. 1hus, the bank reerred to when illing in the questionnaire may not be the bank
they usually isit.
I customers beliee that tangibility and loyalty are hard to deine, so might marketers. As
mentioned only briely in the thesis, a study perormed by Rushton and Carson ,1989,
proed that practitioners in the serice-marketing ield do see a dierence between their
task and that o marketing managers dealing with goods. loweer, being able to separate
intangible beneits and intangible eatures was diicult. Common sense was oten being
used. It might be that, relecting on such indings, the theoretical world is not yet ully
linked to reality. lurther, to implement dierent kinds o tangibility strategies, there is a
need or theorists to communicate what tangibility and intangibility are and rb, marketers
should ocus on marketing their serices in a more tangible way. In addition, to deepen
knowledge o how to market serices as more tangible is an area or urther inestigation.
In the uture, i serice tangibility has been eectiely communicated to practitioners,
loyalty might be measured only based on how customers perceie proided serices. 1heir
expectations as well as experiences based on tangibility could help marketers to direct and
improe marketing methods. In addition, assuming that customers are aware o the word
tangibility, measuring loyalty through rather simple tangibility questions could cut costs
rom more expensie and extensie loyalty programmes. 1hus, ocusing on tangibility
could sae money but it could also acilitate the actual measuring o loyalty.
5.3 Suggestions for further studies
Our study has measured the relationship between loyalty and tangibility within dierent
serice industries. \e detected some similarities and dierence, which would be more
interesting to inestigate urther. lor example, the reasons or why all inestigated serice
industries ended up within a narrow tangibility range rom 1. to 2.3. 1his is interesting
because the serice industries chosen are considered to hae more experience and credence
qualities than search qualities. lence, when marketing serices proided by these
industries, it is argued that these characteristics should be taken into consideration.
loweer, as these serices actually seem to hae more search qualities, could it then be
more appropriate to use traditional marketing than serice marketing Because it is diicult
to ind pure serices or pure products, could it be that customers hae changed and do not
beliee that there is a dierence I so, would it be appropriate to create a new marketing
approach that ocuses on serice and product mixtures instead o either serices or
products
It could also be interesting to perorm similar tests between dierent serice proiders
within the same serice industry. I measuring loyalty and tangibility in one speciic
industry, comparisons o how serice proiders market the same core serice could be
urther inestigated in. In addition, competition theories could be introduced to the
Conclusions and linal Discussion
52
discussion. It might also be interesting to link loyalty and serice tangibility to dierent
kinds o serices proided rom the same organisation.
Identiying a serice proider`s customers could deepen the discussion concerning the
customer loyalty and serice tangibility relationship. 1o examine what preerences,
experiences and expectations a customer has o a speciic serice might help marketers to
ind more suitable segments but also to be able to customize tangibilization strategies to
dierent customer groups.
New trends within or example banks and trael agencies aect a serice`s tangibility. lor
example, banking actiities are carried out more on the internet than beore. In turn,
tangibles, physical surrounding and other actors that inluence serice tangibility are no
longer able to unction as marketing tools. lence, i serices can be considered as
becoming more intangible as new technologies are entering the market and taking oer the
physical meeting between a serice proider and a customer, it is important or marketers
to approach new strategies or attracting and retaining customers. It might be that the
loyalty concept needs to be re-ealuated.















