Wallinandreassen 1998

International Journal of Service Industry Management
Customer loyalty and complex services: The impact of corporate image on quality, customer satisfaction
and loyalty for customers with varying degrees of service expertise
Tor Wallin Andreassen, Bodil Lindestad,
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Tor Wallin Andreassen, Bodil Lindestad, (1998) "Customer loyalty and complex services: The impact of corporate image on
quality, customer satisfaction and loyalty for customers with varying degrees of service expertise", International Journal of
Service Industry Management, Vol. 9 Issue: 1, pp.7-23, https://doi.org/10.1108/09564239810199923
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Customer loyalty
Customer loyalty and complex and complex
services services
The impact of corporate image on

quality, customer satisfaction and loyalty 7
for customers with varying degrees of Received May 1996
Revised February 1997
service expertise
Tor Wallin Andreassen
Norwegian School of Management, The Graduate School, and

Stockholm University, School of Business, and
Bodil Lindestad
Norwegian Institute for Research in Marketing (NiM) at the Norwegian
School of Management, Sandvika, Norway
Introduction
In today’s competitive markets services and service companies within the same
industry are becoming increasingly similar. Differentiation through the delivery
channel (i.e. delivery of services against payment) is difficult. A growing
number of service companies have embarked on a journey of positioning
through the communication channel (i.e. advertising and personal selling)
(Andreassen and Bredal, 1996), with the objective of building strong corporate
images in order to create relative attractiveness. This development is in line
with Lovelock (1984) who claims that:
(images) … are likely to play only a secondary role in customer choice decisions unless
competing services are perceived as virtually identical on performance, price, and availability
(p. 134).
Consequently we would expect that corporate image under current market
conditions will play an important role in both attracting and retaining
customers.
Research related to consumer behavior in the field of service marketing has
progressed steadily over the years. Measured by the impact and amount of
work done within customer satisfaction research, it is fair to say that the
dominant theories are disconfirmation of expectations (Churchill and
Suprenant, 1982; Oliver, 1980; Oliver and DeSarbo, 1988; Swan, 1983) and
The authors gratefully acknowledge the data provided through the funding by sponsoring
companies of The Norwegian Customer Satisfaction Barometer and the support of the Service International Journal of Service
Industry Management,
Forum at The Norwegian School of Management. We are also grateful for valuable comments Vol. 9 No. 1, 1998, pp. 7-23,
made by two anonymous International Journal of Service Industry Management reviewers. © MCB University Press, 0956-4233
IJSIM cognitive psychology (Folkes, 1988; Weiner, 1980, 1985a, 1985b). In the service
9,1 marketing literature these streams of theory have been used in the prediction of
consumer behavior. Disconfirmation theory focusses on cognition of
transaction specific experiences as a foundation for customer (dis)satisfaction
and subsequent consumer behavior whereas cognitive psychology has studied
the importance of cognitive schemas in the decision process and consumer
8 behavior.
Research within the service marketing literature related to the impact of
corporate image (i.e. attitude toward a company) and its impact on customer
loyalty does not share the same long traditions as customer satisfaction
research. Apart from the early conceptual work discussing corporate image and
positioning (Lovelock, 1984), the service management system (Normann, 1991),
the service marketing mix (Bitner, 1991), technical and functional quality
(Grönroos, 1984), surprisingly little empirical work has been done in assessing
the impact of corporate image and customer satisfaction on customer loyalty.
The purpose of this paper is to examine the impact of corporate image on
quality, customer satisfaction and customer loyalty in complex services with
varying degrees of service expertise. A conceptual model treating satisfaction
and image as latent variables with multiple attributes is proposed. Next, the
results of an empirical study from the package tour industry testing the model
are presented. Finally the implications of the findings are discussed.
The conceptual model

