Bsc (Honours) Hospitality Business Management

Sheffield Business School

BSc (Honours) Hospitality Business Management

Title Cathay Pacific Airways Limited how to build up a good relationship with the customers.

Name Ha Chun Sing 91206555

Month Year April 2011

Ha Chun Sing - 91206555 - Hospitality Business Management 1

Sheffield Hallam University

Sheffield Business School

Title Cathay Pacific Airways Limited how to build up a good relationship with the customers.

FULL NAME Ha Chun Sing

91206555

Supervisor: Miss Dorothy Tusi

In partial fulfilment of the requirements for the degree of Bachelor of Science in Hospitality Business Management

Month Year April 2011

Ha Chun Sing - 91206555 - Hospitality Business Management 2

Executive Summary

In this research mainly focus on how to build up a good relationship with the customers. Moreover, in this research I choose Cathay Pacific Airways Limited to see how to satisfy the customers’ need and want and build up a good relationship with the customers. As we know Cathay Pacific is one of the large airways in Hong Kong. And

Cathay Pacific Airways Limited had established in 1946. In Hong Kong it has around

65 year’s histories. It pass through a long time still can exist in this industry, it must have something, it was doing very well. In the past Oasis Hong Kong Airlines had used low price to satisfy the customers’ need. However, after a few years it was gone bankrupt, at that moment Cathay Pacific still can exist without low price tickets.

Cathay Pacific should satisfy the customers others need and want not only low price ticket so that it can exist for 65 years.

In this research, I want to find out Cathay Pacific how to increase the customers’ sense of belonging and loyalty. It is very important for the business. If the business can have loyalty customers, it can run the business longer. This research’s objectives are how to deal with the customers to find out what they want, second analysis nowadays Cathay Pacific Airways Limited provide those solutions are they satisfy the customers needs, third what actions they will do after getting the customers feedback.

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Furthermore, in this study I have found much useful information in the internet.

In Cathay Pacific website it has many update official information and news. That information can help to analysis why customers like to travel Cathay Pacific not others airlines. Moreover, I have found some books about new thinking, new strategies, new tools for getting closer to your customers and how to build up a customers’ relationship and how to deliver customers satisfaction. If we want have a good relationship with the customers, we must understand the customers what they wants.

In this study, I have set a questionnaire for the people who had traveled Cathay

Pacific before and collect some useful information from them. When I collected those questionnaire and after the analysis I want to find out is it most of the people after travel Cathay Pacific has a good experience and Cathay Pacific is it satisfy their needs and wants.

After this study, I estimated that the questionnaire result is most of the people satisfy after travel Cathay Pacific if the customers didn’t satisfy their service, Cathay

Pacific can not get a lot of awards in those awarding ceremony such as Yahoo!

Emotive Brand (Airline category) and in the Wall Street Journal Asia's annual poll won the First in Asia's 200 Most-Admired Companies. Moreover, I want to find out

Cathay Pacific how to increase the customers’ sense of belonging and loyalty. Hope it can implement in others business.

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Table of content

Executive Summary ...... 3

Table of content ...... 5

List of Tables ...... 6

List of figures ...... 7

Chapter 1 ...... 8

Introduction ...... 8

Chapter 2 ...... 10

Instrumental Literature Review ...... 10

Chapter 3 ...... 28

Methodology ...... 28

Chapter 4 ...... 31

Findings and Analysis ...... 31

Chapter 5 ...... 37

Conclusions and Recommendations ...... 37

References ...... 40

Appendices ...... 44

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List of Tables

Table 1………………………………………………………………………….p.31

Table 2…………………………………………………………………………. p.31

Table 3…………………………………………………………………………. p.32

Table 4…………………………………………………………………………. p.32

Table 5…………………………………………………………………………. p.33

Table 6…………………………………………………………………………. p.33

Table 7…………………………………………………………………………. p.35

Table 8…………………………………………………………………………. p.35

Table 9…………………………………………………………………………. p.36

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List of figures

Figure 1………………………………………………………………………….p.14

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Chapter 1

Introduction

Why studying in this case, it was because in hospitality industry customers were very important for the business. Nowadays in the world there are many ranking or awards about service quality, many companies can provide service to satisfy the customers but not all the companies can keep a long relationship with their customers.

