Table of Contents
Chapter 1 Introduction
1.1 Background
1.1.1 Tourism Development in Hong Kong
1.1.2 Hong Kong Shopping Tourism
1.1.3 Mainland Chinese Tourists
1.2 Problem Statement
1.3 Research Objectives
1.4 Significance of the Study
Chapter 2 Literature Review
2.1 Tourism in Hong Kong
2.2 Shopping tourism
2.3 Service Quality
2.4 Tourists Satisfaction
2.5 Importance-Performance Analysis (IPA)
2.6 Summary
Chapter 3 Research Methodology
3.1 Research Design
3.2 Sampling
3.3 Questionnaire Development
3.4 Measurement
3.5 Data Collection
3.6 Data Analysis
3.7 Limitations
APPENDICES
APPENDIX 1
APPENDIX II
References
Table of Figures
Figure 1 Comparison of Actual Number of Visitors (Extract from Appendix I)
Figure 2 The Service Process Matrix (Schemenner 1993)
Figure 3 Importance-Performance Matrix (Martilla & James, 1977, p.78)
Table of Tables
Table 1 Spending Activities of Tourists in Hong Kong
Chapter 1 Introduction
1.1 Background 1.1.1 Tourism Development in Hong Kong
Hong Kong is considered as one of the most successful regions in terms of tourism industry in the world. The city received a total of 25.25 million tourists’ visits in 2006, including the visitors from mainland China. It helped to generate a total of HK7.3 billion or US billion in income. Therefore it made the tourism industry as the second largest generator of foreign currency (Cochrane 2008, p. 260). In 2007, the industry showed a continuous increase in terms of the number of visitors. In September of the year, there are some 2,120,350 visitors that have arrived in Hong Kong, showing a great increase of 15.9% from previous rate, while the from January 1 up to present arrivals have reached 20,363,764, showing an increase of 9.6% year-on-year (Business Monitor International, 2008).
Hong Kong is known as the Shopping Paradise, attracting thousands of travellers from all over the world. It is one of the most important pillars of the economy of the city. The situation had improved due to the implementation of Individual Visit Scheme (IVS) of the government of China, which allows the citizen of mainland China, to visit Hong Kong in individual basis. Prior to that, people of mainland China, traveled by group or business visa. Since then, Hong Kong has become the favourite destination of Mainland Chinese tourists (Hong Kong Economic Times, 2006). The situation has created a tremendous business opportunities to the tourism industry of the city. In 2004, there are about 2.6 million of individual document holders from Chinese mainland that have visited the city since the implementation of the IVS. Furthermore, the scheme had already brought a total of HK.6 billon worth of revenues (People, 2004). According to the Hong Kong Tourism Board (2006), Mainland China reached 58.8% out of the total tourists in the city by the end of 2006 (see Appendix I).
The growing influence of the Mainland Chinese visitors is the primary reason why different players in the tourism industry is focusing on the behaviours, demands and desires of the Mainland Chinese visitors in the process of their decision-making.
Figure 1 Comparison of Actual Number of Visitors (Extract from Appendix I)
1.1.2 Hong Kong Shopping Tourism
Shopping is considered as the most common and enjoyable activities undertaken by people during holidays. Due to the current growth and development of efficient transportation systems, the Internet, and widespread use of credit cards, people have been able to travel different places in order to go shopping (Timothy, 2005).
Shopping plays an important role in the field of tourism. This is due to the fact that for many tourists, an integral part or even the entire purpose of their travel or visit is shopping (Jansen-Verbeke,1998). In addition, shopping is a major time-use for many of the tourists, despite of their primary motivation for travel (as cited from Theobald, 1998).
Hong Kong’s primary attractions are its shopping industry and the scenery (Hudman & Jackson, 2002). The city is a duty-free port, it means that the imported goods are not taxed in the Special Administrative Region or SAR with exception of only few luxury products such as tobacco and alcohol. As the result, people can buy products in the SAR at a cheaper price compared with the price in other countries (Reiber, 2007).