The disconfirmation-of-expectation paradigm (Oliver, 1980) argues that
customer loyalty (e.g. repurchase intentions, willingness to provide positive
word-of-mouth) is a function of customer satisfaction, which again is a function
of a cognitive comparison of expectations prior to consumption and actual
experience. Customer satisfaction/dissatisfaction requires experience with the
service, and is influenced by the perceived quality and the value of the service
(Anderson et al., 1994). It is the primary driver of consumer behavior. Based on
the transaction driven nature of the satisfaction experience, several writers
claim that corporate image is a function of the cumulative effect of customer
(dis)satisfaction, e.g. Bolton and Drew (1991), Fornell (1992), Johnson and
Fornell (1991) and Oliver and Linda (1981). When services are difficult to
evaluate, corporate image is believed to be an important factor influencing the
perception of quality, customers’ evaluation of satisfaction with the service, and
customer loyalty.
It is generally recognized that customers’ perception of quality is based on
one or more cues. Olson (1972) conceptualized the formation of quality
perception as a two-stage process. In Olson’s model the information value of a
cue depends on its predictive value, its confidence value, and whether the cue is
intrinsic or extrinsic to the product. Predictive value is defined as:
the extent to which the consumer perceives or believes that the cue is related to or is indicative
of product quality.
Confidence value is: Customer loyalty
the degree to which a consumer is confident in his ability to accurately perceive and judge the and complex
cue (Olson, 1972). services
Intrinsic cues cannot be changed without also changing the characteristics of
the product or service, whereas extrinsic cues are related to, but not part of the
product or service (e.g. corporate image). Olson (1972) predicts that extrinsic 9
cues have a greater tendency to be used when available intrinsic cues have low
predictive value, low confidence value or both, and a lesser tendency to be used
when intrinsic cues have high predictive value and confidence value.
In line with the theory of cognitive psychology (Folkes, 1988; Weiner, 1980,
1985a, 1985b) we expect that a service company’s image will function as a filter
in the perception of quality, value, satisfaction and as a simplification of the
decision process when consumers choose where to purchase services. Perceived

performance of service quality on attribute level is believed to impact the
satisfaction judgment of the transaction and the perception of value. Value is an
aggregated variable reflecting the perception of all quality attributes as a
function of price is believed to impact the satisfaction judgment of the
transaction. In summary we will suggest that loyalty to the same service
company or same product/service is based on a confirmation based satisfaction
of previous purchases and a general attitude toward the company. This is
illustrated in Figure 1.
Perceived quality and value

Perceived service quality is defined as “the consumer’s judgment about a
product’s overall excellence or superiority” (Zeithaml, 1988). According to Juran
(1988) quality consists of two primary elements:
+ Corporate
Value image +
+
Customer
+ + loyalty
+
Perceived Customer +
quality + satisfaction Figure 1.
The conceptual model
IJSIM (1) to what degree a product or service meets the needs of the consumers;
9,1 and
(2) to what degree a product or service is free from deficiencies.
Service quality is believed to depend on the gap between expected and
perceived performance (Anderson et al., 1994).
10 Perceived value takes into account the price of the service in addition to the
quality. According to Zeithaml et al. (1988):
perceived value is the customer’s overall assessment of the utility of a product based on
perceptions of what is received and what is given.
Consumers’ perception of value is influenced by differences in monetary costs,
nonmonetary costs, customer tastes, and customer characteristics (Bolton and
Drew, 1991).
Based on the above discussion and arguments, we will make the following
propositions:
P1: Perceived quality is believed to have a positive impact on value.
P1.1: Perceived quality and value are believed to have positive impacts on
customer satisfaction.
Customer satisfaction
Customer satisfaction is a well known and established concept in several
sciences: marketing (Fornell and Werneldt, 1987; Fornell and Wernefelt, 1988;
Kotler, 1991), consumer research (Yi, 1989), economic psychology (Johnson and
Fornell, 1991), welfare-economics (Simon, 1974), and economics (Van Raaij,
1981; Wärneryd, 1988).
Assuming that the customer is capable of evaluating the service
performance, the result is compared to expectations prior to purchase or
consumption (Oliver, 1980). Any discrepancy leads to disconfirmation; i.e.
positive disconfirmation increases or maintains satisfaction and negative
disconfirmation creates dissatisfaction. Having roots in social psychology
(Weaver and Brinckman, 1974) and organizational behavior (Ilgen, 1971),
expectancy disconfirmation is actually two processes consisting of the
formation of expectations and the disconfirmation of those expectations.
Perceived performance is influenced by the consumers’ perception of quality,
marketing mix, brand name and company image. Decision research suggests
that positive and negative disconfirmations should weigh very differently on
satisfaction. Losses are perceptually greater than gains of equal amount
(Kahneman and Tversky, 1979). In line with Kahneman and Tversky’s prospect
theory, Anderson and Sullivan (1991) suggest that negative disconfirmation has
more impact on satisfaction than positive disconfirmation at the micro-level. In
this article we treat customer satisfaction as the accumulated experience of a
customer’s purchase and consumption experiences.
proposition:
P2: Customer satisfaction is believed to have a positive impact on customer Customer loyalty
loyalty. and complex
services
Corporate image
From the marketing literature of goods we have learned that brand reputation
has been defined as a perception of quality associated with the name (Aaker
and Keller, 1990). On the company level, image has been defined as: 11
… perceptions of an organization reflected in the associations held in consumer memory
(Keller, 1993).
(Corporate) image in the service marketing literature was early identified as an
important factor in the overall evaluation of the service and the company
(Bitner, 1991; Grönroos, 1984; Gummesson and Grönroos, 1988). Apart from
image as a function of accumulation of purchasing/consumption experience

