Developing service satisfaction strategies using catastrophe model: A replication study in New Zealand
Achieving customer loyalty is one of the greatest challenges facing organisations today. It has become necessary for managers to find the most effective ways by which to attain the loyalty of their customers. The benefits of a loyal customer base are substantial, and as such, an understanding of how to influence customers’ loyalty through satisfaction and by controlling transaction costs would be of significant value. Although there is an abundance of literature on the satisfaction and loyalty association, this association has not been studied in the presence of transaction costs as done in this study and the Oliva, Oliver, and MacMillan (1992) study. This study was a replication of the study by Oliva, Oliver, and MacMillan (1992). Accordingly, their study findings were tested within the New Zealand mobile phone industry to check if their findings could be generalised to a New Zealand service industry. Appropriate hypotheses were developed through a review of relevant literature. A sample of 250 mobile phone users was selected for this study, of which 149 completed the questionnaire that provided information as to the nature of the satisfaction-loyalty association in the presence of transaction costs. The gathered data were analysed statistically and support was found for three of the six hypotheses. Results of the hypotheses tests indicated that the satisfaction-loyalty link is linear in nature. Satisfaction influences loyalty positively and in a linear way so that loyalty moves in the same direction as satisfaction. Transaction costs were found to influence loyalty indirectly via satisfaction. Transaction costs and loyalty were also found to have an inverse association. The results of this study also showed that the cusp catastrophe model could not provide a better model fit than linear regression model. The overall results of this study did not support the findings of the original study by Oliva, Oliver, and MacMillan (1992). The results of this study showed that their findings are not generaliseable to the mobile phone industry in New Zealand.