Hong Kong is considered as one of the most fascinating, product-diverse, and accommodating shopping destinations in the world. These are the reasons why the city has been dubbed as a shopper’s paradise and Hong Kong is synonym for shopping (Timothy, 2005; Hudman & Jackson, 2002). Every year thousands of people travel in the city in order to avail the most valued items for sale such as electronic equipment, cameras, watches, furniture, Chinese antiquities, and jewellery. The popularity of the items usually reflects the lower price tag in Hong Kong compare in other places in the world like Europe and North America. According to the study of the Department of Hotel and Tourism Management in 2001, 68% of the shoppers purchased clothing and footwear, 50% bought jewellery, accessories and gifts and 22% bought electronic gadgets. It is important to consider that the primary reason why the products dominated the market is due to the attractive price. On the other hand, the consumers are also considering the variety of goods, quality, fashion and even novelty in their buying behaviour (Timothy, 2005).
1.1.3 Mainland Chinese Tourists
Due to the closeness of mainland China and Hong Kong in terms of geography and even culture, the number of en route tourists from China is higher compare to other countries in the world (Qui Zhang, Pine & Lam, 2005). Thus, the increasing number of mainland Chinese tourists in the city can be identified as one of the most important factors contributing to the success and continuing growth of the Hong Kong tourism and entire economy.
Shopping in Hong Kong is one of the most important activities for the Mainland Chinese due to the fact that luxury goods in the city are about 10% to 20% cheaper compare to its selling price in Chin. The reason behind it is that the city is not implementing sales tax, compare to China that raised its taxes to the cosmetic products from 20% to 50% (Chan, 2008).
The fact can be seen from the statistics that have been released and reported by the Hong Kong Tourism Board that during the first half of 2008, the same-day visitors made up close to half of all the arrivals from the Mainland China from 41% of the last year (Chan, 2008). Furthermore, people from Mainland China believe that Hong Kong is a major trend setter in terms of fashion and style.
Tourists from mainland China, spend most of their money on shopping when they come to Hong Kong. During 1996, shopping took the 63% of the total expenditures. From 1996 to 2001, visitors in the city is spending more and more on shopping, that had increased to 64% during 2001 (Zhang & Pine, 2005, p. 74). This shows that shopping is considered as one of the most important motivation of the Mainland Chinese visitors in the city. Table 1 shows other important spending activities of tourists in Hong Kong.
Table 1 Spending Activities of Tourists in Hong Kong
Adapted from: (Greasley 1998, p. 66)
The classification characteristics include the degree of labor intensity and a jointly measured degree of the customer interaction as well as equipment. The labor intensity can be defined as the ratio of labor cost to the plant and equipment. On the other hand, the customer interaction pertains on the degree where in the customer can intervene in the processes of the service.
The figure shows that retailing belongs to the lower left quadrant that tackles on the different firms that have a high degree of labor intensity. However, it has a low degree of interaction and customization. It shows that retailing business or retail shops requires a high content of time as well as effort with comparatively little plant as well as equipment cost, it can be said to be labor intense. Thus it shows that customers of retailing business will receive low degree of interaction, meaning that there will be an undifferentiated service provided in the labour-intensive environment.
2.3 Service Quality
There may be different perceptions to quality and quality assurance. Crosby (1995) summarized his quality management philosophy as: 1) the definition of quality is conformance to requirements; 2) the system of quality is prevention; 3) the performance standard is zero defects; and 4) the measurement of quality is to price of non-conformance. On the other hand, Deming (Walton, 1986) defined quality in terms of customer satisfaction. He developed the concept of quality as a management activity using fourteen points for management to seek commitment and stewardship of quality, which can be regarded in terms of three broad philosophical categories – constancy of purpose, continual improvement, and cooperation between functions. Juran (2000) expressed his approach to quality in the form of Quality Trilogy that involves three basic processes – quality planning, quality control, and quality improvement. He identifies ten steps to quality: 1) build awareness of opportunities to improve; 2) set goals for improvement; 3) organize to reach goals; 4) provide training; 5) carry out projects to solve problems; 6) report progress; 7) give recognition; 8) communicate results; 9) keep scores; and 10) maintain momentum by making annual improvement part of the regular systems and processes.