over time, most organizations also provide complex and noisy informational
environments (e.g. advertising, direct marketing, or PR) in order to attract new
and keep existing customers. In the Perceived Quality Model (Grönroos, 1988)
perceived quality is a function of expected quality (generated from market
communication, image, word-of-mouth, and customer needs) and experienced
quality (generated from technical quality and functional quality). According to
Grönroos “(corporate) image is a filter which influences the perception of the
operation of the company”. This is in line with Gummesson (1993), who states
that customer perceived quality is a function of “quality in fact and quality in
perception” (p. 229).
People develop knowledge systems (i.e. schemas) to interpret their perception
of the company. Corporate image is believed to have the same characteristics as
self-schema (Markus, 1977) with regard to influencing the buyers’ purchasing
decision, i.e. good corporate image stimulates purchase from one company by
simplifying decision rules. In this context corporate image becomes an issue of
attitudes and beliefs with regard to awareness and recognition (Aaker, 1991),
customer satisfaction and consumer behavior (Fornell, 1992). Corporate image
can be an extrinsic information cue for both existing and potential buyers and
may or may not influence customer loyalty (e.g. willingness to provide positive
word-of-mouth). Corporate image is consequently assumed to have an impact
on customers’ choice of company when service attributes are difficult to
evaluate. Corporate image is established and developed in the consumers’ mind
through communication and experience. Corporate image is believed to create a
halo effect on customers’ satisfaction judgment. When customers are satisfied
with the services rendered, their attitude toward the company is improved. This
attitude will then affect the consumers’ satisfaction with the company. In this
article we treat corporate image as an accumulated attitude (experience based
or not) towards the company.
proposition:
IJSIM P3: Corporate image is believed to have a positive impact on customers’
9,1 perception of quality, value, customers’ satisfaction judgment, and
customer loyalty.
Customer loyalty
Customer loyalty expresses an intended behavior related to the service or the
12 company. This includes the likelihood of future renewal of service contracts,
how likely it is that the customer changes patronage, how likely the customer is
to provide positive word-of-mouth, or the likelihood of customers providing
voice. If real alternatives exist or switching barriers are low, management
discovers the organization’s inability to satisfy its customers via two feedback
mechanisms: exit and voice (Hirschman, 1970). Exit implies that the customers
stop buying the company’s services while voice is customer complaints

expressing the consumers’ dissatisfaction directly to the company. Customers’
exit or change of patronage will have an impact on the long-term revenue of the
company. Effects caused from changes in the retention rate are exponential (not
linear) with regard to effects on the long-term revenue. Even a marginal
reduction/increase in retention rate has significant effects on future revenue
(Andreassen, 1995; Reichel and Sasser, 1990). Customers may be loyal due to
high switching barriers or lack of real alternatives. Customers may also be loyal
because they are satisfied and thus want to continue the relationship. History
has proven that most barriers to exit are limited with regard to durability;
companies tend to consider customer satisfaction the only viable strategy in
order to keep existing customers. Several authors have found a positive
correlation between customer satisfaction and loyalty (Anderson and Sullivan,
1993; Bearden et al., 1980; Bolton and Drew, 1991; Fornell, 1992).
proposition:
P4: Repurchase intention and willingness to provide positive word-of-mouth
are indications of customer loyalty.
The structural model

