Exploring the Impacts of Service Guarantee Strategy

Abstract

ABSTRACT This study examines the impacts of service guarantee in terms of consumers' perceived purchase risks, loyalty, complaint behaviors, and intent to use “word-of-mouth” within the context of the casual dining restaurant segment. The scenario method was developed and used to test the research hypotheses. The results of the study reveal that a well-executed service guarantee could reduce consumers' perceived purchase risks, and increase a positive word-of-mouth and customer loyalty. On the other hand, it also raises consumers' intent to complain upon service failure. Furthermore, the results of the study indicate that a “specific” service guarantee is much more effective in reducing consumers' perceived purchase risks, and increasing consumers' intent to claim after a service failure as opposed to an “unconditional” service guarantee. The results of the study suggest that a service guarantee offered by independent restaurants could offer a competitive advantage over brand restaurants not offering a service guarantee.