Scholarly article on topic 'E-S-Quality, Perceived Value and Loyalty Intentions Relationships in Internet Retailers'

E-S-Quality, Perceived Value and Loyalty Intentions Relationships in Internet Retailers Academic research paper on "Economics and business"

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Abstract of research paper on Economics and business, author of scientific article — Cemal Zehir, Yasin Sehitoglu, Elif Narcikara, Songül Zehir

Abstract E-commerce has become an important phenomenon in today's business life owing to developments in technology and growing internet retailing. More and more people started to prefer internet retailers while shopping and this resulted in giving more emphasis on service quality, customer perceptions and customer loyalty to those online retailers. Consequently, service quality and the factors effecting customer preferences regarding online retailers became a popular field of study. This paper examines the above-mentioned topic in Turkish business context. Our survey applied to 645 respondents using the 10 most prominent internet retailers in Turkey, with the aim of understanding associations between E-Service Quality, Perceived Value and Loyalty Intentions. According to the results of our study, we can infer that there is a strong relationship between E-service Quality and Loyalty Intentions and Perceived Value act as a mediator between them.

Academic research paper on topic "E-S-Quality, Perceived Value and Loyalty Intentions Relationships in Internet Retailers"

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Procedía - Social and Behavioral Sciences 150 (2014) 1071 - 1079

10th International Strategic Management Conference

E-S-Quality, Perceived Value and Loyalty Intentions Relationships in Internet Retailers

Cemal Zehira*, Yasin Sehitoglub, Elif Narcikaraa, Songül Zehirc

aYildiz Technical University, Istanbul, 34220, Turkey cGebze Institute of Technology, Kocaeli, 41400, Turkey b Gazi University, Ankara, 06500, Turkey

Abstract

E-commerce has become an important phenomenon in today's business life owing to developments in technology and growing internet retailing. More and more people started to prefer internet retailers while shopping and this resulted in giving more emphasis on service quality, customer perceptions and customer loyalty to those online retailers. Consequently, service quality and the factors effecting customer preferences regarding online retailers became a popular field of study. This paper examines the above-mentioned topic in Turkish business context. Our survey applied to 645 respondents using the 10 most prominent internet retailers in Turkey, with the aim of understanding associations between E-Service Quality, Perceived Value and Loyalty Intentions. According to the results of our study, we can infer that there is a strong relationship between E-service Quality and Loyalty Intentions and Perceived Value act as a mediator between them.

© 2014TheAuthors. PublishedbyElsevierLtd. This is anopen accessarticleundertheCC BY-NC-ND license (http://creativecommons.Org/licenses/by-nc-nd/3.0/).

Peer-review under responsibility of the International Strategic Management Conference. Keywords: E- service quality; perceived value; loyalty intention.

1. Introduction

In order to be competitive in a changing market, companies must improve their quality and innovativeness (Zehir and Sadikoglu, 2012). In today's world, e-commerce is an important tool for both individuals and companies.

The world of business benefits from the advantages and convenience of e-commerce. The situation is similar in the individual level. Combined with the developments related to internet, emerging internet retailing has started to change shopping habits of individuals. Following these developments, academicians have started to study the concepts of electronic retail services and their quality. Previously, the quality of electronic retail services has been measured by the same methods with measuring normal service quality. However, it soon appeared that the previous methods had some disadvantages and in later researches, the scaling measures have been improved.

The purpose of this study is to identify the mediating effect of Perceived Value on the relationship between E-Services Quality, and the Loyalty Intentions considering the customers of 10 most popular Internet stores in Turkey. For this purpose, we researched the related literature, we developed a research model and hypotheses for this study, and we made numerous analyses in order to test our hypothesis. This study revealed the causes of changes in the Perceived Value considering the effects of E-Services Quality and Loyalty Intention. Findings of

* Corresponding author. Tel.: +90-212-383-3119; fax: +90-212-383-3118. E-mail address: cemalzehir@gmail.com

1877-0428 © 2014 The Authors. Published by Elsevier Ltd. This is an open access article under the CC BY-NC-ND license (http://creativecommons.org/licenses/by-nc-nd/3.0/).