We treat perceived service quality, value, corporate image, customer
satisfaction, and customer loyalty as latent variables with multiple indicator
measures (i.e. pi, vi, si, ci, and li ) (Bolton and Drew, 1991; Oliver, 1992). Customer
loyalty at (t + 1) is positively correlated with customer satisfaction at (t) and
corporate image at (t). Customer satisfaction at (t) is positively correlated with
corporate image at (t), value at (t), and perceived quality at (t). Value at (t) is
positively correlated with perceived quality (t) and corporate image (t).
Perceived quality at (t) is positively correlated with corporate image (t). The
theoretical framework can be summarized as:
Customer loyaltyt+1 = f(corporate imaget, customer satisfactiont, ζ4)
Customer satisfactiont = f(corporate imaget, valuet, perceived qualityt, ζ3)
Valuet = f(corporate image, perceived qualityt, ζ2) Customer loyalty
Perceived quality = f(corporate imaget,, ζ1) and complex
ζi is a vector of other factors (e.g. environmental, situational, error). services
The structural model is illustrated in Figure 2.
When evaluating the service value, consumers consider the quality
transaction specific attributes as well as the price and the quality of the service. 13
We propose the following hypothesis for empirical testing:
H1: Perceived quality will have a positive impact on value for the industry
consolidated.
We believe that perceived quality and value will have positive impacts on
customer satisfaction. Since the quality attributes are difficult to evaluate in the
package tour industry, it is likely that an assessment of the utility of the product
is based on the value perception rather than the perception of the quality
attributes. We therefore propose the following hypothesis for empirical testing:
H2: Value and perceived quality have positive impacts on customer
satisfaction. Value has a stronger impact on customer satisfaction than
perceived quality for the industry consolidated.
Customers with a high degree of service expertise are more capable of
evaluating the different quality attributes of complex services. We believe the
impact of perceived quality on customer satisfaction will be stronger than the
v1 v2 v3 c1 c2 c3
γ21 Corporate
Value image
η2 ξ1 γ41
l1
β21 Customer
γ11 β32 γ31 loyalty
η4
l2
Perceived β31 β43

Customer
quality satisfaction
η1 η3
Figure 2.
Proposed structural
model
p1 p2 p3 s1 s2 s3
IJSIM impact of value on customer satisfaction for these customers. We therefore
9,1 propose the following hypothesis for empirical testing:
H3: For customers with a high degree of service expertise perceived quality
will have a stronger impact on customer satisfaction than value.
Customers with a low degree of service expertise are less capable of evaluating
14 the different quality attributes of complex services. We believe the impact of
value on customer satisfaction will be stronger than the impact of perceived
quality on customer satisfaction for these customers. We therefore propose the
following hypothesis for empirical testing:
H4: For customers with a low degree of service expertise value will have a
stronger effect on customer satisfaction than perceived quality.
Corporate image is believed to influence the customer’s perception of value and