If the firms can promote good image into eyes of targeted customers, it can help creating the loyalty to the customers’ mind. If the customers keep spending their money to buy the product, the company can get more profit. In the past, in hospitality industry didn’t focus on their service and didn’t care of the customers’ satisfaction.

The business organizations want to gain more profit form the customers. But nowadays, most of the companies scarify certain extent of profit to maintain customers’ satisfaction so that they would repeat buying from day to day. The firms want to target the long term profit not the short term profit from now on. From now, most of the companies are talking about customers oriented. Before selling the product they need to do a research to analysis the customers needs and wants. During selling the product they need to provide good service and selling technique. After selling the product they need to provide a good after sell service to the customers.

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Moreover, Cathay Pacific Airways Limited was a one famous airline in the world and it had a long history in flight industry; it had done a lot of things to satisfy their customers. So that the aim of this research aim is find a way to increase the customers’ sense of belonging and loyalty, it will use Cathay Pacific Airways Limited for an example. And the objectives of this research are finding out how Cathay Pacific to deal with the customers to satisfy what they want. Second, analyses nowadays

Cathay Pacific Airways Limited provide those solutions are they satisfy the customers’ needs. Finally, what actions Cathay Pacific will do after getting the customers feedback.

Furthermore, in an airline company, it must face different nationality customers; it should hard to satisfy all of them. In this study, it will focus on Cathay Pacific

Airways Limited because it is a one of the good company to build up a good relationship with the customers and finding out Cathay Pacific Airways Limited’s manager how to improve the customers’ relationship. In this research, it will include

50 questionnaires to ask the travelers who had traveled Cathay Pacific before. To prove that Cathay Pacific really had done something to satisfy their customer and keeping improve their service nowadays.

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Chapter 2

Instrumental Literature Review

In this chapter, it will include the theories of service quality, customers’ thinking such as their expectation, perception and satisfaction. After, introduce these theories, it also include using what method to analysis how to fulfill these theories such as gap model, SERVQUAL model and the customer loyalty system. Finally, it will talk about

Cathay Pacific had taken what actions to satisfy the customers.

What is service?

According to Kotler (1984), he defined a service is any activity or benefit that one party can offer to another that is essentially intangible and does not result in the ownership of anything. Its production may or may not be tied to a physical product.

Renting a hotel room, depositing money into a bank, traveling on an airplane, visiting a psychiatrist, getting advice from a lawyer- all involve buying a service. It showed that a wide range of activities and business can be classified as services.

What is service quality?

Berry and Parasuraman (1991) stated that service quality is the foundation for services marketing because the core product being marketed is a performance. The performance is the product the performance is what customers buy. A strong service Ha Chun Sing - 91206555 - Hospitality Business Management 10 concept gives companies the opportunity to compete for customers; a strong of service concept builds competitiveness by earning customers’ confidence and reinforcing branding, advertising, selling and pricing. (Li,2005)

According to Parasuraman (1998), they presented that service quality is perception resulting from a comparison of consumer expectations with actual service performance.

Service quality dimension

According to (Gronroos, 1983), the service quality dimension aids an understanding of customer needs and wants. When the multi-dimensional nature of the construct has been noted, there is general agreement that quality evaluations are made not only on the outcome of the service, but also on the process of service delivery. The customer’s experience of the service depends on two key dimensions, namely technical and functional quality.

Gronroos (1988) stated that technical quality has received more attention due to tangibility and often large amount of capital tied up in elements such as service production and delivery systems, for example, technical solutions, however, are easily copied Functional quality, in contrast, can be used to create a competitive edge by focusing on staff-customer relations.

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Theory of the Gaps Model

According to Parasuraman (1985) perceived service quality can be defined as, according to the model, the difference between consumers’ expectation and perceptions which eventually depends on the size and the direction of the four gaps concerning the delivery of service quality on the company’s side.

From Gronroos (1990), the model demonstrates how service quality emerges.

The upper part of the model includes phenomena related to the customer, the lower part shows phenomena related to the service provider. The expected service is a function of the customer’s past experience and personal needs and of word-of-mouth communication. And also, it is influenced by the market communication activities of the firm.