Peer-review under responsibility of the International Strategic Management Conference. doi: 10.1016/j.sbspro.2014.09.120

this study will support further researches and the practical implications will be helpful in solving real problems in businesses.

2. Literature Review And Hypotheses

2.1. E- Service Quality

Research about service quality has been popular for many years, but it is only recently that it started to take place in e-commerce environment. Service quality in e-commerce can be defined as the consumers' overall evaluation and judgment of the excellence and e-service quality offerings in the virtual marketplace (Santos, 2003). According to Jeon (2009), based upon the review of literature and previous website service quality studies; functionality, customer experiential aspects and reputation dimensions determine website quality. There are nine attributes underlying these three major areas: information usefulness, usability, accessibility, aesthetics/design, privacy/security, personalization/customization, past experience, social influence, and advertisement.

Rowley (2006) defines electronic service (e-service) as deeds, efforts or performances whose delivery is mediated by information technology. Service quality is being increasingly recognized as an important aspect of electronic commerce. Since online comparisons of technical features of products are essentially costless, feasible, and easier than comparisons of products through traditional channels, service quality is the key determinant of successful e-commerce (Santos, 2003).

E-Service Quality can be described as entire customer perceptions or evaluations of electronic service experience of the online marketplace (Santos, 2003). It can be observed that, in this definition; the meaning of service is comprehensive and includes both pre- and post- web site service aspects (Zeithaml etc., 2002).

According to Francis & White (2002) dimensions of e-service quality are; web store functionality, product attribute description, ownership conditions, delivery, customer service and security whereas according to Ho & Lee (2007); information quality, security, ease of use, availability, customization, community, responsiveness, and delivery fulfillment are important indicators. Jeong & Lambert (2001) explained perceived usefulness, perceived ease of use and perceived accessibility as the basic dimensions of e-service quality in their research. Kaynama & Black (2000) state that content and purpose, accessibility, navigation, design and presentation, responsiveness, background, and personalization and customization are the most important dimensions. According to Kim & Lee (2004) information content, structure and ease of use, reputation and security, and usefulness are important whereas O'Connor (2003) explained ease of use, transaction speed, update speed, traffic levels, integration and security in their research. Sanchez-Franco & Roldan (2005) stated that usefulness, ease of use and flow are basic dimensions, according to Yang et al. (2005) usefulness of content, adequacy of information, usability, accessibility, privacy/security, interaction. Yoo & Donthu (2001) explained perceived quality of site-related aspects, ease of use, aesthetic design, processing speed, security in their research. Wolfinbarger & Gilly (2003) state that fulfillment/reliability, customer service, personalization, usability, experiential/atmospheric, ease of use, informativeness, selection, security/privacy.

Zeithaml et al. (2002) and Parasuraman et al. (2005) empirically examined E-S-QUAL, a multiple item scale with core service quality aspects and four dimensions: efficiency, privacy, fulfillment and availability. Parasuraman et al. (2005) obtained following four dimensions. (1) Efficiency: The ease and speed of accessing and using the site. (2) Fulfillment: The extent to which the site's promises about order delivery and item availability are fulfilled. (3) System availability: The correct technical functioning of the site. (4) Privacy: The degree to which the site is safe and protects customer information. Zeithaml (2002) has defined similar dimensions in the following manner. (1) Efficiency refers to the ability of the customers to get to web site, find their desired product and information associated with it and check out with minimal effort. (2) Fulfillment incorporates accuracy of service promises, having products in stock and delivering the products in the promised time. (3) Reliability is associated with the technical functioning of the site, particularly the extent to which it is available and functioning properly. (4)The privacy dimension includes assurance that shopping behavior data are not shared and that credit card information. Between two researches, we implemented the dimensions put forward by Parasuraman et al. (2005), since it is widely accepted by academia.