As the business environment evolves and competition becomes more acute, quality also takes on a broader perspective. Basically, the overall goal of quality is the achievement of customer satisfaction and market success leading to business excellence. As stated in the ISO 900 quality standards:
1) Business is a team work, in which everyone should know their part and play their part; 2) Management should establish a policy for quality attainment that is understood by all; 3) Activities need to be carried out in ways which are as effective and as efficient as possible for the business concerned; 4) Any management system must be dynamic, updated and monitored to cope with changes in business scopes and technologies (Peach, 1997).
Quality system is not something imposed on top of other business systems; it is the system of the business (Juran, 2000). Quality is being seen as an increasingly important element in defining a service provision. It is an important basis that customers use for differentiating between competing services. The service quality can normally only be assessed once the service has been consumed, which is unlike a tangible good that can usually be assessed by examination (Palmer, 1998). Therefore, the purchase decision process for a service usually involves more risk than in the case of tangible goods. It is not sufficient for a service provider to set quality standards according to assumptions of customer expectations. Customers often attach the quality of the service provider with the service being provided (Lovelock & Wirtz, 2003). This makes consistency in service quality even more complex and difficult. Many analysis of service quality has attempted to distinguish between objective measures of quality and measures, which are based on the more subjective perceptions of customers. Analysis of service quality is further complicated by the affect that production and consumption of a service generally occur simultaneously (Zeithaml, Berry & Parasuraman, 1996).
It is important to meet the expectations of the customers in order to gain competitive advantage due to the fact that it can help to gain loyalty from the customers. That is why it is important for any firm and industry to focus on the different activities and plans that will help to understand and analyze the customer expectations. It can be done by conducting different researches that will focus on the quality service such as customer continuous customer surveys, formation of customer panels, transaction analysis, perception surveys, complaint analysis, employee research as well as industry research (Zeithaml, Berry & Parasuraman, 1993). This will enable the firm to know about what will motivates them to buy and avail of specific product and service.
2.4 Tourists Satisfaction
Customer satisfaction is regarded as a post-consumption evaluation that depends on perceived quality or value, expectations and confirmation or disconfirmation in the deviation between actual and expected quality (Anderson, Fornell & Lehmann, 1994). Customer satisfaction is a complex human process, which involves cognitive and affective process, besides other psychological influences (Oh & Parks, 1997). Customer satisfaction involves need fulfilment, pleasure, displeasure, expectation-performance interactions, evaluation of the purchase, consumption experience, and evaluation of the benefits of consumption (Hunt, 1997).
Customer satisfaction with total retail experience is a goal most retailers should target. They can listen to criticisms and adapt appropriately by gearing the overall mission and goals to customer satisfaction. If shoppers are satisfied, other corporate goals are more easily achievable (Berman & Evans, 2006). No matter what product or service is provided, customer satisfaction is always one of the important criteria that businesses would consider in formulating their strategies. Any deviation between customer expectation and customer experience would cause dissatisfaction. If the perceived performance of the product is below customer expectations, it would cause negative disconfirmation of expectation thus leading to disappointment and dissatisfaction of the customer. On the contrary, if the performance matches customer’s expectations, it would lead to neutral feeling (Oliver, 1980). The extent of discrepancy between customer’s expectations or desires and their perceptions of the quality of service is generated through word-of-mouth, personal needs, experience and external communications that influence customers’ expectations (Parasuraman, Zeithaml & Berry, 1990). Expectation is the desire or wants of customers, and what they feel a service provider should offer rather than would offer (Parasuraman, Zeithaml & Berry, 1990). The term expectation has been used to represent what customers ideally want, which is termed as normative expectation (Cove, 2004). The expectations component is designed to measure customers’ normative expectations (Parasuraman et al., 1990). It is viewed as predictions made by customer about what is likely to happen during a coming transaction or exchange (Zeithaml et al., 1993).
Satisfied customers demonstrate considerable customer loyalty in respect of a product or service that they have already purchased previously from the same supplier (Yeon et al., 2006). Repeated purchases build and broaden a solid customer base. Therefore, loyal customers are in fact assets of a company. Increasing customer satisfaction is an effective and efficient way to improve company performance and image, which may increase sales and build better reputation. It is apparent that satisfaction rating has close relation to the degree of company success (Anderson & Sullivan, 1993).
