Universiti Teknologi MARA. User Perception on Electronic Customer Relationship Management (E-CRM) Features in Online Hotel Reservation

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1 Universiti Teknologi MARA User Perception on Electronic Customer Relationship Management (E-CRM) Features in Online Hotel Reservation HasUza Binti Azizan Thesis submitted in fulfillment of the requirements for Bachelor of Science (Hons) Business Computing Faculty of Information Technology And Quantitative Science May 2007

2 DECLARATION I certify that this thesis and the research to which it refers are the product of my own work and that any ideas or quotation from the work of other people, published or otherwise are fully acknowledged in accordance with the standard referring practices of the discipline MAY 2,2007 HASLIZA BINTIAZIZAN

3 APPROVAL USER PERCEPTION ON ELECTRONIC CUSTOMER RELATIONSfflP MANAGEMENT (E-CRM) FEATURES IN ONLINE HOTEL RESERVATION BY HASLIZA BINTIAZIZAN This thesis was prepared and has been approved by thesis advisor, Puan Rogayah Abd Majid and supervisor, Puan Norjansalika Janom. It was submitted to the faculty of Information Technology and Quantitative Science and was accepted in partial fulfillment of his requirement of the Bachelor Science. Approved By: Puan Rogayah Abd Majid Thesis Advisor Puan Norjansalika Janom Thesis Supervisor m

4 ACKNOWLEDGEMENT "In the name of Allah, the Compassionate, the Merciful, Praise be to Allah, Lord of Universe, and Peace and Prayers be upon His Final Prophet and Messenger" First, I would like to express my gratitude to Allah S.W.T, for give me strength and opportunity to finish this research project. Without His consent, I would never complete this research. Secondly to my beloved supervisor, Pn Norjansalika Bt Ahmad for her comments, advice and giving the brilliant idea to me in preparation and completion of this research project. Thank you for your guidance, advice and time. With supportfi-ompn Norjan, finally I canfinishup myfinalthesis that is beyond my capabilities. I also want to extend my appreciations to Pn Rogayah Abd Majid, Academic Project Coordinator for her support and guidance in writing this academic project. A special thank also for Pn Halilah Bt Harun who assist me in data collections and SPSS software. My special thank to my beloved parent and family for giving me moral support, and unconditional love. And not to forget I would like give my appreciation to all my fiiends for giving an idea, understanding and open minded during this research preparation. Last but not least, my special appreciation to all my respondents for their cooperation and willing to spend their time for answering my questionnaire and to all individuals who were directly and indirectly involved during my academic project preparation. Thank you and thousand appreciations for your cooperation. May Allah S.W.T bless us. Wassalam. IV

5 ABSTRACT USER PERCEPTION ON ELECTRONIC CUSTOMER RELATIONSHIP MANAGEMENT (E-CRM) FEATURES IN ONLINE HOTEL RESERVATION By: Hasliza Binti Azizan May 2007 In the hotel industry, the internet plays to grow an important role as a core distribution channel in management sector. From a global perspective hotels are at varying stages of managing their direct and indirect channels to markets and are adopting different strategies to reach customer satisfaction, sales, profit and their loyalty. Some hotels have yet to develop all available distribution channels while others are encouraging customers to book through the most effective channel by booking via online. Due to these phenomena, this research was conducted to identify the customers' perception towards the electronic customer relationship management (E-CRM) features of hotel online service quality. Through all the E-CRM features application, the services can be enhanced, instead of offering customers convenience, personalization in information, customization site and other accommodation information is integrated. Thus are presented from the customer experience and their interaction with a website. Responding to the phenomena, this research also wants to gain deeper understanding regarding the services by using 42 features of E-CRM application. The research also comprised the influences of E- CRM features and their relationship between the 9 dimensions in the E-CRM. Furthermore, the research also provides the hotelier with general recommendation and suggestion from customers to enhance their service quality in online hotel reservation in firture.