2.2 Perceived Value

Perceived value is a multidimensional concept and has a dynamic structure. According to Monroe and Chapman (1987), it would be expected that consumers' preferences or choices would depend on how they evaluate the

quality or benefits to be received from a product rather than the cost or sacrifice inherent in the price. It has argued that buyers' perceptions of value represents a kind of trade-off between the quality or benefits they perceive in the product relative to the sacrifice they perceive by paying the price;

1. Perceived Value = (Perceived Benefits) / (Perceived Sacrifice)

Moreover, Zeithaml's research classified four different consumer definitions of value: (1) value is low price, (2) value is whatever I want in a product, (3) value is the quality I get for the price I pay, and (4) value is what I get for what I give (Zeithaml, 1988)

The concept of perceived value has several models. Dodds and Krishnan presented the first model, the most known model, in 1984. There is a positive relationship between perceived quality and perceived value. Nevertheless, there is a negative relationship between perceived value and perceived sacrifice. Consequently, consumers conduct a benefit-cost analysis regarding to the product and they make the purchasing decision accordingly (Dodds and Monroe, 308, 1985).

In the light of this information, perceived value can be summarized as the value of a product that is determined by customer's opinion about its value. It may have little or nothing to do with the product's market price, but depends on its ability to satisfy customers' needs or requirements.

It was founded that the perceived values are related to the quality of the web site. A recent empirical study found that the quality of web site is positively associated with customers' perceived value (Bauer, et al., 2006; Parasuraman etc., 2005; Wolfinbarger and Gilly, 2003). Marimon et al. (2009) find that, of the four, two dimensions, system availability and fulfilment, significantly and positively affect customer's perceived quality. Last but not least, Fuentes Blasco et al. (2010) identify five dimensions of e-service quality, such as efficiency system availability and fulfilment, security and responsiveness; they further reveal that all five dimensions, except fulfilment, positively influence customer's perceived value. As we agreed with previous researches, our study focused e-service quality.

2.3 Loyalty Intention

Brand loyalty is an indicator of customers' degree of passion and commitment to the brand (Aaker, 1991). Jacoby and Chestnut approaches to the brand loyalty in five different aspects. These are; (1) biased (i.e. non-random), (2) behavioral response (i.e. purchase), (3) expressed over time, (4) by some decision-making unit, (5) with respect to one or more brands out of a set of such brands, and is a function of psychological (decision-making evaluate) processes (Jacoby and Chestnut, 1978). Engel etc. (1990) defined brand loyalty as a customer's positive attitude and behavioral reaction towards one or several brands that are in the same product line, over a period.

In the literature, behavioral loyalty represents repetitive purchasing of a brand over a period by consumer. However, behavioural loyalty alone is not considered enough to explain the various buying situations as there are personal motives that provoke the consumer to buy the same brand and therefore behavior must be accompanied with positive attitude (Hardeep and Bala, 2010). Furthermore, Jacoby and Chestnut (1978) observe 33 specific measures of behavioural loyalty. They sub-divided these measures into five sub groups; (1) proportion of purchases devoted to a given brand, (2) those concerned with the sequence in which brands are purchased, (3) those that reflect probability of purchase, (4) those that synthesize or combine several behavioural criteria, and finally (5) a number of miscellaneous measures (Jacoby and Chestnut, 1978).

To sum up, the issues of loyalty mainly concerned on how loyalty is operationalized. It is very important to understand how we should measure loyalty. Although there are three approaches that can be used to measure loyalty (i.e. behavioural, attitudinal, and composite approaches), most researchers resorted to attitudinal measurement in terms of intention to repurchase and intention to recommend as an indicator of loyalty (Sondon Jr. etc., 2007).

Chang et al. (2009) also argue that customers' perceived value positively contributes to the e-loyalty by reducing individual's need to seek alternative service providers. Nevertheless, Rachjaibun (2007) found that e-relationship quality significantly affected loyalty. Therefore, we studied Loyalty Intentions in our study. Our first goal is to find out the relationship with E-Services Quality and Loyalty Intentions. Secondly, the relationship with Perceived Value and its effects on Loyalty Intentions are also studied. We studied those subjects because we found out that the mediating effect of Perceived Value on the relationship between E-Service Quality and Loyalty Intention is a subject which has not been studied before. Furthermore we wanted to see the relationship particularly in Turkey.

Hypotheses:

H1 : There is a significant relationship between the E-Service Quality and Perceived Value.

H2: There is a significant relationship between Perceived Value and Loyalty Intentions.

H3: There is a significant relationship between the E-Service Quality and Loyalty Intentions.