The experienced service, which in this model is called the perceived service, is the outcome of a series of internal decisions and activities. Management perceptions of customer expectations guide decisions about service delivery and production process as a process-related quality component, and the technical solution received by the process as an outcome-related quality component. Thus market communication can be expected to influence the perceived service as well as the expected service

(compared the quality study by Lindqvist 1998). There are five gaps between the customer’s expectation, perception, quality specification, service delivery and expected service.

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The key points for each gap can be summarized as follows:

Gap1: The difference between what customers expected and what

management perceived about the expectation of customers.

Gap 2: The difference between management’s perceptions of customer expectations

and the translation of those perceptions into service quality specifications and

designs.

Gap 3: The difference between specifications or standards of service quality and the

actual service delivered to customers.

Gap 4: The difference between the services delivered to customers and the promise

of the firm to customers about its service quality

Customer Gap:The difference between consumer expectations and perceptions of the

quality of the service received depending on the size and directions and

perceptions of the quality of service received depending on the size and

direction of the above 4 gaps.

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figure1

The Integrated Gaps Model of Service Quality

(Parasuraman, Zeithaml, Berry 1985)

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SERVQUAL model

According to Parasuraman, Zeithaml, and Berry (1985), they have developed a comprehensive measurement instrument, known as SERVQUAL, originally devised to measure perceived service quality. In their approach, the authors propose that customers entertain expectations of performance on the service dimensions, observe performance, and later form performance perceptions. These two key concepts are then compared through difference scores or gaps.

Parasuraman et al. (1988) stated that SERVQUAL contains 22 pairs of

Likert-type items. One set of measures, containing one item from each pair, is utilized to measure customers’ expected levels of service for a particular service industry as a way of calibrating expectations. The second set of measures, containing the remaining item from each pair, is intended to measure the level of service provided by a specific service company as experienced by the consumer as a way of calibrating perceptions.

A measure of service quality is then formulated by calculating the difference scores between the corresponding set of items such as perceptions minus expectations.

The early exploratory research of Parasuraman et al. (1985) revealed that the primary criteria utilized by consumers in assessing service quality could be described by 10 separate dimensions: tangibles, reliability, responsiveness, communication, credibility, security, competence, courtesy, understanding/knowing the consumer, access. These 10 dimensions were later combined and condensed to 5: tangibles,

Ha Chun Sing - 91206555 - Hospitality Business Management 15 reliability, responsiveness, assurance and empathy. These last two constructs, assurance and empathy, contain items representing seven of the original dimensions – communications, credibility, security, competence, courtesy, understanding/knowing customers and access – that did not remain distinct after sequential testing. These authors claim that the instrument can be utilized in a wide array of services without modification, and that the SERVQUAL instrument has high reliability and validity.

Despite disagreement over use of both the expectations and performance measures and the dimensionality of the SERVQUAL measurement instrument across different industry settings, there is general agreement that the 22 items are good predictors of overall service quality. Rust and Oliver (1994) stated that although the

SERVQUAL items measured at the level of the firm’s services appear to be good predictors of overall perceived quality, it is also possible that the 22 items measured at the encounter level may be good predictors of encounter satisfaction, and that when measured as a function of multiple experiences they may be good predictors of overall service satisfaction.

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Customer expectation

Parasuraman, Zeithaml, Berry (1988) stated that customers’ expectation will be affected by how well a provider performs. Influencing expectation factors included word of mouth, personal needs, past experience, external communication and price.

First, word of mouth is including recommend from relatives, friends and other peers.

Second, personal needs means how necessary that you need the goods and services.

Third, past experience means you bought or used the product in the past. Fourth, external communications are media that received to people through newspaper, magazine, television, radio and etc.

Moreover, Olson and Dover (1979) defined that expectation as beliefs about a product or service’s attributes or preference at some time in the future. However, Yi

(1991) identifies two basic conceptualizations of expectations. One version, a more global perspective, has to do with an institutional perspective, which defines expectations as the before consumption beliefs about the overall performance of the product/service created by previous experience, the organization’s claims, product information or word of mouth. The other major view of expectations has more to do with a process internal to the customer, and is more componential.

Furthermore, Spreng et al (1996) suggest decomposing the traditional expectations measure into two measures, the predictive expectations; beliefs about the likelihood that attributes, benefits or outcomes are associated with a product or service,

Ha Chun Sing - 91206555 - Hospitality Business Management 17 and desires: evaluations of the desirability of an attribute, benefit or outcome, that is the extent to which the attribute, benefit or outcome leads to the attainment of the customer’s values. In the view, expectations are future-oriented and are considered malleable. In contrast, desires are described as present-oriented and relatively stable.