Basically, customers perceive their experience with the service in terms of all the different actions of the employees of the service provider, which include the behaviours, knowledge, response, personality, attitude, communication skills, attire, and other attributes (Peppers & Rogers, 2005). In addition, the attributes of the company are also important. A customer can create value for a company by purchasing its service or products today, or repeat further purchases in the future (Peppers & Rogers, 2005). With customer loyalty, the company can expect higher “return on customer”, which is tracked by how much business the customer has given to the company throughout his lifetime (Peppers & Rogers, 2005).
2.5 Importance-Performance Analysis (IPA)
Importance- Performance Analysis is one of the most useful forms in marketing research. The following figure illustrates a matrix demonstrating the combined information about customer perceptions and important ratings. It shows the gap between the customer expectations and perceptions.
Figure 3 Importance-Performance Matrix (Martilla & James, 1977, p.78)
The top left quadrant indicates the area of highest leverage for service quality improvements, where importance is high while performance is low. The attributes in this quadrant have the most need for improvement. In the top right quadrant are the attributes to maintain. They are the ones that a company performs well and that are very important to customers. The low were two portraits contain attributes that are less important, some of which are performed well and others poorly. Neither of these quadrants merit as much attention in terms of service improvements as the upper two quadrants because customers are not as concerned about the attributes that are plotted in them as they are the attributes in upper two quadrants.
By identifying the attributes that are important to the customers from the quadrants and comparing with the experienced performance of the retail shops, it is possible to evaluate whether the customers have customer satisfaction with the retail or not.
2.6 Summary
The above literatures reviewed the relationship between tourism and the businesses in Hong Kong. They further present the general situation in the retail shops, the importance of service quality and customer satisfaction to cooperate success. The chapter introduces a measurement tool – the importance-performance analysis, which can be used for evaluating and confirming the attributes and degree of customer satisfaction versus expectations in the retailing shops. The succeeding chapters will further explore the methodology and the findings attained based on the importance-performance analysis that will be adopted for this research.
Chapter 3 Research Methodology 3.1 Research Design
This study is a descriptive research, which is a research that intends to show facts that concerns with the current status and situation, as it exists at the time of the study (Creswell, 1994). It also help to focus on the relationship and practices that exist, together with the beliefs and processes that are going on, thus affects things that are in demand or in trend. Furthermore, it can help to describe the current situation based on the impression and reactions of the respondents of the study (Creswell, 1994).
Fundamentally, a descriptive research utilizes observations and surveys. That is the reason this approach was chosen by the researcher, whose intention is gather first hand data from respondents. Furthermore, it also allows flexible approach that when new issues arise during the study, a further investigation can be conducted in order to fill the gap. Apart from this, the research will also be allowed to drop different unproductive areas of research from the original plan of the study. Above all, it will be fast and cost-effective.
Primary data was collected directly from conveniently selected Mainland Chinese tourists through a set of questionnaire at various major tourist attraction spots where most Mainland China tourists like to visit. First of all, a pilot test was undertaken to test the wording, and time completing a questionnaire. Secondly, the final survey was conducted on a convenience sample. A total of 200 questionnaires was distributed and collected on the spot by the researcher. The questionnaire was designed in a way that was straightforward enough that respondents only needed to spend minimal time in the process (Creswell, 1994).
3.2 Sampling
The target sample of this study is Mainland Chinese tourists. A total of 200 questionnaires were distributed to the target sample by convenience sampling. Convenience sampling is picked over types of probability sampling because it will make the survey faster and easier. The criteria for the sampling are that the respondents should be Chinese and tourist from China. These specific demographic requirements have been put in the study so as to make the results more specific.
3.3 Questionnaire Development
The entire questionnaire was constructed in Mandarin, due to the fact that it is the official language in mainland China. In addition, because the respondents were chosen in convenience sampling and the research was interrupt their activities for the day, close-format questions were used in order to make it easier and faster for the respondents to answer.