List o reerences
53
6 List of references
Aczel, A.D., & Sounderpandian, J. ,2002,. Covtete v.ive.. tati.tic.. New \ork: McGraw-
lill,Irwin.
Alesson, M., & Deetz, S. ,2000,. Doivg Criticat Mavagevevt Re.earcb. London: Sage.
Andersson, B.L. ,1995,. ov vav fragar far vav .rar. Kristianstad: Kristianstads Boktryckeri.
Backham, J. ,1998,. Raorter ocb v.at.er. Lund: Studentlitteratur.
Bain & Company ,2005,. o,att, rvte.!. Retrieed 2005-03-02 rom:
http:,,www.loyaltyrules.com,loyaltyrules,index.html.
Bergman, B., & Klesjo, B. ,2003,. Quality and quality improements. Ln Bergman, B. &
Klesjo, B. ,Lds., Qvatit, frov cv.tover veea. to cv.tover .ati.factiov ,pp. 21-51,
Lund: Studentlitteratur.
Bitner, M.J. ,1992,. Sericescapes: 1he Impact o Physical Surroundings on Customers and
Lmployees. ]ovrvat of Mar/etivg, :,2,, 5-2.
Blumberg, B., Cooper, D.R., & Schindler, P.S. ,2005,. v.ive.. Re.earcb Metboa.. London:
McGraw lill.
Brown, S.\., lisk, R.P., & Bitner, M.J. ,1994,. 1he Deelopment and Lmergence o
Serices Marketing 1hought. vtervatiovat ]ovrvat of errice vav.tr, Mavagevevt,
:,1,, 21-48.
Butscher, S.A. ,1998,. Cv.tover ctvb. ava to,att, rogravve.. UK: MPG Books limited.
Chalmers, A.l. ,1999,. !bat i. tbi. tbivg cattea cievce. Indianapolis: lackett Publishing
Company.
Christensen, L., Andersson, N., Lngdahl, C., & laglund, L. ,2001,. Mar/vaa.vvaer./vivg.
Lund: Studentlitteratur.
Collis, J., & lussey, R. ,2003,. v.ive.. Re.earcb ,2
nd
ed,. New \ork: Palgrae Macmillian.
Cook, S.D. ,1996,. loreword. Ln B. Reichheld, l.l. 1be qve.t for to,att,. US: larard
Business Reiew Press.
Cooper, D.R., & Schindler, P.S. ,2001,. v.ive.. Re.earcb Metboa. ,
th
ed.,. New \ork:
McGraw-lill,Irwin.
Cooper, D.R., & Schindler, P.S. ,2003,. v.ive.. Re.earcb Metboa. ;igbt eaitiov). New \ork:
McGraw-lill,Irwin.
Daidsson, B., & Patel, R. ,2003,. or./vivg.vetoai/ev. grvvaer. Lund: Studentlitteratur.
Lgidius, l. ,1986,. Po.itiri.v - fevovevotogi - bervevevti/. Lund: Studentlitteratur.
List o reerences
54
Lriksson, L.1., & \iedersheim-Paul, l. ,1999,. .tt vtreaa for./a ocb raortera. Malmo: Dale-
ke Graiska.
Ljegard, R. ,1996,. 1etev./atig vetoa. Lund: Studentlitteratur.
Ghauri, P.N., Gronhaug, K., & Kristianslund, I. ,1995,. Re.earcb Metboa. iv v.ive.. tvaie.: a
Practicat Cviae. New \ork: Prentice lall.
Gronroos, C. ,1998,. Marketing serices: the case o the missing product. 1be ]ovrvat of
v.ive.. c vav.triat Mar/etivg, 1,4,5,, 322-332.
Gronroos, C. ,2000,. errice vavagevevt ava var/etivg a cv.tover retatiov.bi vavagevevt
aroacb ,2
nd
ed.,. Chichester: John \iley & Sons.
Groes, R.M., Dillman, D.A., Lltinge, J.L., & Little, R.J.A. ,Lds.,. ,2002,. vrre, ^ovreov.e.
New \ork: John \ileys & Sons.
Gustasson, A., Nilsson, L., & Johnson, M.D. ,2003,. 1he role o quality practise in serice
organizations. vtervatiovat ]ovrvat of errice vav.tr, Mavagevevt. 14,2,, 232-244.
larte, l.G., & Dale, B.G. ,1995,. Improing quality in proessional serice organization: a
reiew o the key issues. Mavagivg .errice qvatit,, :,3,, 34-44.
leskett, J.L., Jones, 1.O., Loeman, G.\., Sasser, \.L., & Shlesinger, L.A. ,1994,. Putting
the serice-proit chain to work. arrara v.ive.. Rerier, March-April, 164-14.
Johns, N. ,1999,. \hat is this thing called serice vroeav ]ovrvat of Mar/etivg. ,9,, 958-
96.
Kotler, P., & Armstrong ,2004,. Privcite. of Mar/etivg ,10
th
ed.,. New Jersey: Pearson
Prentice lall.
Kotler, P., Armstrong, G., Saunders, J., & \ong, V. ,2002,. Privcite. of Mar/etivg ,1hird
Luropean Ldition,. London: Pearson Lducation.