In a test of these constructs, Spreng et al (1996) found them to be on satisfaction, expectations had both positive and negative effects, while desires had only negative effects.

Customer perception

According to Parasuraman (1988) stated that perception resulted from a comparison of consumer expectation with actual service performance. For example, customers have high expectation through television, but they got the service is difference than their expectation. They will become dissatisfaction. That made customer perception after all the service process.

Customer Satisfaction

According to Howard and Sheft (1969) stated that consumer satisfaction was the buyer’s cognitive state of being adequately of inadequately rewarded for the sacrifice he has undergone. Hunt (1979) summarized that the definition by stating that satisfaction involved need fulfillment, pleasure, displeasure, expectation performance

Ha Chun Sing - 91206555 - Hospitality Business Management 18 interactions, evaluation of the purchase consumption experience, and evaluation of the benefits of consumption. Oliver (1981) stated that satisfaction is a summary psychological state resulting when the emotion surrounding disconfirmed expectations is coupled with consumer’s prior feeling about the consumption experience. Zeithmal and Bitner (2000) defined satisfaction as the customers’ evaluation of a product or service in terms of whether that product or service has met their needs and expectations. Dissatisfaction with the product or service is resulted as failure to meet the customers’ needs and expectations.

The relationship of service quality and customer satisfaction

Oliver (1981) summarize the transaction specific nature of satisfaction, and differentiate it from the attitude; Attitude is the consumer’s relatively enduring affective orientation for a product, store, or process while satisfaction is the emotional reaction following a disconfirmation experience which acts on the base attitude level and is consumption specific. Attitude is therefore measured in terms more general to product or store and is less situational oriented. Therefore, the difference between service quality and satisfaction in that service quality is a global judgment or attitude relating to the superiority or excellence of the service whereas satisfaction is related to a specific transaction. The two construct are related in that incidents of satisfaction over time result in perceptions of service quality. If the service quality met the

Ha Chun Sing - 91206555 - Hospitality Business Management 19 customers’ perceptions they will feel satisfy. If the service quality is lower than the customers’ perceptions they will feel dissatisfy.

The relationship of expectations and customer perception

From Sasser, Olsen, and Wyckoff (1987), Gronroos (1982), Lehtimem and

Lehtinen (1982), and Parasuraman, Zeithmal and Berry (1984), they noticed that service quality as perceived by consumers, stems from a comparison of their expectations of the services they will receive with their perceptions of the expectations of the performance of firm providing of discrepancy between consumers’ perceptions and expectations the better perceptions are than expectations, the higher is the level of perceived service quality, the worse perceptions are than expectations, the lower is the level of perceived service quality.

According to Olive (1981), expectations are consumer defined probabilities of the occurrence of positive and negative events if consumer engages in some behavior.

In the service quality literature, expectations are viewed as desires or wants of consumers like what they feel a service provider should offer rather than would offer.

The consumer’s expectation in a satisfaction context represents a prediction, it is expressed by a mean expectation value with a degree of uncertainty surrounding the mean because the consumer is unsure about what they expect (Winer, 1985). In contrast, since a consumer’s expectations in a service quality context represents what

Ha Chun Sing - 91206555 - Hospitality Business Management 20 he or she desires, it can be viewed as a distinct value with little or no uncertainty surrounding it.

What is customer loyalty?

Jacoby & Chestnut (1978); Kahn & Meyer, (1991); Dick & Basu, (1994) stated that where attempts have been made to conceptualize loyalty it has typically been divided into 2 typologies–behavior and attitude. According to Samuelson & Sandvik

(1997) the behavioral typology to customer loyalty is primarily concerned with measures of repeat purchase, proportion of purchases etc. Although, this is considered to be a relevant measure, the main criticism of this typology is that it does not include the customer’s motives for their behavior. Therefore attitudinal approaches to loyalty have been developed. While a behavioral approach to loyalty is still valid as a component of loyalty, it is argued that attitudinal approaches to loyalty should supplement the behavioral approach. Dr. Ruth M Smith (2010) stated that the attitudinal typology includes, for example, measures of commitment and trust.