6 TABLE OF CONTENT DECLARATION APPROVAL ACKNOWLEDGEMENT ABSTRACT LIST OF TABLES LIST OF FIGURES II iii iv V vi -xiii xiv CHAPTER 1 INTRODUCTION 1.0 Introduction 1.1 Background of the Research 1.2 Problem Statement 1.3 Research Question 1.4 Objective of Research Question 1.5 Scope of Research 1.6 Significant of the Research 1.7 Research Approach and Methodology 1.8 Limitation of Research 1.9 Summary CHAPTER 2 LITERATURE REVIEW 2.0 Introduction Internet Information Technology essential in the Tourism Industry Electronic Commerce Customer Relationship Management (CRM) VI

7 2.6 Customer satisfaction through Customer Relationship Management (CRM) Electronic Customer Relationship Management (E-CRM) E-CRM satisfaction E-CRM integration dimension Electronic Customer Relationship Management (E-CRM) features Different meaning in categories of E-CRM features Pre-adoption customer satisfaction Post-adoption customer satisfaction Identification 42 of E-CRM features Advantages of adopting the E-CRM Quality service in Web site Web service requirement Summary 34 CHAPTERS RESEARCH APPROACH AND METHODOLOGY 3.0 Introduction Research Hypotheses There is positive relationship between customer's perception and reliability dimension There is positive relationship between customer's perception and efficiency dimension There is positive relationship between customer's perception and information dimension There is positive relationship between customer's perception and ease of use dimension There is positive relationship between customer's perception and hnkage dimension. 36 Vll

8 3.16 There is positive relationship between customer's perception and support dimension There is positive relationship between customer's perception and security dimension There is positive relationship between customer's perception and communication dimension There is positive relationship between customer's perception and incentive dimension Research Approach and Methodology Problem Assessment and Research Study Knowledge Acquisition Instrument Approach Data Analysis Finding Representation Report Representation Method of Data Collection Primary data Secondary data Research Model Sampling Design Data sampling Research Design Chart Analysis of Data Collection Summary 50 CHAPTER 4 ANAYLSIS AND FINDINGS 4.0 Introduction 4.1 Instrument reliability 4.2 Demographic profile Vlll

9 4.2.1 Descriptive analysis Perception on E-CRM features Statistical analysis by Correlation Coefficient test Reliability Efficiency Information Ease of use Linkage Support Security Communication Incentive Summary result of customer correlation coefficient test on the E-CRM features Suggestion and Recommendation in improving the online hotel reservation Summary CHAPTER 5 CONCLUSION AND RECOMMENDATION 5.0 Introduction 5.1 Discussion and Conclusion 5.2 Recommendation REFERENCES APPENDIX A APPENDIX B IX

10 LIST OF TABLES Table No. Name Page No. 3.1 Research Design Chart Data Analysis Methodology for Hypothesis Cronbach's Alpha Reliability Coefficient Respondents Demographic Profile Respondents experience on making online hotel reservation Respondents make the hotel reservation within the past six month Factor that contributes the user not using online reservation service purchase/booking condition features and total reliability service page features and total reliability ability to track order/ booking status features and total reliability customization possibihties features and total rehability speed of downloading page features and total efficiency

11 online order, quick ability, order features and total efficiency spare part features and total efficiency ease of check out features and total efficiency product information features and total information site customization features and total information store locator/company profile/history features and total information product request for catalogue features and total information introduction for first time user features and total information product preview features and total information maihng list features and total information site tour features and total information hierarchical diagram of webpage, site map features and total information XI

12 product highlight, on scale area features and total information local search engine features and total ease of use search engine features and total ease of use affinity program features and total linkage external links features and total Hnkage FAQs features and total support problem solving features and total support complaining ability features and total support membership features and total security postal privacy policy features and total security account information features and total security features and total communication chat room features and total communication postal address features and total communication

13 tollfree number features and total communication bulletin board features and total communication electronic bulletin board features and total communication fax features and total communication call back button features and total communication voice over IP features and total communication gift certificate purchase features and total incentive member benefits features and total incentive Correlation Coefficient for Hypothesis in each features Correlation Coefficient for Hypothesis in each dimension 104 XllI

14 LIST OF FIGURES Figure No. Name Page No 3.1 Research Approach and Methodology Methods of data collection Adopted from E-Reservation Research Model Respondents experience on making online hotel reservation Respondents make the hotel reservation within the past six month Hotel's Name