Lekall, P., & \ahlbin, C. ,2001,. vforvatiov fr Mar/vaa.frivg.be.tvt. Goteborg: IlM
orlag.
Leitt, 1. ,1981,. Making tangible the intangible. arrara v.ive.. Rerier. May-June, 101-
102.
Lind, D.A., Marchal, \.G., & Mason, R.D. ,2001,. tati.ticat 1ecbviqve. iv v.ive.. c
covovic. ,11
th
ed.,. New \ork: McGraw-lill,Irwin.
Loelock, C.l. ,1991,. errice. Mar/etivg. London: Prentice-lall International.
Lundahl, U., & Skrad, P.l. ,1982,. Intressentmodellen i teori och praktik. In C.J., \est-
holm ,ed.,, retaget. ivtre..evter ocb /ovtra/t ,pp. 9-53,. Stockholm: SAls orlag.
McDougall, G.l.G., & Snetsinger, D.\. ,1990,. 1he intangibility o serices: measurement
and competitie perspecties. 1be ]ovrvat of errice. Mar/etivg, 1,4,, 2-40.
List o reerences
55
Moorthia, \.L.R ,2002,. An approach to branding serices. ]ovrvat of errice Mar/etivg, 1,3,,
259-24.
Olier, R.L. ,1993,. A conceptual model o serice quality and serice satisaction:
compatible goals, dierent concepts. .aravce. iv errice Mar/etivg ava
Mavagevevt, 2, 65-85.
Olier, R.L. ,1999,. \hence consumer loyalty ]ovrvat of Mar/etivg, Special Ldition, 33-45.
Payne, A. ,1993,. 1be ..evce of errice Mar/etivg. London: Prentice lall.
Petersen, L. ,2005, lebruary 26,. Ltt delat Serige - Vxande klytor mellan Seriges regio-
ner. rev./a Dagbtaaet. Retrieed April 26, 2005, rom
http:,,www.sd.se,dynamiskt,naringsli,did_9225500.asp.
Reddy, A.C., Buskirk, B.D., & Kaicker, A. ,1993,. 1angibilizing the intangibles: some
strategies or serice marketing. 1be ]ovrvat of errice Mar/etivg, ,3,, 13-1.
Reichheld, l. l. ,199,. Business Loyalty. ecvtire cettevce, 11,6,, 19.
Reichheld, l. l., Markey Jr, R. G., & lopton, C. ,2000,. 1he loyalty eect - the
relationship between loyalty and proits. vroeav v.ive.. ]ovrvat, 12,3,, 134-
139.
Rushton, A.M., & Carson, D. J. ,1989,. 1he marketing o serices: managing the
intangibles. vroeav ]ovrvat of Mar/etivg, 2,8,, 23-44.
Rust, R.1., Zahorik, A.J., & Keiningham, 1.L. ,1996,. errice Mar/etivg. New \ork:
larperCollins College Publisher.
Ruyter, K., & Scholl, N. ,1998,. Positioning Qualitatie Research: Relections rom 1heory
to Practise. Qvatitatire Mar/et Re.earcb: .v vtervatiovat ]ovrvat, 1,1,, -14.
Santos, J. ,2002,. lrom intangibility to tangibility on serice quality perceptions: a
comparison study between consumers and serice proiders in our serice
industries. Mavagivg .errice qvatit,, 12,5,, 292-302.
Saunders, M., Lewis, P., & 1hornhill, A. ,2003,. Re.earcb Metboa. for v.ive.. tvaevt.. Lssex:
Pearson Lducation Limited.
Soderlund, M. ,2003,. Dev to;ata /vvaev. lelsingborg: AB Boktryck.
Stell, R., & Donoho, C.L. ,1996,. Classiying serices rom a consumer perspectie. 1be
]ovrvat of errice. Mar/etivg, 10,6,, 33-44.
Sweden.se, ,2005,. errice .ector iv reaev. Retrieed 2005-02-19 rom
http:,,www.sweden.se,templates,cs,Basiclactsheet____310.aspx.
Swit, L. ,2001,. Qvavtitatire Metboa. for v.ive.., Mavagevevt c ivavce. New \ork: Palgrae.
1rost, J. ,2001,. v/atbo/ev. Lund: Studentlitteratur.
List o reerences
56
\elman, J.C., & Kruger, S.J. ,2001,. Re.earcb Metboaotog, ;2va eaitiov). Oxord: Oxord
Uniersity Press.
Zeithaml, V.A., Berry, L.L., & Parasuraman, A. ,1988,. Communication and Control
Processes in the Deliery o Serice Quality. ]ovrvat of Mar/etivg, :2,2,, 35-48.
Zeithaml, V.A. ,1991,. low consumer ealuation processes dier between goods and
serices. Ln B. Loelock, C.l ,ed.,. errice Mar/etivg 2
va
ea. ,pp. 39-4,. Lon-
don: Prentice-lall International.
Appendices
5
Appendices
Appendix 1 Survey Swedish version
Ln enktunderskning angaende lojalitet relaterat till tjnster.