H4: There is a mediating effect of Perceived Value on the relationship between the E-Service Quality and

Loyalty Intentions.

3. Methodology

3.1. Research Goal

Day by day Internet shops are increasing in number and type and they are increasing their service quality in order to attract greater number of customers. Owing to the opportunities provided by service quality and its effect on attracting customers from real shops to online shops, giving importance to service quality is coming into prominence with all dimensions. Due to the fact that this theme is a recently emerging study field in Turkey, studies held in this topic are very limited and as a result studying service quality of Turkish online shops come about as a plausible topic to study.

In this study, the service qualities of e-commerce web sites have been measured by E-S-QUAL scale. Aim of this study is to put forth if service quality of these web sites has an effect on their value perceived by their customers and loyalty intentions of their customers. Moreover, it has been investigated if perceived quality has a mediating effect between existent e-service quality and loyalty intentions of customers.

3.2. Sample and Data Collection

In this research E-S QUAL, a scale developed by Parasuraman et al., consisting of 22 items on four dimensions (2005), has been used with the aim of measuring service quality, perceived value and loyalty intentions. Main dimensions of this scale are:

Efficiency: The ease and speed of accessing and using the site.

Fulfillment: The extent to which the site's promises about order delivery and item availability are fulfilled.

System availability:The correct technical functioning of the site.

Privacy: The degree to which the site is safe and protects customer information.

Figure 1. Research Model

Table 1. Demographic Findings

Perceived Value

Loyalty Intentions

Variables

Gender

Education level

Length of time the evaluated website is used by the

Female

High School

Technical College

University

0-6 months

150 430 66 51 58 166 326

151 123

23,2 66,6 10,2 46,8 53,2 25,8 50,7 23,5 19,2

replier 6-12 months 120 18,6

12 months and more 403 62,4

Frequency of visits to the evaluated website 8 or less monthly 418 65,8

9 or more monthly 206 31,6

Monthly net income 801-1500 TL 179 27,8

1501-2500 TL 226 35,0

2501 or more 230 34,4

For this research, a survey composed of 31 questions has been prepared and applied on randomly chosen individuals working in e-commerce companies. Between 2013 and 2014, 750 questionnaires have been sent and 645 usable responses have been obtained by making face to face interviews. Data of the research have been analyzed by using SPSS 20.00 (Statistical Package for Social Sciences) for Windows.

3.3. Analyses and Results

In this section, findings derived from our analysis are summarized. Table 2. E-S-QUAL Factor Analysis Results

Factor Loadin

% of Varianc

Cronbach' s Alpha

Efficiency

Fulfilment

System Availabilit

Privacy

Perceived Value

Loyalty Intentions

This site is well organized. 0,806 13,195 0,836

This site makes it easy to find what I need. 0,800

Information at this site is well organized. 0,763

It enables me to complete a transaction quickly. 0,683

This site enables me to get on to it quickly. 0,663

This site is simple to use. 0,562

It makes it easy to get anywhere on the site. 0,524

It quickly delivers what I order 0,693 14,560 0,862

This site makes items available for delivery within a suitable time frame. 0,685

It makes accurate promises about delivery of 0,674

products.

It has in stock the items the company claims to have. 0,665

It delivers orders when promised. 0,653

It is truthful about its offerings. 0,628

It quickly delivers what I order. 0,626

This site does not crash. 0,802 7,661 0,726

Pages at this site do not freeze after I enter my order information. 0,795

It does not share my personal information with other sites. 0,798 5,763 0,786

It does not share my personal information with other sites. 0,785

It protects information about my online-shopping behavior. 0,667

The prices of the products and services available at this site (how economical the site 0,760 9,078 0,847

The overall value you get from this site for your money and effort. 0,735

The extent to which the site gives you a feeling of being in control. 0,705

The overall convenience of using this site. 0,649

Recommend this site to someone who seeks your advice? 0,792 12,667 0,891

Encourage friends and others to do business with this site? 0,781

Say positive things about this site to other people? 0,766

Consider this site to be your first choice for future transactions? 0,722

Do more business with this site in the coming months? 0,691

Total variance was % 62, 9 after factor analysis. KMO and Barlett analysis show that since KMO score is under 0,925 and Barlett score is under 0,001 it is meaningful to make factor analysis.