Customer loyalty can be achieved in some cases by offering a quality product with a firm guarantee. Customer loyalty is also achieved through free offers, coupons, low interest rates on financing, high value trade-ins, extended warranties, rebates, and other rewards and incentive programs. According to Drilling Down (2010) customers may express high satisfaction levels with a company in a survey, but satisfaction does

Ha Chun Sing - 91206555 - Hospitality Business Management 21 not equal loyalty. Loyalty is demonstrated by the actions of the customer; customers can be very satisfied and still not be loyal.

Development of customer loyalty program for Cathay Pacific

The Cathay Pacific passenger can join the Marco Polo Club to enjoy a world of benefits, convenience and personalized service wherever their go. It include 24 hour access to the worldwide toll free Marco Polo Club Service Line, priority check in and boarding, in-flight duty-free specials on Cathay Pacific and Dragonair, latest news and special offers via email as well as excess baggage allowances, guaranteed seats, worldwide lounge access and exclusive benefits on one world alliance airlines for

Silver members and above. This program develops the passenger loyalty. The Club has four tiers, including Diamond, Gold, Silver and Green. Different tier members enjoy different rewards. It based on different members level to provide self needs to them. It encourages them to be the company repeat customer. Moreover, the club members have their self purchase record; Cathay Pacific can know that which members are their loyalty customers, company can through these data to offer special service and discount to those customers. Let the members know that they are special of this company to increase their loyalty. Furthermore, the Marco Polo Club is an exclusive programme organized by Cathay Pacific offers a range of privileges to our most frequent flyers, all designed to enhance journey before, during and after flight.

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Based on the theory about CLP, the Macro Polo Club balance the loyalty and reward system in order to encourage further purchase from existing customers so as to increase sales revenue.

Cathay Pacific satisfy the customers’ needs actions

Cathay Pacific already have many actions to satisfy the customers’ needs for example, those video and audio entertainment in flight, those movies are available with alternative soundtracks in English, Cantonese, Mandarin, Japanese, Korean,

Hindi, French, Italian or German; and the TV programmes are broadcast in English,

Cantonese, Mandarin, Japanese and Hindi respectively. The customer can choose different languages to satisfy their needs. Another airline didn’t have so many languages to let the customers to choose. Moreover, Cathay Pacific has a special in-flight service; the customers can order the special meals, it can satisfy customers’ needs. It is because some people are partiality for a particular kind of food; they can order the special meals for themselves. If the customers want to order the special meals, they should orders before 24 hours before your scheduled flight.

In 1 November, 2010, Cathay Pacific Airways announced the introduction of a new method of calculating extra a baggage charge which aims at simplify the handling of charges for extra baggage and special baggage. The new policy ensures a much more straightforward and transparent calculation of baggage charges, and

Ha Chun Sing - 91206555 - Hospitality Business Management 23 customers can view a easy-to-understand grid of charges through the airline’s website which facilitates them in calculating exactly what charges they will have to pay by referring to the zones in which their travel originates and ends.

And the most remarkable programme that Cathay launched was namely “FLY greener offset programme”. Cathay Pacific and sister airline Dragonair were the first

Asian airlines to introduce a carbon offset programme which aims at achieving permanent reductions in carbon emissions to ensure a greener living environment. The programme provides passengers an opportunity to offset their carbon emissions attributable to their journey on a non-profit basis. The programme has achieved in a

total 80,000 tonnes of CO2 offset since its launch in 2007. The new project portfolio launched in November 2010 consists of a set of 95 small "run-of-river" hydropower stations in Chongqing, Guizhou, Sichuan, and Yunnan provinces that link the electricity generated into the Pearl River Delta region; a group of 23 wind turbines in

Shandong; and a "run-of-river" hydropower project in the Pearl River Delta region of

Guangdong. Apart from carbon reductions, the project was chosen for added social and environmental benefits such as reducing local air pollution, enhancing the productivity of local farms, and providing power and jobs to local communities.

Conclusively, it can be revealed that Cathay endeavors to establish good relationship with the customers by not only maintaining the quality of flight services, but also implementing various programmes in taking good care of the customers in

Ha Chun Sing - 91206555 - Hospitality Business Management 24 different aspects.