Kn O Man Alder O 18 - 32
O Kinna O 33 - 4
O 48 - 64
O 65 - 80

Iragorna ska besvaras utifran Lr senaste erfarenhet hos en bank. Hur kon-
kret eller abstrakt anser ni att tjnsten var? Kryssa fr det alternativ som
stmmer bst verens.

Hur vl stmmer fljande fragor in pa er syn av fretaget? Ringa in det alter-
nativ som stmmer bst verens.
J. Hur stor r sannolikheten att ni kommer att fortstta kpa denna tjnst hos detta
fretag?
Inte troligt 1 2 3 4 5 6 8 9 10 1roligt
2. Om ni skulle vlja ett liknande fretag fr frsta gangen, hur troligt r det att ni
skulle ha valt detta fretag?
Inte troligt 1 2 3 4 5 6 8 9 10 1roligt
3. Hur troligt r det att ni kommer att rekommendera andra att kpa tjnsten hos
detta fretag?
Konkret
Abstrakt
O Jag har en ldigt tydlig bild a denna tjnst.
O Ln orestllning a denna tjnst kommer direkt ramor mig.
O Denna tjnst r ltt att se och rora.
O Jag anser att detta inte r en typ a tjnst som r ltt att orestlla.
O Detta r en sar tjnst att orestlla sig.

Appendices
58
Inte troligt 1 2 3 4 5 6 8 9 10 1roligt
4. Hur njd r ni med tjnsten?
Inte nojd 1 2 3 4 5 6 8 9 10 Mycket nojd
I vilken grad verensstmmer ni med fljande pastaende? Ringa in det alter-
nativ som stmmer bst verens.
S. Iretaget bryr sig om att bygga upp en stark relation med mig.
laller inte med 1 2 3 4 5 6 8 9 10 laller med
6. Iretaget kommunicerar ppet och rligt.
laller inte med 1 2 3 4 5 6 8 9 10 laller med
7. Iretaget r engagerat i att skapa msesidiga frdelar (dvs. missbrukar inte sina
kundrelationer).
laller inte med 1 2 3 4 5 6 8 9 10 laller med
8. Jag litar pa detta fretags ledare och anstllda.
laller inte med 1 2 3 4 5 6 8 9 10 laller med
9. Kundlojalitet r vrdefullt fr detta fretag och lnar sig fr mig som kund.
laller inte med 1 2 3 4 5 6 8 9 10 laller med
J0. Jag anser att fretaget r vrd min kundlojalitet.
laller inte med 1 2 3 4 5 6 8 9 10 laller med
JJ. ver aren sa har min kundlojalitet kat fr detta fretag.
laller inte med 1 2 3 4 5 6 8 9 10 laller med
J2. Det r enkelt att vara kund pa detta fretag.
laller inte med 1 2 3 4 5 6 8 9 10 laller med
J3. Iretaget r ett bra fredme fr denna bransch.
laller inte med 1 2 3 4 5 6 8 9 10 laller med
J4. Iretaget har bra personal.
laller inte med 1 2 3 4 5 6 8 9 10 laller med
JS. Iretaget kommer med innovativa lsningar.
laller inte med 1 2 3 4 5 6 8 9 10 laller med
1ack fr er medverkan!

Appendices
59
Appendix 2 Survey English version
A survey concerning customer loyalty relating to services.

Gender O Male Age O 18 - 32
O lemale O 33 - 4
O 48 - 64
O 65 - 80

1he questions should be answered with reference to your last experience at a
bank. 1o what extent did you perceive the service as being tangible or
intangible? Mark with a cross the alternative, which best coheres with your
view.