quality through a filtering effect. Corporate image is also believed to influence
the customer’s satisfaction evaluation. Based on this we propose the following
hypothesis for empirical testing:
H5: Corporate image through a filtering effect impacts customers’ perception
of value, quality and customer satisfaction for the industry consolidated.
Customers with a high degree of service expertise are believed to be more
capable of evaluating the service attributes. One may consequently assume that
corporate image has less impact on the perception of quality, value, and the
evaluation of customer satisfaction. Based on this we propose the following
hypothesis for empirical testing:
H6: For customers with a high degree of service expertise the impact of
corporate image on value, quality and customer satisfaction will be
weaker than for customers with low degree of service expertise.
On the industry level we believe that both corporate image and customer
satisfaction will impact customer loyalty. Since the quality attributes in the
package tour industry are difficult to evaluate, i.e. the confidence value of the
intrinsic cues are low, we believe that the corporate image path to loyalty is
more significant than the customer satisfaction path to loyalty. We therefore
propose the following hypothesis for empirical testing:
H7: Corporate image and customer satisfaction are two routes to customer
loyalty with the image path to loyalty as the most significant for the
industry consolidated.
Customers with a high degree of service expertise are able to perform a
comparison of expectations prior to consumption and actual experience after
consumption. Their repurchase intention is consequently assumed to be based
on a cognitive evaluation of previous purchase experience. In this respect we
think that customer satisfaction rather than corporate image will be used in
future decision processes. We therefore propose the following hypothesis for
empirical testing:
H8: For customers with a high degree of service expertise customer Customer loyalty
satisfaction rather than corporate image will be the primary path to and complex
loyalty. services
Customers with a low degree of service expertise are less capable of evaluating
various aspects of the service. Consequently these customers are believed to use
corporate image as an extrinsic cue for service quality dimensions. We therefore
propose the following hypothesis for empirical testing: 15
H9: For customers with a low degree of service expertise corporate image
rather than customer satisfaction will be the primary path to loyalty.
These hypotheses can be tested empirically by calculating the significant path
coefficients.
Methodology
Sample
A total of 600 customers were sampled from three package (charter) tour
operators in Norway. These companies’ collective sales represent about 75
percent of the sales in Norway. The package tour industry was chosen due to its
complex nature. It is characterized by high monetary cost, infrequent
consumption, and the quality attributes of the services are difficult to evaluate.
The sample frame which was representative for the Norwegian population was
developed by a professional company. In order to secure service experience
customers who had traveled with one of the three operators within the last 12
months were interviewed by telephone. If respondents had used more than one
operator in this period, the most recent operator was used. Each interview
lasted about 15 minutes. Prospective respondents who were not available on the
first call, were called three times before a substitute was picked. Respondents
and companies were incorporated in The Norwegian Customer Satisfaction
Barometer.
Measures
Quality, value and choice can be used to operationalize utility (Perreault and
Russ, 1976), i.e. satisfaction. Customer satisfaction cannot be measured directly
using an objective measure (Simon, 1974). If, however, customer satisfaction is
treated as an abstract and theoretical phenomenon it can be measured as a
weighted average of multiple indicators (Johnson and Fornell, 1991).
Measurement errors in the index are taken care of through the quality and
quantity of the measures being used (Fornell, 1989). Consequently value,
perceived quality, customer satisfaction, corporate image, and customer loyalty
were measured using multiple indicators. Perceived quality is measured using
three transaction specific items; the total quality of the package tour, the flight,
and the destination. Value is an overall quality price evaluation of the service
attributes and is measured using two indicators; quality given price, and price
given quality. Customer satisfaction is a measure of the customers’ experience
based evaluation of the service/product provider. The indicators tap into the
IJSIM construct by addressing overall satisfaction, comparison with an ideal package
9,1 tour company, and congruence with expectations. Corporate image is an overall
evaluation of the company and is measured using three indicators; overall
opinion of the company, opinion of the company’s contribution to society, and
liking of the company. Customer loyalty was initially measured using two
loyalty indicators; repurchase probability, and likelihood of providing positive
16 word-of-mouth to potential buyers. Repurchase intention is often used as an
indicator of intended repurchase behavior. In most studies, however, the item is
related to products or services with a frequent consumption pattern (see, for
example, Anderson et al. (1994); Fornell (1992). A preliminary model estimation
indicated a bad model fit when repurchase probability was included. This may
be explained by the infrequent consumption pattern of package tours. Another
factor explaining this result is related to the respondents’ recent consumption of
package tours. Any repurchase intention in the near future was thus not
obvious. Based on this repurchase intentions was excluded in the measure and
the latent variable customer loyalty was reduced to one item. Service expertise is
self-reported and measured as ease of evaluating the quality of a package tour.
The indicators were measured using ten-point scales such as “very
dissatisfied”/“very satisfied”, “very likely”/“very unlikely” and “very
difficult/very easy” as anchor points. Participants were allowed to be indifferent
by the use of “no opinion” or “don’t know” categories. Component measures
were constructed by multiple indicators. Characteristics of the component
measures are given by the number of items making up each measure and
Cronbach alpha coefficients which express internal consistency in measures.
The Cronbach alpha coefficients are presented in Table I.
According to Nunnally (1967) a score above 0.5 is adequate for basic
research. Despite the fact that this score was later adjusted to 0.7 (Nunnally,
1978), we will still claim that the measures are good.
Model
A reflective measurement model was used, where the observed variables are
caused by the latent variables (Bollen, 1989). Endogenous (dependent) latent
Industry consolidated High service Low service