According to correlation analysis all factors are related to each other in % 1 significance level. Therefore, H1, H2, H3 are accepted.

The correlation analysis applied for investigating the relationship between Perceived Value and Efficiency showed that the relationship is statistically significant at %50, 5 significance level in positive direction. (r=0,505; p=0,000<0, 05). According to this analysis as Perceived Value score gets higher, efficiency score also increases.

The correlation analysis investigating the relationship between Loyalty Intentions and Efficiency shows that the relationship is statistically significant at %44, 6 significance level in positive direction. (r=0,446; p=0,000<0,05). According to this analysis it can be inferred that as Loyalty Intentions score gets higher, efficiency score also increases.

The correlations analysis investigating the relationship between Perceived Value and System Availability shows that the relationship is statistically significant percentage 39,1 significance level in positive direction. (r=0,391; p=0,000<0,05). According to this analysis, as Perceived Value score increases System Availability score increases too.

The correlation analysis between Loyalty Intentions and System Availability shows that the relationship is significant at %32,1 significance level in positive direction (r=0,321; p=0,000<0,05). According to the value the conclusion can be drawn that as Loyalty Intentions score gets higher, System Availability score increases too.

The correlation analysis between Perceived Value and Fulfillment shows that the relationship is statistically significant at %45,6 significance level in positive direction (r=0,456; p=0,000<0,05). According to this value, it can be deduced that as Perceived Value score gets higher, Fulfillment score also increases.

Moreover, the correlation analysis between Loyalty Intentions and Fulfillment shows that there is a %50, 3 significant relationship in positive direction (r=0,503; p=0,000<0, 05). According to this analysis, it can be inferred that as Perceived Value score gets higher, Fulfillment score also increases.

Furthermore, the correlation analysis between Perceived Value and Privacy shows that the relationship is statistically significant at %43 significance level. (r=0,430; p=0,000<0, 05). According to this analysis when perceived Value score increases the Privacy score increases too.

The correlation analysis between Loyalty Intentions and Privacy shows that the relationship is statistically significant at %42, 9 significance level. (r=0,429; p=0, 000<0, 05). According to the analysis when Loyalty Intentions score increases privacy score also increases.

Lastly, the correlation analysis between Perceived Value and Loyalty Intentions shows that the relationship is statistically significant at %63, 8 significance level. (r=0,638; p=0,000<0, 05). According to the analysis when Perceived Value score increases Loyalty Intentions score also increases.

Table 3. Correlation analysis of the relationship between Service Quality, Loyalty Intentions and Perceived Value levels

Mean Std. Deviation Efficiency System Availability Fulfillment Privacy Perceived Value

Efficiency 3,995 ,569

System 3,778 ,824 ,402**

Availability

Fulfillment 3,884 ,656 454** ,384**

Privacy 3,850 ,385 ,409** ,369** ,466**

Perceived 3,689 ,660 ,505** ,391** ,456** ,430**

Loyalty 3,849 ,682 ,446** ,321** ,503** ,429** ,638**

Intentions

***P<0,001, **P<0, 01,*P<.05

Furthermore, the correlation analysis between Perceived Value and Privacy shows that the relationship is statistically significant at %43 significance level. (r=0,430; p=0,000<0,05). According to this analysis when perceived Value score increases the Privacy score increases too.

The correlation analysis between Loyalty Intentions and Privacy shows that the relationship is statistically significant at %42,9 significance level. (r=0,429; p=0, 000<0, 05). According to the analysis when Loyalty Intentions score increases privacy score also increases.

Lastly, the correlation analysis between Perceived Value and Loyalty Intentions shows that the relationship is statistically significant at %63, 8 significance level. (r=0,638; p=0,000<0, 05). According to the analysis when Perceived Value score increases Loyalty Intentions score also increases.

In this study, regression analysis is also conducted to test the hypotheses and to define the direction of relations. Regression analysis has been applied with the aim of testing whether Perceived Value has a mediating effect between Service Quality and Loyalty Intentions or not. The conditions of Baron and Kenny (1986) has been applied accurately in this analysis.

