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The Role Of Customer's Perception Of Service Brand On The Customer Value Creation Process

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The focus of this research is the role of customer's perception of service brand on the customer value creation process. Three factors which represent the customer's perception of service brand are chosen as the independent variables, they are: brand image, company image and employee trust. The other two independent variables are: cost and service quality. Through multiple regression analysis, the research shows that the influential factors to create customer value are cost and company image. The result suggest company to improve its costs components and its company image in order to increase their customer's customer value.

Key words:

customer brand perception, service brand, customer value


The size of service sector contribution in world's economy is growing rapidly. The Bureau of economic Analysis shows that in 2004, 68% of American GDP (Gross Domestic Product) is generated from the service sector. This condition give us a picture about how large the service sector has grown and becoming important to the world's economy. This success drives companies serving in service sector to put some efforts in diffrentiating their services. One of their effort is by giving brand to their service, popularly known as branding of service. Quoting from Stephen King, " A product is something that is made in a factory; a brand is something that is bought by a customer. A product can be copied by competitors, a brand is unique. A product can be quickly outdated, a successful brand is timeless", by then, a good kowledge about its brand for a service provider becoming much more essential.

The term of service brand used to present a broader perspective, where brand interfaces not just with end customers but the company, its employees and a network of stakeholders (Padget&Allen,1997). Hence, the concept of service brand is integrative where "service" is superordinate to the branding of goods and/or services (Brodie et al.,2006).

The purpose of the research is to further explore the understanding of the nature of the service brand by undertaking a quantitative investigation. Previous research about the nature of the service brand is largely qualitative (Brodie RJ et al, 2008) or largely focused on the effects of brand equity to consumer's responses at the brand's marketing mix. (Keller, 1993)

Altough brand equity was stated as being influenced by the brand awareness, but brand "meaning" that the customers derive from their service experience is more important. (Berry, 2000). Then, the company becomes the primary brand rather than the product. It imlies that the consumers' experiences with the organization and its employees delivering the service offer are the major determinants of brand meaning (Brodie RJ, et al, 2008).

The emperical setting for this research is airline service (based on previous research by Brodie RJ et al, 2008) with consideration that airline service has the useful context for this research as the service delivery process involve extensive customer interactions with the airline and its employees.

The airline services in Indonesia has grown rapidly in past few years. Several names could be seen, whether it is an old player surviving in the industry or a new name craving for its place in the game. The author has choosen Garuda Indonesia for several reasons. First, Garuda Indonesia already settled its stable position in Indonesia's airline industry and second, the extensive advertising and communication campaigns where the image of Garuda Indonesia is differentiated from its competitors.


2.1 Conceptual framework of service brand to customer value-loyalty process

In airlines service, as similar with other services categorized as people processing, there are intensive interactions within the customer and organization's company and its employees. Previous research conducted by Brodie RJ et al (2008) has resulted a theoritical framework in figure 1. The customers' brand perception consist of brand image, company image, employee trust and company trust. Each aspects of the brand is hypothesized to have a separate influence on customers' perception of service quality and value of brand to the customers' perception.

Figure 1. Conceptual framework of service brand to customer value-loyalty process

Source: Brodie RJ,et al, 2008

2.2 Customer Value, Service Quality and Costs

The nature of customer value in this research adopts a cost-benefit view, which assesses value on the basis of a "get for give" view. The benefits are what the customer gets, and costs are what the customer gives up (Zeithaml,1988). Within a pricing theory context, Monroe (1990) refers to this as the "worth what paid for" trade-off. This study uses the "worth what paid for" approach.

Gronroos (1990) argued that customer' services quality perceptions consists of what they get (the technical outcome) and how they get it (the service process). Although we can continue to regard services brands as clusters of functional and emotional values, nevertheless, because of their intangible nature, it is especially important to capitalize on clues associated with their physical evidence in order to communicate their values (Zeithaml and Bitner, 1996).

Cost, defined as monetary and non-monetary cost paid by customers to obtain service offer (Zeithaml, 1988). According to Peter & Olson (2008) there are four sources of cost that have to be paid by customers. There are: money, time, cognitive activity and behaviour effort. Commonly, cost is associated with the amount of money that customer spend in order to obtain a product or a service. Time, in the other hand is associated with the amount of time that has to be paid by the customers to obtain the service offer. The time cost is strongly related with behaviour effort, which is the effort that has to be done by the customers to obtain the service offer.

2.3 Service Brand

Customer Brand Relationship can be seen as a process of mutual exchange and the process of fulfilling promises made by company. Successful services brands also depend on good internal communication programs enabling greater consistency delivering the service experience, regardless



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