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CHAPTER5

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					                                   Chapter 5
                        Conclusion and Recommendation

This chapter shows a conclusion and limitations of this study. Direction for future researches
and recommendations for business in life insurance and education industry i.e. international
programs in business administration (BBA international programs) in Thailand are also
provided based on the results of this study.


5.1      Conclusion

This study investigates expectations of service quality toward life insurance and BBA
international programs across different dimensions of country of origin (COO): service brand
origin, design origin, nationality of service provider i.e. sales representatives for life insurance
and instructors for BBA international programs. Prices and product familiarity are also
included as controlled factors in this study. The study shows five main results. First, the
magnitude of COO effects on consumers’ expectations of service quality varies across
country of brand, country of design, and nationality of service providers, confirming COO
service is partitioned. Nationality of service provider is commonly found to have significant
impact on quality expectations for life insurance and BBA international programs since
service providers play an important role of service quality delivery in high contact services.
Country of brand has significant effect on expectations only for life insurance while country
of design does not affect expectations toward both services.

For a specific country, life insurance sold by Thai sales rep. has the highest quality
expectations, followed by American, and Indian sales rep. Thai consumers hold higher
expectations toward life insurance associated with Thai sales rep. than is consistent with
Thailand’s objective place in the economic development hierarchy. These results could be
explained by Thai ethnocentricity or a specific service country image. When country of brand
is considered, life insurance with brand from more favorable country image has higher
consumers expectations than life insurance with brand from less favorable country image. For
country of design, the rank of country across ten dimensions is not clear and significant. For
BBA international programs, students are likely to use their perceptions of country image to
form their expectations for nationality and design origin. Students hold higher expectations
for programs designed by a university or programs taught by instructors from a country with
more favorable image. For brand origin, students hold expectations for each brand origin
across ten dimensions inconsistently.

Second, service quality expectations are multi dimensional that is exposed to COO effect
differently. For life insurance, brand origin significantly affects access, reliability and tangible
while other dimensions of the expected service quality seem not to be related to brand origin.
Similarly, not all dimensions are significantly affected by nationality of sales rep. These
dimensions include security, tangible and understanding the customers. For BBA international
programs, only nationality affects expectations significantly across seven dimensions
including competence, communication, credibility, courtesy (sig = 0.68), reliability, security
and understanding the customer.

Third, the follow up study found that nationality of service providers is the most important
service feature on overall expectations of service quality for both services since life insurance
and BBA international programs are high contact services, which service providers play an
important role of service quality delivery as mentioned earlier. The next relative important
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features are different for each service. For life insurance, price is the second important factor,
followed by brand origin and design origin. For BBA international programs, design origin
has the second most relative weight, followed by brand origin and prices.

Fourth, partitioned COO effects on services are slightly varied to a specific service.
Nationality of service providers is commonly found to have significant effect on expectations
toward life insurance and BBA international programs. However, brand origin found to be
significant for life insurance has no significant impact on BBA international programs.
Further, not all the same dimensions of expected service quality toward both services are
similarly exposed to nationality of service providers. COO effects on competence,
communication, credibility, courtesy and reliability are commonly found in both services.
COO effects on access and responsiveness are found in life insurance while COO effects
security and understanding the customer for BBA international programs are influenced by
nationality of instructors. In addition, the order of expectations toward programs by different
nationalities of service providers is slightly different between life insurance and BBA
international programs. It seems that Thai ethnocentrism in life insurance is stronger than
BBA international programs. Otherwise, consumers perceive that Thai people are better
service providers for life insurance than BBA international programs. Among three COO
dimensions and price, nationality is found to have the greatest weight on overall expectations
toward both services while the relative importance of the other service features is varied since
the characteristics of life insurance services are relatively different from that of BBA
international programs.

Finally, price and product familiarity significantly affect expectations of service quality for
life insurance. Price-quality relationship is found to be a threshold. Higher price tends to lead
lower expectations. Similarly, higher product familiarity leads expectations to be lower.
However, they are not moderators of COO effects. For BBA international programs, price has
no impact on expectations but it is a moderator of nationality of instructors. Price-quality
relationship seems to be a threshold when instructors come from a country with less favorable
image. On the other hand, high price encourages students to improve their expectations when
instructors come from a country with more favorable image. In addition, product familiarity
has no direct effect and moderating effect of COO dimensions on students’ expectations.