15 CHAPTER ONE

16 CHAPTER 1 INTRODUCTION 1.0 Introduction This chapter will cover on background of research, problem statement, research questions and objectives of the research, scope of the research, significance of the research, research approach and methodology, limitations of the research and lastly ended with summary consists of overview of chapters in whole report. There are several part in this chapter to be focus on where are in the first part on background of research is explained briefly the reason of choosing this issue. The second part is regarding to the problem statement which explaining the issue faced by hotelier industry. The third part is the objective of research which is explained the purposed of this research conducted and move to the next part in scope of research in defining which area this research will focus on. The last part is significance of the research is discussed about the expected advantages fi-om customer overview towards the E-CRM features in online hotel reservation. 1.1 Bacl^round of the Research Nowadays, the growth of e-business and the continuing rise in the volume of online transactions has given consumers more contact points with companies than ever before. These days, "e-customers" operate in a multi-channel universe with the ability to solicit information via phone, fax, , Web sites, online chat groups, VOIP (voice over IP) calls, and even old-fashioned face-to-face communication. This array of communication chaimels has given rise to a new

17 demand-based business model in which customers determine how, when, and where they will be served. Joseph (2001) indicated that the internet is growing faster than all proceeding technologies. This fact is proved that radio took 38 years to reach 50 millions listeners, television took 13 years but Internet however only took about 5 years to reach that volume. This is shows that the internet is indeed a young but powerful tool medium. Since to the increasing number of internet user nowadays, electronic commerce (e-commerce) has been introduced as one of business tools. Many of business have been permitted to use the internet and the speculations on the potential as a new marketing channel have been recognized. As we known that customer demand for the internet is a key factor that ultimately driver widespread of adoption of the internet by retailer. More over, many industries such as travel and tourism industries have been influenced and affected by the changes. In addition, the rapid of development of information and communication technologies for the travel and tourism industry has induced hotels and others enterprise in this sector increasing to adopt the technology. Hotel traditionally use a variety of different distribution channels, including distributing through others affiliation organizations, others properties within their chain, or others outsourcing to represent of third-party reservation companies. Unfortunately, as we can see in a hotel reservation process, the current registration is actually done manually. Manual operation is not able to keep track and manage the customer's information registration in good structure. Responding to this phenomenon, the hotelier need to have a very good understanding regarding to the customer relationship management (CRM) and the electronic customer relationship management (E-CRM) in gaining customers loyalty and satisfaction. It is an opportunity to do the customer relationship management (CRM) even better. This electronic medium or e-channel offer business advantages that complement high impact customer relationship management (CRM) capabilities. The

18 electronic customer relationship management (E-CRM) is the application of electronic business (e-business) strategy includes personalization and customization of customer's interaction and experience through the website, call center or any method of customers contact with the e-business. Thus advantages included contact cost that is cheaper than those associated with traditional call center channel, increased customer control and additional sales channel for revenue generation. As the result the electronic reservation for hotel services has been introduced and widely implemented throughout the world as the electronic service that will lead to an improvement in operating efficiencies and customer service level. The main purpose of this electronic reservation services is transferring a portion of accommodation agency sales, commission and segment reservation fees, to direct reservation channel. Through all this services the customer services are been enhanced, and information is be integrated and also be personalized. Lastly, for the past few years, online reservation has been introduced and widely used in Malaysia, thus it offer many advantages to the involved party especially for the customers and hotelier. So that regarding to this situation, the research is conducted to determine perception and preferences of customers towards the services offered and to study the state of electronic customer relationship (E- CRM) features in online reservation in Malaysia. Moreover, the research provides recommendations which can be used by hotelier in improving their service quality in online reservation. 1.2 Problem Statement Recently, online hotel reservation in Malaysia is still very small and hard to calculate. The essence of the infonnation technology evolution in this particular area is still a new medium of services and not widely used in Malaysia. So

19 there are some problems arise regarding to the services as this type of services is in the early stage of introduction phase in life cycle. From the site of hotelier perceptive, they do not know what are the exactly their customers wants and needs from their services. It became the main problem that arise, that they have to face to face and solve it. Otherwise, they also do not have enough knowledge or comprehensive system that can help them to fulfill their customer's needs in term of customer relationship management (CRM) activity process. Moreover, the hoteliers itself do not have specific guidelines for the electronic customer relationship management (E-CRM) features especially for the hotelier companies in Malaysia. Lastly, this research also conducted to identify customer perception and preferences toward online hotel reservation services. 1.3 Research Question The research questions of this research are: - 1. What are the electronic customer relationship management (E-CRM) features that contribute the customer perception in the online hotel reservation sector? 2. What are the guidelines of electronic customer relationship management (E-CRM) features that can be used?

