Exploring the Impacts of Service Guarantee Strategy

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.