In 15 October, 2010, From October onwards, the airline's passengers traveling in

First Class will receive new First Class amenity kits of high quality products and real benefits produced by two sophisticated brands of exceptional quality.

The airline's male passengers traveling in First Class will receive a stylish black pouch designed by Ermenegildo Zegna, one of Italy's most famous family enterprises and renowned fashion brands, packed with skincare products specially selected from another Italian luxury brand, Acca Kappa.

While the new First Class travel kit for female passengers features elegant designs by Ipa-Nima, a Vietnam-based brand, and carries skincare products by

Australian-based brand Aesop, made using plant-based ingredients of the highest quality as well as non-botanical elements.

In 23 July, 2010, Cathay Pacific has launched one of the world’s first customized airline applications, CX Mobile application, for the ipad. The CX Mobile application can be downloaded free of charge from Apple’s iTunes store which offers users access to a wide range of Cathay Pacific services and information including checking in for flights, checking the status of flights, accessing flight schedules and managing their bookings.

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In 6 July, 2010, it has good news for the customers; it is because Cathay Pacific

Airways plans to offer in-flight broadband; cell-phone service and live television on its aircraft from early 2012, Cathay Pacific will use the eXConnect system supplied by Panasonic Avionics that can deliver a 50Mbit/sec. Internet stream via satellite to aircraft. That stream will be split between passenger Internet service and crew applications, such as the transmission of real-time flight data back to the airline's base of operations. Moreover, the satellite link will also support data and voice cell-phone calls and carry a handful of live TV stations and some pay-per-view programming.

Also Cathay Pacific is the first airline to offer those services in Asia.

In the recent, it had an earthquake in Japan, some Hong Kong people can not back to Hong Kong immediately, Cathay Pacific has offered more flights from Japan to Hong Kong; let those Hong Kong people can back to Hong Kong as soon as possible. Furthermore, after the earthquake in Japan, most of the flights had delayed or canceled, Cathay Pacific has a special policy for this situation. The customers can refund all the ticket charge. Refunds are applicable to all tickets regardless of fare type, including those sold in special sales promotions

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Summary

In this chapter had introduced those theories about the service and customers’ needs. Also it had included Cathay Pacific how to satisfy the customers. In next chapter it will talk about how to evaluate those actions were done by Cathay

Pacific. And introduce using which method to find out the customers’ satisfaction after traveling Cathay Pacific. Moreover, in Cathay Pacific Airways Limited, they have two loyalty programs. For The Marco Polo Club, the company can create a customer database which may record the flying patterns, preferences and the demographic information of the customer which can let the marketers to form marketing strategies, pricing and inventory management. Secondly, the company has built up a specific channel with the customer. Once the company has any new promotions or newsletters, the company can send to the customer directly through email or the club magazine. Apart from that, Cathy Pacific will provide some privilege services to the customers which can make them feel honorable and enhance the customer satisfaction which can retain the customer and attract them to repeat purchasing.

Another customer loyalty program is Asia Miles; Asia Miles is a loyalty program which rewards the frequent flyer. And it can increase the average sales and also increase the demand in low season. By rewarding the customer, the customer will keep on purchasing from the Cathay Pacific.

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Chapter 3

Methodology

Noel (2008) states that the research methodology defines what the activity of research is, how to proceed, how to measure progress, and what constitutes success. It provides us advancement of wealth of human knowledge, tools of the trade to carry out research. The research methodology is a science that studying how research is done scientifically. It is the way to systematically solve the research problem by logically adopting various steps. Also it defines the way in which the data are collected in a research project. However, in this study, it has some restrictions; it only can collect 50 questionnaires or 2 interviews or focus groups. Moreover, in this study, it will use questionnaires to collect the information by the customers, try to get the useful information to prove that Cathay Pacific has good relationship with the customers. In the questionnaire mainly to ask the customers are they satisfy the service after traveling Cathay Pacific and what Cathay Pacific should improve.

Furthermore, at the above it has some news about Cathay Pacific what they have done in the recent. The questionnaire can show that the customers are they satisfy those changes of Cathay Pacific. Moreover, why do not use the past data to analysis the customers’ satisfaction and try to set a questionnaire to collect the new data. It is because the world is changing day to day the data got last year may be out dated. So that, there is a need for researcher to find out the update information to do Ha Chun Sing - 91206555 - Hospitality Business Management 28 the latest research for exist in this industry. In this research will collect the primary sources and the secondary sources.