A ranking approach will also be used to measure the degree of importance and satisfaction level of the respondents on several statements. A five-point Likert Scale will be used in this measure. In the Likert technique, the degree of importance and irrelevance or satisfaction and dissatisfaction is given a numerical value ranging from one to five, thus a total numerical value can be calculated from all the responses (Underwood, 2004). The equivalent weights for the answers will be:
Range Interpretation
4.50 – 5.00 Very Important/Very Satisfied
3.50 – 4.00 Important/Satisfied
2.50 – 3.49 Not Sure
1.50 – 2.49 Unimportant/Dissatisfied
0.00 – 1.49 Very Unimportant/Very Dissatisfied
A survey instrument was created in order to gather the perception of the tourist’s shoppers regarding the importance of attributes as well as performance of the retail shops. The questionnaire will contained 40 questions that will help to rate the level of importance of the customer satisfaction.
A self-administered questionnaire was used and conducted on the spot by the researcher. The questionnaire includes two parts. The first part will contain a set of attitude statements while the other part will intend to acquire the demographic profile of the respondents. The purpose of the set of attitude statements is to determine the level of importance and satisfaction level using a five-point Likert scale. In the Likert scale, the degree of importance is given a numerical value ranging from one to five, thus a total numerical value can be calculated from all the responses. (Underwood, 2004). Furthermore, the question will also ask for the overall rating of the shoppers regarding their satisfaction in the retail shops that they have visited. The Likert scale will be used in order to measure the said aspect.
3.4 Measurement
This research will make use of the Importance-Performance Analysis to evaluate customer satisfaction and perceptions of Mainland China tourists for decision-makers in the retailing industry (Martilla & James, 1977). We often wonder why customers stop purchasing a particular product or service after a while. This is because there are different factors that must be considered in order to fully understand how the customer satisfaction affects the entire buying behaviour and their interest on the given product. Despite favourable customer satisfaction survey results, some companies still lose customers. Many companies have made a variety of customer satisfaction measurements in order to understand the complex behaviours of customers and capture a larger market share. These measurements usually involve surveying customers about the rating of a company’s products or services in terms of satisfaction dimensions using numerical scales. However, real customer satisfaction is based on much deeper values, which are developed by continual relationships and experiences between a company and its customers. Therefore, tracking and measuring real customer satisfaction is one of the most important objectives of companies.
The attributes of the questionnaire comes from the previous literature that have been gathered and review that tackles the same issue of subject. It also uses different online reactions, coming from blogs and forums that tackle the issue of shopping satisfaction (Yang, 1996; Tu, 2007).
3.5 Data Collection
Survey was chosen as the means to collect the primary data due to the fact that it can help to understand the audience as well as define the existence and magnitude of the problems. In addition the survey data can also help to determine the different issues that are related to the satisfaction of the tourists, together with the characteristics of the shopping tourism industry in Hong Kong (Commonwealth of Learning, 2000).
The recruitment of respondents and the dissemination of the survey questionnaire will be conducted in four major shopping areas in the city, where most of the Mainland Chinese tourists often go. The four shopping areas are: Mongkok, Tokwawan, Sheung Wan and Causeway Bay.
3.6 Data Analysis
All data will be evaluated using the latest SPSS software. The weighted mean and percentage of the responses will be calculated. The data results of the study will be analyzed by determining their corresponding frequency, percentage and weighted mean. The following statistical formulas will be used:
1. Percentage – to determine the magnitude of the responses to the questionnaire.
n
% = ——– x 100 ; n – number of responses
N N – total number of respondents
2. Weighted Mean
f1x1 + f2x2 + f3x3 + f4x4 + f5x5
x= ——————————————— ;
xt
where: f – weight given to each response
x – number of responses
xt – total number of responses
The importance and performance mean scores of each attribute in the questionnaire will be calculated and then plotted into two-dimensional grid with the vertical axis of importance values and a horizontal axis of the performances values. For positioning the crosshairs of the grid, the overall means of the importance as well as performance score were used. Thus, using the mean scores for the crosshair positioning is considered as more critical approach than using the middle point of the scale or some arbitrary point. The two-dimensional grid displayed the following four quadrants: Keep up the Good Work with high on importance scale and high on performance scale; Concentrate Here with high on importance scale and low on performance scale; Possible Overkill with low on importance scale and high on performance scale; and Low Priority with low on importance scale and high on performance (Okata, Lankford & Inui, n.d.).
3.7 Limitations
The limitation of this study is that many potential sources of selection bias would occur as the interviewer has the full power to determine which respondent to interview. In addition, convenient samples can not represent any population, and this may limit the generalability of this study.
