Service Quality Essay Example

Service Quality Essay University of Nottingham The Dark Side of Customer Relationship Management in the Luxury segment of the Hotel Industry Akshay Jaipuria MA Management Abstract Today, service organizations are shifting their focus from â€Å"transactional exchange† to â€Å"relational exchange† for developing mutually satisfying relationship with customers. Extended relationships are reported to have a significant impact on transaction cost and profitability, and customer lifetime value. Serving the customers, in true sense, is the need of the hour as the customer was, is and will remain the central focus of all organizational activities. The hotel industry, especially the luxury segment hotels needs to be purely customer-centric and focus on the customer needs and duly fulfill them. Customers will not blindly accept poor service quality from a luxury hotel. They expect high quality of service in return for the money they spend on luxury hotels. This paper is an attempt to explain the dark side of CRM in the luxury segment of the hotel industry with the help of the ‘gap model’ available in literature which suggests that gaps in service occur at various instances. The author explains that the gap model is a useful tool to explain the dark side partly. There is more to the dark side like privacy issues, unwillingness of customers to build a relationship with the service provider and changing tastes and preferences of the customer. Ritz- Carlton Hotel Company, L. L. C. has been chosen as a single case study and the research questions have been addressed for the industry at large using Ritz- Carlton as a classic example of superior service quality to the customers. We will write a custom essay sample on Service Quality specifically for you for only $16.38 $13.9/page Order now We will write a custom essay sample on Service Quality specifically for you FOR ONLY $16.38 $13.9/page Hire Writer We will write a custom essay sample on Service Quality specifically for you FOR ONLY $16.38 $13.9/page Hire Writer Some simple measures to reduce the dark side have been mentioned, which addresses the third and last research question. The project would contribute as a useful guide to luxury hotels, giving them some valuable information on what the customer expectations are and if they are duly met then service gaps shall not occur. This paper shall provide scope for luxury hotels to improve their overall service quality and strengthen their position in the industry. The relevant existing theory has been reviewed and the subject has been explored, using the ‘gap model’ (Parasuraman et al 1998) mainly. Based on the research findings and analysis, recommendation has been given to reduce the dark side at Ritz-Carlton and luxury hotels in general. Table of Contents Abstract0 Table of Contents2 Acknowledgments4 Chapter 1: Introduction5 Chapter 2: Literature Review7 2. 1 What is Customer Relationship Management? 7 2. 2Customer satisfaction, loyalty and business performance9 2. 3CRM and Service Quality13 2. 3. 1 Customer’s perception of quality:13 2. 3. 2 The Perceived Service Quality approach16 2. 3. 3 Gaps between customer expectations and perceptions:17 2. . 4 Service Guarantee24 2. 3. 5 Service Recovery26 2. 3. 6 Complaints management28 2. 4 Do all customers want a relationship with their service provider? 29 2. 5 Synopsis31 Chapter 3: CRM and Hotel Industry32 Chapter 4: Methodology and Research Design34 4. 1 Overview34 4. 2 Research objectives34 4. 3 Research design35 4. 4 Case study: An introduction36 4. 5 History of case study37 4. 6 Types of Case Study37 4. 7 Choice of cas e: Ritz-Carlton Hotel Company38 4. 8 Components of the Case Study38 4. 9 Data collection39 4. 9. 1 Documentation41 4. 9. Focus Groups41 4. 9. 3 Interviews43 4. 10 Data Analysis49 4. 11 Key issues of Data collection: Reliability and Validity50 4. 12 Synopsis51 Chapter 5: Case study52 5. 1 Ritz-Carlton: An Overview52 5. 2 Ritz-Carlton and the â€Å"Gold Standards† of Service Quality54 5. 2. 1 The Credo54 5. 2. 2Motto55 5. 2. 3 Three Steps of Service55 5. 2. 4 Service Values55 5. 2. 5 Employee Promise56 5. 3Ritz-Carlton: Current Reality57 Chapter 6: Research Findings59 6. 1 Focus groups findings59 6. 1. 1 Does the gap model explain the dark side of CRM? 59 6. 1. Is there more to the dark side of CRM than what is explained in the gap model? 61 6. 1. 3 How can the dark side of CRM be reduced? 62 6. 2 In-depth interview findings63 6. 2. 1 Customer Interviews64 6. 2. 2 Employee Interviews67 Chapter 7: Analysis of Research Findings70 7. 1 Does the gap model explain the dark side of C RM? 70 7. 1. 1 Ritz-Carlton and the ‘Gap model’70 7. 1. 2General Inference for the luxury hotel sector75 7. 2 Is there more to the dark side of CRM than what is explained in the gap model? 76 7. 2. 1 Willingness to build a relationship76 7. . 2 General Inference for the Hotel Industry79 7. 3 How can the dark side of CRM be reduced? 