If it had more time to doing this research and didn’t have any limited such as doing 2 interviews or 50 questionnaires. It will have more accurate evaluation, it is because doing more questionnaires or interviews, and it will have more data to analysis. Moreover, the questionnaire it will include the open questions, the open question can reflect the customers’ needs and wants. After knowing their needs and wants, it is easy to know how to improve the service to satisfy them. However, this study had a limited time and limited questionnaire. It does not have enough time to analysis large amount questionnaire.

Primary research

Cohen (1991,p.104) defined that primary research involves the collection of primary data by marketing researcher or agents of the marketing researcher directly from respondents. It is because these data must be collected firsthand, the process to set a good questionnaire, it may be wasting a lot of time but it can collect the information which is directly relate with the research.

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There are many ways to collect the data for example, telephone interview, personal face to face interview, mail survey, focus group, questionnaire etc.,

Boyd(1989, p.212) stated that the greatest advantage of the questionnaire method was its versatility. Almost every problem of marketing research can be approached from the questionnaire standpoint. Boyd also point out that questioning is usually faster and cheaper than observing as interviewers have more control over their data gathering activities than do observers.

Secondary research

According to Saunders, Lewis and Thornhill (2000), it stated ‘Secondary data is often criticized for being out-dated and inconsistent’. It is because nowadays the information is changing very fast, for example some news or journals may be out-dated after a few months or years such as technology items ----- i-pad. After the i –pad on sale for a few months. It already has some news about i-pad2. If want to get an update information, find the secondary data should not a good choice. However, secondary data, it is cheaper and easy to get it. It is because nowadays, finding the secondary data in internet very convenient.

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Chapter 4

Findings and Analysis

Table 1

Gender Percentage Male 58% Female 42%

Table 2

Frequency Percentage Always(over 6 per yr) 10% Often(3~5 per yr) 16% Seldom(1~2per yr) 68% Never 6%

In table 2 shows that most of the people will travel Cathay Pacific per year and most of them will travel Cathay Pacific 1~2 times per year. Only 6% people never travel Cathay Pacific.

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Table 3

Age Percentage 18-25 12% 26-35 52% 36-45 20% 46-55 12% 56 and above 4%

Table 4

Occupation Percentage Student 4% White Collar 62% Blue Collar 14% Housewife 12% Retired 4% Unemployed 2% Others 2%

In table 3 shoes that all people are over 18 years old. Most of them are in the working age range (26~55 years old), in table 4 can show that the percentage of white collar and blue collar are higher than other occupations. The table 3 age range of

18~25 and 56 and above percentage total is near to the table 4 percentage of student, retired, unemployed and others.

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Table 5

Education level Percentage Primary School or Below 2% Primary School 0% Secondary School 20% Certificate/Diploma 28% University or above 50%

Table 6

Income(HKD) Percentage < Less than $10,000 12% $10,001 - $15,000 30% $15,001 - $20,000 22% $20,001 or above 36%

In table 5, it can see that most of the customers’ education level is above diploma.

It is about 78%. And the table shows that about 20% customers are above secondary school level. Moreover, in Hong Kong secondary level or diploma level worker their income classes are very close. Most of their income classes are $10,000~$20,000 when they are graduated. In the table 6 can show that the percentage of

$10,000~$20,000 income class is 52%. Furthermore, it has 50% customers are university level or above. The table 6 shows that 36% customers’ income classes is

$20,001 or above, it had 18 customers in this research had $20,001 or above income.

And 16 out of 18 of them are university level or above. Only 2 of them are secondary school level.

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In this research question 3 it is about the customers’ satisfaction of in-flight service. In the questionnaire 1 = Very dissatisfaction 2 = Dissatisfaction 3 = Fair

4= Satisfaction 5= Very satisfaction

After the analysis, the mean of the customers’ satisfaction is 3.6 and the standard derivation is 0.84. It can show that most of the customers’ satisfaction is above average.