(n = 600) experience (n = 360) experience (n = 222)
Perceived quality
(three items) 0.67 0.66 0.66
Value (two items) 0.62 0.61 0.63
Corporate image
(three items) 0.62 0.57 0.67
Table I. Customer satisfaction
Cronbach alphas for (three items) 0.81 0.78 0.83
five constructs in the Note:
package tour industry Customer loyalty was operationalized using one indicator
variables are labeled η, and the exogenous (independent) latent variable is Customer loyalty
labeled ξ. The dependence of the latent variables was then expressed as η = Bη and complex
+ Γξ + ζ. services
Analysis and results
Using structural equation modeling (LISREL VIII, ML) (Jöreskog and Sörbom,
1989) the relationships hypothesized in this study were analyzed. 17
Figure 2 illustrates the structural equation model that was tested in this
phase of the analysis. Four indices were employed to evaluate the fit of the
proposed model. The goodness of fit index (GFI) represents an index of the
relative amount of observed variances and covariances among indicators
collectively accounted for by the hypothesized model. Adjusted goodness of fit
index (AGFI) expresses the same as the GFI, but takes into account the number
of degrees of freedom relative to the number of indicators. Root mean square of

residuals (RMR) is a measure of the average of the fitted residuals between the
observed and the implied model. An additional fit index, less dependent on
sample size, is the root mean square error of approximation (RMSEA) provided
by LISREL VIII. It tests a hypothesis of close fit (Browne and Cudeck, 1993).
Error of approximation refers to lack of fit between the proposed model and the
population covariance matrix. The sample size is not present in the RMSEA
measure, which makes it less dependent on sample size. The level on RMSEA
indicates close approximation of the model to the data (Browne and Cudeck,
1993). The chi-square statistic is not adequate for sample sizes as large as 600
and is not included for the industry as a whole. The values are illustrated in
Table II.
Industry High service Low service

consolidated expertise expertise
RMSEA 0.064 0.072 0.060

RMR 0.038 0.043 0.044
GFI 0.95 0.94 0.94
AGFI 0.93 0.90 0.90
Chi-square – 149.97 93.71
n = 360; (p = 0.00) n = 222; (p = 0.00) Table II.
52 df 52 df LISREL fit indices
Based on these fit indices, provided by LISREL, we can conclude that overall the
model fits the data reasonably well.
Parameter estimates
The estimated standardized path coefficients between the endogenous and
exogenous variables (i.e. the gamma matrix) are illustrated in Table III.
IJSIM Industry High service Low service
9,1 consolidated expertise expertise
Corporate image Corporate image Corporate image
Perceived quality 0.87 0.86 0.88

(17.02) (12.73) (12.00)
18 Value ns ns ns
Customer satisfaction 0.67 0.45 0.93
(6.96) (3.77) (12.36)
Table III. Customer loyalty 0.75 0.79 0.73
Influence of exogenous (18.97) (14.38) (12.01)
variables on endogenous Note:
variables ns = not significant at the 0.05 level. T-values above 2.57 are significant at the 0.001 level
As can be seen from Table III the effect of corporate image, except for value, is
positive as modeled in Figure 2. Contrary to our expectations corporate image
has no significant impact on the perception of value in any of the cases.
The estimated standardized path coefficients between the endogenous
variables value, customer satisfaction (CS), and customer loyalty (CL) are
illustrated in Table IV.
Industry High service Low service

consolidated expertise expertise
Perceived Perceived Perceived
quality Value CS quality Value CS quality Value CS
Value 0.63 0.58 0.63