When the results of regression analysis examined;

H1: There is a positive significant relationship between Perceived Value and subdimensions of E-service Quality which are Efficiency, System Availability, Fulfilment and Privacy (R2: 0, 53***, t: 2,874). Thus H1 hypothesis is accepted.

H2: There is a positive significant relationship between Loyalty Intentions and subdimensions of E-service Quality - Efficiency, Fulfilment and Privacy. Thus H2 is also accepted (R2 : 0,336***, t: 4,651). Nevertheless, a significant relationship could not be found between System Availability and Loyalty Intentions

H3: There is a positive significant relationship between Perceived Value and Loyalty Intentions. (R2: 0,406***, t: 12,969). Thus H3 is accepted.

H4: Between Service Quality and Loyalty Intentions, Perceived Value act as a mediator. When this hypothesis is investigated it is observed that Perceived Value is accepted as a mediator and no relationship can be found between system availability and Loyalty Intentions. Moreover, explanation rate has fallen in the relationship between dimensions of Effectiveness, Privacy and dependent variable of Loyalty Intentions, but Model's overall explanation rate has increased. According to these scores there is a partial mediating effect of Perceived Value between Service Quality dimensions and Loyalty Intentions. (R2: 0,477***, t: 3,268).

When models are investigated we see that R2 explanation value is always between %33 and %53. In models the power of independent variables are powerful at explaining the dependent variables, that is to say, their goodness of fits are powerful.

Table 4. Regression Analysis; The mediator effect of Perceived Value between Service Quality and Loyalty Intentions Dependent Variable

Model 1: Loyalty Intentions Model 2: Perceived Value Model 3: Loyalty Intentions Model 4: Loyalty Intentions

Independent Variable ß t ß t ß t ß t

Constant 1,489 12,969 1,736 2,487 0,816 4,651 0,519 3,268

Efficiency - - 0,306** 8,086 0,222** 5,719 0,097* 2,681

System availability - - 0,137** 3,755 0,044 1,193 -0,012 -,365

Fulfillment - - 0,185** 4,755 0,300** 7,582 0,214** 5,953

Privacy - - 0,166** 4,408 0,177** 4,582 0,109* 3,138

Perceived Value 0,638*** 12,969 - - - - 0,447** 12,318

F R2 Sig. 436,975 0,406 0,000 89,010 0,5360 0,000 80,157 0,336 0,000 114,538 0,477 0,000

P standardized beta weights, ***P<0001 ,**P<0,01,*P<.05

4. Conclusion And Recommendations

With the help of increasing globalization more and more firms started to become technology and market oriented. Firms giving importance to E-S-Quality are obliged to serve without any trouble. Otherwise, they cannot fulfill their market-oriented duties. In this study we have focused on the importance of electronic service quality - which has become very important after companies started to adopt a more market oriented strategy- and its effect on Loyalty Intentions and Perceived Values.

By using E_S_QUAL scale, it is observed that the relationship of E-service Quality, with Perceived Values and Loyalty Intentions is positive. After making correlation analysis and regression analysis it is observed that

there are meaningful relationships between the four subdimensions of E-service Quality and Perceived Value. In this point the improvements in websites infrastructures and the rate of internet are important contributors for these results.

As a consequence of recent developments in technology, positive perceptions and evaluations of customers about web sites they are using have increased noticeably. For example; nowadays the System Availability of most web sites are almost similar; most sites do not experience interruptions, freezings and they can get orders without any technical problems and delays. Nonetheless, 2 of our research questions related to System Availability have been removed due to lack of factor loadings.

In creating Loyalty ensuring perceptions; Fulfillment, Effectiveness and Privacy factor are seen prominent initiators, thus it is observed that customers give importance to the tendency of websites in keeping their promise, emphasis on privacy and promptness in orders given from websites.

One of the most important findings of the research is the deduction that Perceived Value acts as a mediator between E-service Quality and Loyalty Intentions and according to this finding, we understand that customers are building Value Perceptions about the web sites before and after buying something and their perceptions about the web site effects how they act in their further shopping activities.

In further studies concerning E-service Quality, specific online shops can be compared and different websites from different countries especially different cultures can be compared as a cross cultural study. Moreover different factors can be included into the study and by this way different customer segments can be analyzed.

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