An empirical study of externality and customer satisfaction

Abstract

In general, customer satisfaction is derived from the quality of product. Hundreds of studies examine the relationship between the performance of product attributes and customer satisfaction. Instead of conducting an analysis on the influence of attribute performances on customer satisfaction, this study pays close attention to the influences of externality on customer satisfaction in the case of the tourism industry. We examine the externality coming from companion’s behavior on tourist satisfaction in tour groups. The regression results show that companion’s behavior significantly influence tourist satisfaction, no matter the satisfaction is measured from the aspect of tour schedule or tour escort. By encouraging or discouraging some companions customer can enhance tourist satisfaction. In addition, gender and companions will cause different regression results. This reminds us to take consideration of the individual difference when taking actions to enhance satisfaction. These results imply customer satisfaction is not only determined by the performance of product attributes, but also depends on externality. Controlling the influence of externality is an alternative to enhance satisfaction.