Moreover, in question 7 it is about the customers’ satisfaction of the Cathay

Pacific loyalty program. And the mean of the customers’ satisfaction is 3.36 and the standard derivation is 0.5904. The loyalty system of Cathay Pacific is not bad most of the customers feel satisfy. Furthermore, the mean of customers’ satisfaction of in-flight service and the mean of customers’ satisfaction of the Cathay Pacific loyalty program are very close. It can show that most of the customers after traveling Cathay

Pacific, they are satisfy the service and they will join the loyalty club. Also the in-flight service and loyalty club can satisfy the customers’ needs at least major customers feel it is fair not dissatisfy.

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Table 7

Kind of improvement of the service No. of customers’ choice Food and Drink 35 Safety Guideline 12 Grooming 1 In-Fight Service 39 Fight Delay Policy 11 In-Flight Entertainment 26 In-Flight Announcement 5

In table 7 it can show that most of the customers are not satisfy the food and drink, in-flight service and the in-flight entertainment. If Cathay Pacific wants to have high rank in customers’ satisfaction, these three things it should improve.

Table 8

Kind of information the customers No. of customers’ choice always search in CX website Refund Policy 20 Promotions 33 Souvenir 11 Loyalty Club 7 Online Booking 28 Complain Method 10 Cathay Pacific History 0 Flight Delay Announcement 13

In table 8 shows that none of the customers are care about the history of Cathay

Pacific, most of the customers are concern about the promotion, online booking and refund policy. They want have more promotion can get a lower price tickets also the convenient of booking the seat. If Cathay Pacific wants to attract more customers, it should put more efforts on promotion and has better refund policy than other airline.

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Table 9

Kind of service should provide in loyalty No. of customers’ choice club Brochure Of Other Countries Culture 16 24Hr Hotline 35 Miles Refund 12 Priority Boarding 18 Extra Baggage Quotas 18

In the table 9 it shows that most customers want the loyalty club provide 24 hour hotline. Moreover, others services are very close, it can show that different customers have different needs and those services are important too.

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Chapter 5

Conclusions and Recommendations

After this study, it can let us know that the important of service, the customers’ satisfaction and using what method to evaluate the customers’ satisfaction. If the firms want to satisfy the customers’ needs and wants, it should understand their perception and expectation first if not the firms may provide wrong service to the customers. No any gap between the firms and customers is the best.

Besides maintaining the quality of flight service, Cathay has launched a variety of activities to establish and improve the relationship with the existing customers as well as the potential customers.

Cathay has launched one of the world’s first customized airline applications, CX

Mobile application, for i-pad. The CX Mobile application can be downloaded free of charge from Apple’s i-Tunes store which offers users access to a wide range of Cathay

Pacific services and information including checking in for flights, checking the status of flights, accessing flight schedules and managing their bookings.

Cathay cooperated with 2 worldwide famous brands, Ermenegildo Zegna and

Ipa-Nima to offer the airline's passengers traveling in First Class new travel kits with exclusively designed amenity bags. The airline's male passengers traveling in First

Class will receive a stylish black pouch designed by Ermenegildo Zegna, one of Ha Chun Sing - 91206555 - Hospitality Business Management 37

Italy's most famous family enterprises and renowned fashion brands, packed with skincare products specially selected from another Italian luxury brand, Acca Kappa.

While the new First Class travel kit for female passengers features elegant designs by

Ipa-Nima, a Vietnam-based brand, and carries skincare products by Australian-based brand Aesop, made using plant-based ingredients of the highest quality as well as non-botanical elements

Cathay announced the introduction of a new method of calculating extra baggage charges which aims at simplifying the handling of charges for extra baggage and special baggage. The new policy ensures a much more straightforward and transparent calculation of baggage charges, and customers can view a easy-to-understand grid of charges through the airline’s website which facilitates them in calculating exactly what charges they will have to pay by referring to the zones in which their travel originates and ends.

Moreover, this study can tell more that customer loyalty program and its application. Nowadays, customer loyalty programs are used across the board among service industries. Thus it is important for us to learn development of an effective customer loyalty program. Also Cathay Pacific has a good loyalty club in the questionnaire most of the customers are satisfy the loyalty club.

Finally, if the firms want to make more profit, it should provide the good quality service for the customers to satisfy their needs and wants. The firms do not

Ha Chun Sing - 91206555 - Hospitality Business Management 38 misunderstand the customers’ needs and wants; it can decrease the gap of the customers’ expectation and the firms’ service. If the firms want to have long term relationship with the customers, it can build up a good loyalty system.

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Appendices

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