APPENDICES APPENDIX 1
COMPARISON OF TOTAL INBOUND VISITORS FROM CHINA
AND ALL OTHER COUNTRIES TO HONG KONG
APPENDIX II
School of Hotel & Tourism Management
The Hong Kong Polytechnic University
2008 Hong Kong Shopping Tourism
Questionnaire
The purpose of this survey is to assess Mainland Chinese tourists’ importance and satisfaction level towards Hong Kong retail shops. It is appreciated if you could spare 10 minutes of your time to participate in it. All provided information is used solely for academic purposes and your individual responses will be kept confidential.
Part I – Respondents’ Service Importance and Satisfaction of Hong Kong Retail’s Shop Overall
Please rate the importance of each attribute in your service encounter with retail shops by encircling the appropriate number in the scale provided:
5 – Very Important
4 – Important
3 – Not Sure
2 – Unimportant
1 – Very Unimportant
N/A – not applicable
Service Attributes
Please rate the satisfaction of each attribute in your service encounter with retail shops by encircling the appropriate number in the scale provided:
5 – Very Satisfied
4 – Satisfied
3 – Not Sure
2 – Dissatisfied
1 – Very Dissatisfied
N/A – not applicable
Tangible Qualities of Shops
5
4
3
2
1
N/A
1. Longer Opening Hours
5
4
3
2
1
N/A
5
4
3
2
1
N/A
2. Visually appealing external appearance of the store
5
4
3
2
1
N/A
5
4
3
2
1
N/A
3. Cleanliness and safety of the places and facilities
5
4
3
2
1
N/A
5
4
3
2
1
N/A
4. Lighting and Ambiance
5
4
3
2
1
N/A
5
4
3
2
1
N/A
5. Accessibility (near the transportation system)
5
4
3
2
1
N/A
5
4
3
2
1
N/A
6. Offers many variety of products
5
4
3
2
1
N/A
5
4
3
2
1
N/A
7. Authenticity
5
4
3
2
1
N/A
5
4
3
2
1
N/A
8. Choice of payment methods
5
4
3
2
1
N/A
5
4
3
2
1
N/A
9. Good Location
5
4
3
2
1
N/A
Staff Service Quality
5
4
3
2
1
N/A
10. Visually appealing external appearance of the staff (Clean and Neat)
5
4
3
2
1
N/A
5
4
3
2
1
N/A
11. Reliability and dependability of staff
5
4
3
2
1
N/A
5
4
3
2
1
N/A
12. Consistency of service by the staff
5
4
3
2
1
N/A
5
4
3
2
1
N/A
13. Know of products and attentions to the details
5
4
3
2
1
N/A
5
4
3
2
1
N/A
14. Provide service in timely manner
5
4
3
2
1
N/A
5
4
3
2
1
N/A
15. Courtesy, politeness and respect received by the shopper from the staff
5
4
3
2
1
N/A
5
4
3
2
1
N/A
16. Language Ability
5
4
3
2
1
N/A
Part II– Demographic profile
1. Sex
¨ Male ¨ Female
2. Age group
¨ 25 – Below ¨ 26 – 35
¨ 36 – 45 ¨ 46 – Above
3. You’re province/hometown in Mainland China:
____________________________
4. Is this your first time visiting Hong Kong?
¨ Yes ¨ No
5. If answer to item 4 is no, how many times do you usually visit each year?
¨ Once ¨ 2 to 3 times
¨ 4 to 5 times ¨ more than 5 times
6. What are your reasons in shopping in Hong Kong? (You may tick more than one)
¨ Quality
¨ Low Price
¨ Accessibility
¨ Others: Please specify: ____________________________
7. Which items you usually shop for in Hong Kong? (You may tick more than one)
¨ Clothes
¨ Accessories
¨ Footwear
¨ Electronic Gadgets
¨ Jewelry
¨ Others: Please specify: ____________________________
8. How much do you usually spend in shopping? Please select the appropriate range.
¨ Less than RMB 5000
¨ RMB5001 – 10000
¨ RMB10001 – 20000
¨ RMB20001 – 30000
¨ RMB30001 and above
Thank You Very Much for Your Time and Have a Nice Day!
Enjoy Shopping!
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