Although this study shows a several important findings, some limitations should be
mentioned. First, only country of brand, country of design and nationality of service providers
i.e. sales rep. for life insurance and instructors for BBA international programs are
investigated in this study; thus, other combinations of COO dimensions on services could
have different results. Secondly, it was conducted in Thailand, so the results may not be
generalizable to respondents in other countries, especially on issues of consumer
ethnocentrism that is quite likely to differ across country of respondents. Thirdly, only two
high contact services are investigated. Other high or low contact services may generate
different results especially the effect of nationality of service providers. Personal contact is
not very important for low involvement services. Next, the profile of respondents for each
service is different; thus, the comparison of life insurance with BBA international programs
may not fully valid. Finally, between subject design was used in the methodology for this
study while within subject design may or may not generate different results.

Accordingly, the further researches should extend COO service study to other COO
dimensions, countries and services to investigate whether these results could be generalized.
Furthermore, the profile of respondents should be controlled if the further study is interested
in whether the effects of partitioned COO services are varied according to a specific service.
Within subject design should be used in the further study to confirm whether the result is

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varied by methodology. Finally, the study found that price quality relationship for life
insurance is not linear as shown in a several previous price-quality studies. Thus, the further
study could reexamine the price and quality relationship for services related to investment
issues such as bond, and security.


5.2    Recommendations

The results from this study provide a several business implications for promotion and pricing
policies of Thai businesses or businesses from a country with different favorableness of
country image that are likely to enter life insurance and education industry in Thailand.


Promotion Policy

The promotion efforts can emphasize or downplay origin in either nationality of sales rep. or
brand for life insurance, and nationality of instructors for BBA international programs,
depending on the favorableness of the image of that country on Thai consumers’ expectations.
Further, the dimension of the expected service quality, which is significantly influenced by
such COO dimensions, should be highlighted to increase overall expectations. In contrast,
promotion efforts stressing origin in policy design for life insurance, and curriculum design
and brand origin for BBA international programs cannot improve quality expectations and
will detract company resources.

For life insurance, either Thai life insurers or foreign life insurers from a country with higher
or lower country image relative to Thai country image may use Thai or foreigner as sales rep.
(foreign sales rep. might be allowed to sell life insurance when life insurance industry is fully
liberalized). However, promotion efforts should emphasize Thai sales rep. and highlight such
service quality dimensions as accessibility, communication, and courtesy. Thai
ethnocentricity toward Thai sales rep. will improve consumers’ expectations. On the other
hand, promotion efforts stressing foreign sales rep. could decrease consumers’ expectations if
sales rep. is come from a country with unfavorable image relative to Thai country image.
Although foreign sales rep. from a country with more favorable image could improve
consumers’ expectations, our findings indicated that in general, there are not significantly
different expectations between Thai sales rep. and foreign sales rep. from a country, which
has more favorable image. In addition, recruiting only foreign sales rep. with more favorable
country image in Thailand is probably not practical and has high cost because the number of
foreigners who can speak Thai may not be much available in Thailand while a large number
of sales reps. is needed to make a wide market coverage.

Besides nationality of sales rep., brand origin affects Thai consumers’ expectations for life
insurance. When foreign insurers from a country with more favorable image enter Thai life
insurance market, they can take advantage of its brand origin. Some care has to be taken in
applying these general recommendations, as not all a country with high favorable images are
exactly equal in consumers’ expectations. For example, brand from one country with high
favorable image should not go head-to- head against those from another country with higher
favorable image in building on brand origin image. The promotional message stressing that its
brand originated from a country with more favorable image can improve consumers’
expectations. In contrast, foreign insurers from a country with less favorable image should
downplay or give no clue to its actual brand origin. Alternatively, they may use a new brand
name for Thai market. Choosing a brand name that sounds as if it comes from a country with
more favorable image can help to increase consumers’ expectations. The example included

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“Giordano” benefiting the Italian fashion but owned by Hong Kong Chinese entrepreneur. It
does not have any relates to Italy at all. On the other hand, a brand name that sounds as if it is
from a country with less favorable image should be avoided. For Thai insurers, a several Thai
insurers have already made a partnership with foreign insurers while many of them are likely
to ask cooperation with foreign insurers in partnership to enhance its financial and
technological capacity before the life insurance market is fully liberalized. After associated
with foreign insurer, Thai insurer has at least three choices of branding policy: Thai brand
name, partner’s foreign brand name or combining Thai with foreign brand name. First, Thai
insurer and partner may decide to use the former Thai brand name since local brand may be
its branding policy or partner’s brand is unfavorable image among Thai consumers.
Advertising efforts should highlight tangibility dimension to increase overall expectations
since Thai consumers have higher expectations on this dimension of Thai brand against
foreign brand with more favorable country image. The second choice is foreign brand.
Foreign brand associated with more favorable country image can increase consumers’
expectations especially on accessibility and reliability issue. In contrast, foreign brand
associated with less favorable county image will lower expectations. Another possible
branding is the combining brand name between Thai and foreign brand although this study
does not investigate such effect on consumers’ expectations. However, consumers’
expectations could increase if Thai brand was combined with foreign brand from more
favorable country image. In addition, it may utilize Thai ethnocentricity associated with
brand.