20 1.4 Objectives of the Research The objectives of this research are: - 1. To identify customers perceptions towards the electronic customer relationship management (E-CRM) features of hotel online service quality. 2. To provide recommendation for the hoteliers to enhance their services quality on electronic customer relationship management (E-CRM) features implementation in their online hotel reservation. 1.5 Scope of the Research This research is only focus on gathering, identifying and analyzing information on the type of electronic customer relationship management features that implemented in online hotel reservation from different perceptions of customers towards on this. The respondents of the questionnaires for this research included customers hotel in Klang Valley area. All of the respondents either they are using the online booking services or not used online booking service being selected in carrying out their reservation affair. In addition, the questionnaire is distribute through the internet which contain web address and will leave in chat room like Yahoo! Chat room and and ask them to answer the questionnaire. The respondents just only need to send back the answered questionnaires to . Moreover, customers are randomly selected in gaining their perception towards the existing online reservation services and suggestion in improving the service quality.

21 1.6 Significance of the Research This research is importance and will give several benefits to hotelier site and also involved parties. Through this research, it provides a collection of data and information towards the consumers' perspective in electronic customer relationship management (E-CRM) features regarding online hotel reservation. With this information, the hotelier can enhance and improve their booking online service in ensuring customer satisfaction and fulfilling their needs and wants. In addition, the hoteher also can use the results to create more creative marketing strategy and enhanced the efficiency of booking service process by using this information. Besides that, the hotelier migjit also know the best type of electronic customer relationship management (E-CRM) features that influencing online consumers' and attitudes them toward online hotel reservation. Furthermore, the hotelier will realize that the utiuzation of the service is the importance method to increase overall service quality and upgrading the standard in various industries. This is opportunity to improve their business in maximizing their growth in the market and gaining their profit fi-om their customers. This research are conducted in indicating the importance roles among the hotelier in maintaining a good and long term relationship with their customer and also sharing the customer perception value regarding to the service offered. Not only for that, through this research also, customers who have no experience in using booking online service will indirectly realize the capability of the service in making it simpler and faster. Moreover, this research also can be as guideline or potential research regarding to this area.

22 1.7 Research Approach and Methodology This research is basically focused on electronic customer relationship management (E-CRM) features towards consumers' perspective. In order to collect data information', a set of questionnaire were randomly distributed to the respondents in Klang Valley area. From the questionnaire, they will ask about their perception toward electronic customer relationship management (E-CRM) features. The collected data are then analyze and compute to research information as a research result andfindings.there are also secondary data such as hbrary research on past research and books that relate to this topic. Internet is also uses for retrieving journals and articles that close related to this research. 1.8 Limitations of Research There are a few Hmitations when conducting a research. There are some of the factors which considered as limitation of the study internally and externally which are Umited respondents, sources, time and cost constraint. Under limited respondents, the research conducted used a convenient sample of hotels' customer only on Klang Valley. The problem arise there are few numbers of them never experience using the services and even they do not know what is the features in electronic customer relationship management (E-CRM) itself Furthermore, the information were gather via questionnaire which only require the respondents to express their feeung and perception towards the electronic customer relationship management (E-CRM) features in online hotel reservation service. It is hard to obtain information and acquire co-operation from respondents. In addition some of respondents do not response appropriately to the questions given. Meanwhile, under time and cost limitation Time is the vital factor in completing this research. Time is so short in order to complete this

23 research. If the length of time is longer, the number of respondents can be increase. Another point is respondents are not interested to answer the questionnaire. In the progress of conducting this research, I had encountered a few financial constraint due to the involvement of expenses such as traveling, printing and material reproduction cost to name a few. Another limitation is it was difficult to find secondary data such as the journals regarding on electronic customer relationship management (E-CRM) features. The alternative way is by using the Internet to find out the relevant journals which meet the needs of the research. Otherwise, lack of knowledge about SPSS is another limitation in this research in which some of the techniques cannot be applied in data analyzing. 1,9 Summary Chapter 1 provides an introduction to this thesis, including the problem statement of the research that has been investigated. In chapter 2 provides a detail explanation about electronic customer relationship management (E-CRM) features literature and also comprises of information about other field that are related to the areas investigated in this study. In chapter 3, it covers the research approach and methodology gatheredfi-omthe research that has been conducted. As for chapter 4 it will discussed about the research analysis and findings. The data and information are presented in tables, charts, graphs and others presentation medium that are related to the study topic. Conclusion and svunmary as a last chapter of this research report. It also cover recommendations for fiuther studies that should be conducted and related research in gaining more knowledge in this area are given in chapter 5.

24 CHAPTER TWO