(15.53) (11.32) (9.12)
CS 0.36 ns 0.58 ns ns 0.12
(3.90) (4.78) (2.41)
Table IV. CL ns ns ns
Relationships between Note:
endogenous variables ns = not significant
Perceived quality impacts value as expected. Except for customers with low
service expertise perceived quality influences customer satisfaction in all the
cases. Value impacts customer satisfaction only for customers with low service
expertise. Contrary to our expectations customer satisfaction has no impact on
customer loyalty in any cases.
Discussion
In stagnating markets where product or service differences are marginal if any,
retaining current customers becomes important to the future existence of most
companies. Customer satisfaction and corporate image are two aspects which
are believed to impact customer retention. From a managerial perspective Customer loyalty
understanding the drivers of customer satisfaction and corporate image is and complex
important. services
Based on the model structured and the data sampled support is found for H1.
Perceived quality has a positive impact on value in all the cases studied.
The H2 hypothesis is rejected. Value has no significant impact on customer
satisfaction for the industry consolidated. This finding indicates that the 19
satisfaction evaluation for the industry consolidated is a direct function of
performance judgment on the attribute level. The use of attribute performance
implies that disconfirmation of each attribute is more important for customer
satisfaction than the aggregated value perception. This agrees with Oliver’s
(1997, p. 124) dimension of attribute specific operations of the expectancy
disconfirmation model.
Support is found for the H3 hypothesis. Perceived quality has a stronger
effect than value on customer satisfaction for customers with a high degree of
service expertise.
Support is found for hypothesis H4. For customers with a low degree of
service expertise value has a stronger impact on customer satisfaction than
perceived quality. Perceived quality has no significant impact on customer
satisfaction in this segment.
Support is partly found for hypothesis H5. Corporate image has an impact
on perceived quality and customer satisfaction for the industry consolidated,
but has no significant effect on value. Although corporate image has no direct
effect on value, it has an indirect effect through perceived quality.
H6 is partly accepted. For customers with a high degree of service expertise
corporate image has a weaker impact on perceived quality and customer
satisfaction than for customers with a low degree of service expertise. The
impact on perceived quality is, however, only marginally weaker for customers
with high service expertise compared to customers with low service expertise.
Corporate image has no effect on value for any of the segments studied.
H 7 is supported. Corporate image has a stronger effect on loyalty than
customer satisfaction for the industry consolidated. Customer satisfaction has
no significant effect on loyalty. This finding is in line with the notion that
package tour services are complex and hard to evaluate. The fact that corporate
image rather than customer satisfaction impacts future intended consumer
behavior indicates credence quality.
H8 is rejected. Even for customers with a high degree of service expertise
corporate image is the main driver of customer loyalty. Customer satisfaction
has no significant impact on loyalty for customers with a high degree of service
expertise. The explanation to this finding may be found in the nature of
package tour services and supports the argument that corporate image
functions as an extrinsic cue for complex services.
Support is found for hypothesis H9. Corporate image is the primary path to
customer loyalty. Corporate image also has a very strong impact on customer
IJSIM satisfaction. For customers with a low self-reported service expertise, image is
9,1 the strongest driver of future intended repurchase behavior.
Even though the package tour industry is a complex service industry
characterized by quality attributes that are difficult to evaluate, perceived
quality exerts a strong influence on customer satisfaction, while value has no
significant effect on (dis)satisfaction. Corporate image is the primary driver of
20 customer satisfaction for the package tour industry consolidated, and
managers should seek to maximize the customers’ satisfaction by building a
strong corporate image as well as securing high quality services.
Based on the above findings we can conclude that for complex and
infrequently purchased services, corporate image rather than customer
satisfaction is the main predictor of customer loyalty. This finding challenges
the disconfirmation-of-expectations paradigm, which predicts customer
satisfaction as the primary route to customer loyalty.

For managers, this finding has important implications with regard to brand
building strategies. Key to profitability is customer loyalty. We have
documented that corporate image is the dominant route to customer loyalty.
Indications of a successful brand building strategy are found when companies
have a relative attractiveness in their image, that is corporate image is
significantly different from other companies within the same industry. Data
from the Norwegian Customer Satisfaction Barometer showed that there are no
significant differences in either the customers’ perception of the corporate
image or their satisfaction with the three companies in the study. These results
indicate that the companies have not succeeded in their brand building
strategies, and that the industry provides generic services. Relative
attractiveness is key in order to attract or retain customers.
Future research
Corporate image and satisfaction are two important routes to customer loyalty
for most service companies, either in retaining or attracting customers.
Research related to the importance of image and satisfaction in attracting new
customers to the company and how this may change between different service
industries is in dire need. In the emerging paradigm of relationship marketing,
we need to understand the importance of image and satisfaction in retaining
customers.
We have focused on the impact of image and customer satisfaction on
customer loyalty. One problem in estimating existing customers’ experience
with and perception of the company is the closeness of the two constructs. This
may create validity problems. Research related to construct validity, i.e. finding
good measures of satisfaction, image and loyalty, is therefore required.
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*Related content and download information correct at time of download.

The impact of corporate image on

Norwegian School of Management, The Graduate School, and

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decision process when consumers choose where to purchase services. Perceived

Perceived quality and value

image as a function of accumulation of purchasing/consumption experience

stop buying the company’s services while voice is customer complaints

The structural model

Perceived β31 β43

Corporate image is believed to influence the customer’s perception of value and

Industry consolidated High service Low service

of degrees of freedom relative to the number of indicators. Root mean square of

Industry High service Low service

RMSEA 0.064 0.072 0.060

Perceived quality 0.87 0.86 0.88

Industry High service Low service

Value 0.63 0.58 0.63

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