How well do your view of this company coheres with these questions? Mark
the alternative, which best coheres with your view.
J. How likely are you to continue buying services from this company?
Not likely 1 2 3 4 5 6 8 9 10 Likely
2. If you were selecting a similar vendor for the first time, how likely is it that you
would choose this company again?
Not likely 1 2 3 4 5 6 8 9 10 Likely
3. Overall, how likely are you to provide enthusiastic referrals to this company?
Not likely 1 2 3 4 5 6 8 9 10 Likely
4. Overall, how satisfied are you with the service from this company?
1angible
Intangible
O I hae a ery clear picture o this item.
O 1he image comes to my mind right away.
O 1his item is ery tangible.
O 1his is not the sort o item that is easy to picture.
O 1his is a diicult item to think about.

Appendices
60
Not satisied 1 2 3 4 5 6 8 9 10 Very satisied
Please rate your level of agreement with the following statements.
S. Company really cares about building a relationship with me.
Do not agree 1 2 3 4 5 6 8 9 10 Agree
6. Company communicates openly and honestly.
Do not agree 1 2 3 4 5 6 8 9 10 Agree
7. Company is committed to win/win solutions (does not take advantage of its
partners or customers).
Do not agree 1 2 3 4 5 6 8 9 10 Agree
8. I trust Company's leaders and personnel to behave with fairness and integrity.
Do not agree 1 2 3 4 5 6 8 9 10 Agree
9. Customer loyalty is appropriately valued and rewarded at Company.
Do not agree 1 2 3 4 5 6 8 9 10 Agree
J0. I believe Company deserves my loyalty.
Do not agree 1 2 3 4 5 6 8 9 10 Agree
JJ. Over the past year, my loyalty to Company has grown stronger.
Do not agree 1 2 3 4 5 6 8 9 10 Agree
J2. Company makes it easy for me to do business with them.
Do not agree 1 2 3 4 5 6 8 9 10 Agree
J3. Company sets the standard for excellence in its industry.
Do not agree 1 2 3 4 5 6 8 9 10 Agree
J4. Company attracts and retains outstanding people (employees, partners, etc.).
Do not agree 1 2 3 4 5 6 8 9 10 Agree
JS. Company creates innovative solutions that make my life easier.
Do not agree 1 2 3 4 5 6 8 9 10 Agree
1hank you for participating!


Appendices
61
Appendix 3 Correlation Outputs

Restaurants
Correlations
1,000 -,394*
, ,012
40 40
-,394* 1,000
,012 ,
40 40
Pearson Correlation
Sig. (2-tailed)
N
Pearson Correlation
Sig. (2-tailed)
N
Intangibility rate
Loyalty
Intangibility
rate Loyalty
Correlation is significant at the 0.05 level (2-tailed).
*.



Hairdresser
Correlations
1,000 -,246
, ,126
40 40
-,246 1,000
,126 ,
40 40
Pearson Correlation
Sig. (2-tailed)
N
Pearson Correlation
Sig. (2-tailed)
N
Intangibility rate
Loyalty
Intangibility
rate Loyalty



1ravel Agencies
Correlations
1,000 -,352*
, ,026
40 40
-,352* 1,000
,026 ,
40 40
Pearson Correlation
Sig. (2-tailed)
N
Pearson Correlation
Sig. (2-tailed)
N
Intangibility rate
Loyalty
Intangibility
rate Loyalty
Correlation is significant at the 0.05 level (2-tailed).
*.




Appendices
62
Dentistry
Correlations
1,000 -,320*
, ,044
40 40
-,320* 1,000
,044 ,
40 40
Pearson Correlation
Sig. (2-tailed)
N
Pearson Correlation
Sig. (2-tailed)
N
Intangibility rate
Loyalty
Intangibility
rate Loyalty
Correlation is significant at the 0.05 level (2-tailed).
*.



Bank
Correlations
1,000 -,053
, ,746
40 40
-,053 1,000
,746 ,
40 40
Pearson Correlation
Sig. (2-tailed)
N
Pearson Correlation
Sig. (2-tailed)
N
Intangibility rate
Loyalty
Intangibility
rate Loyalty



1he Swedish Lmployment agency
Correlations
1,000 -,024
, ,883
40 40
-,024 1,000
,883 ,
40 40
Pearson Correlation
Sig. (2-tailed)
N
Pearson Correlation
Sig. (2-tailed)
N
Intangibility rate
Loyalty
Intangibility
rate Loyalty