For BBA international programs, foreign university entering Thai education market and Thai
university currently conducting international programs could use instructors with various
nationalities. However, promotion efforts focusing instructors from more favorable country
image can increase students’ expectations while instructors from a country with less favorable
image should be downplayed. The other alternative is Thai instructors who can speak English
very well. Although student’s expectations toward programs with Thai instructors is lower
than those with instructors from more favorable country image, expectations toward both
nationality of instructors are not significantly different. However, Thai BBA international
programs may develop cooperation with university from more favorable image in partnership
to access foreigner instructors. The example is a visiting faculty program. Universities from
more favorable country image would provide some instructors to teach BBA international
programs offered by Thai universities or universities from less favorable country image.
Certainly, Thai universities and foreign universities from less favorable country image may
hire instructors from more favorable country image by themselves.

In addition, the promotion efforts that use the combination of design origin and nationality of
instructors could be important. Curriculum designed by a university from a country with more
favorable image improves students’ expectations toward programs taught by Thai instructors
or instructors with more favorable country image. However, design origin does not help
improve students’ expectations when programs have instructors from extremely low country
image. Some kinds of cooperation with universities from more favorable country image allow
Thai universities and universities from less favorable country image to use curriculum as a
part of their international programs in business. The parts of the curriculum in BBA
international programs designed by or in cooperation with universities from more favorable
country image should be stressed in advertising. Foreign universities from more favorable
country image may want to cooperate with Thai universities for market access and rapid
distribution purpose rather than the purpose of enhancing overall image. On the other hand,
when design origin is related to a country with less favorable image, promotion effort should
downplay design origin since it can decrease COO effect on nationality of instructors.


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Pricing Policy

Pricing policy can affect consumers’ expectations of service quality. For life insurance, higher
premium does not always mean higher quality expectations. When the company wants to
increase consumers’ expectations by prices, it should be careful about the threshold effect
since higher annual premium tends to make lower consumers’ expectations for life insurance.
For BBA international programs, tuition fees have no main effect on students’ expectations.
However, it does not mean that the university can charge any levels of tuition fees, as they
want. Education is a service involved in a family decision-making. Students are users, parents
are purchasers and they are decision makers. Thus, students rarely have any realistic idea
about cost of major expenditures since Thai parents always take care of all expenses for
education. Pricing policy should consider parents’ quality expectations by prices.

Prices show interaction effects with nationality of instructors. When BBA international
programs taught by Thai instructors or instructors from a country with more favorable image,
higher tuition fees can increase students’ expectations. However, quality expectations from
instructors with more favorable country image are higher than those with Thai instructors but
its quality expectation is slightly increased when the tuition fee is higher. Thus, premium-
pricing policy seems to be appropriate for BBA international programs with foreign
instructors from more favorable country image. Its target is likely to be students demanding
high quality with relatively less price sensitivity. In fact, given the strong belief that prices
generally reflect quality, cutting tuition fees may well result in lowering expected quality.
This may cost market share among those students who want better quality education, though,
of course, this might be balanced by gaining students among those who are willing to sacrifice
some quality for lower prices.

For BBA international programs with Thai instructors should have lower tuition fees than
those with foreign instructors from more favorable country image. The pricing policy should
focus the value orient students. On the other hand, BBA international programs with
instructors from a country with less favorable image cannot set higher tuition fees than those
taught by instructors from Thailand and a country with more favorable image due to lower
expectations. Moreover, higher tuition fees tend to decrease students’ expectations toward the
programs. The programs can used low pricing policy to attract price conscious students who
are willing to sacrifice the expected quality to get lower price. However, there is a limit to
how much a program with only instructors from a country with less favorable image could cut
costs purely on operations to compete on price. Some expense (e.g. instructors salary) may be
lower for a program with instructors from less country image than for a program with
instructor from more favorable image, but much of the back office expenses (e.g. utility cost,
and non academic staff salary) will be local- in the Thai office, as in all universities. Service
like education cannot gain production cost advantages through COO as easily as products can;
in this case, this study did not use country of manufacturer, but rather country of service
provider.




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posted:11/8/2010
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