79 Chapter 8: Conclusion and Further research83 References85 Appendices93 Appendix 1Consent Form93 Appendix 2CRM and ‘Atithi Devo Bhava’94 Appendix 397 Appendix 4100 Appendix 5108 Acknowledgments Education is a progressive discovery of our ignorance. Will Durant (1885-1981) U. S. author and historian I would like to thank all those who helped me through the project phase of the MA Management program. I would like to express my sincere appreciation to my supervisor, Prof. Dave Wastell for his enlightenment of my knowledge of CRM and the hotel industry, valuable advice and kind support throughout the process of dissertation completion Most importantly, I would like to thank my parents and sister who were always there to motivate me. I would also like to thank my close friends at Nottingham for being around to discuss my ideas and giving me emotional support when I was stressed. I would like to thank all the focus group members for giving their valuable time and thoughts to my project. I would like to thank all the customers and employees of Ritz-Carlton for sharing their valuable thoughts which helped me shape this project. Lastly, I would like to thank the academic and library staff at University of Nottingham for their support throughout this year. Chapter 1: Introduction In the mid-twentieth century, mass production techniques and mass marketing changed the competitive landscape by increasing product availability for consumers. However, the purchasing process that allowed the shopkeeper and customer to spend quality time interacting with each other was also fundamentally changed. As a result, customers lost their uniqueness becoming an â€Å"account number†. Shopkeepers lost track of their customers’ individual needs as the market became full of product and service options. Many companies today are striving to re-establish their connections to new as well as existing customers to boost long-term customer loyalty (Chen and Popovich, 2003). The world has come full circle from selling to marketing and from seller’s market to buyer’s market. The customer today has the option to buy what he thinks he should and from whom, being in his best interest. Product development, technological improvement, cost optimization and excellent service facility are very important for any organisation but their importance is only if the customer appreciates it. For example, both diamond and coal are carbon but they are priced differently due to different valuations by the customer. Therefore, any business begins and ends with the customer (Sugandhi, 2002). Thus, service organizations are shifting their focus from â€Å"transactional exchange† to â€Å"relational exchange† for developing mutually satisfying relationship with customers. Extended relationships are reported to have a significant impact on transaction cost and profitability, and customer lifetime value. Serving the customers, in true sense, is the need of the hour as the customer was, is and will remain the central focus of all organizational activities. The paper explores â€Å"The Dark Side of Customer Relationship Management (CRM) in the Luxury segment of the Hotel Industry† using the ‘gap model’ of Parasuraman et al (1985) and suggests generic strategies to reduce the dark side. The researcher was motivated to choose the hotel industry because of his deep rooted passion for luxury hotels. The importance of this research is that it helped the researcher familiarize himself with the use of primary with a blend of secondary research to analyze a given situation. This piece of work shall contribute to the academic community as there is not much literature available on the dark side of CRM for the luxury hotels. It shall also benefit the management of luxury hotels to understand what the customer expects in terms of service quality. The aim of this research is to highlight the dark side of CRM in the luxury segment of the hotel industry using The Ritz-Carlton Hotel Company as a classic example of high service quality. The research objectives are as follows: 1. Does the gap model explain the dark side of CRM? 2. Is there more to the dark side of CRM than what is explained in the gap model? 3. How can the dark side of CRM be reduced? This paper is divided into seven chapters. Chapter one is an introduction to the paper. Chapter two provides the reader with necessary literature available on CRM. Chapter three provides information on CRM and the hotel industry. Chapter four discusses the research design including interviews and focus groups that have been used for primary research. Chapter five provides an overview of The Ritz-Carlton Hotel Company . Chapter six provides a summary of the research findings. Chapter seven is an analysis of the research findings addressing the research questions, one of which provides recommendations to reduce the dark side. Chapter eight is a conclusion of the paper. The following chapter provides the literature review. Chapter 2: Literature Review Modern marketers are rediscovering the ancient mantras for success in corporate world and blending them with contemporary marketing practices. Long term survival and competitive advantage can only be attained by establishing an emotional bond with the customers. A shift is taking place from marketing to anonymous masses of customers to developing and managing relationships with more or less well known or at least some identified customers (Gronroos, 1994). This section shall provide general literature on CRM and its link with customer satisfaction, customer loyalty and business performance followed by literature on CRM and service quality in details. The ‘gap model’ shall be introduced and literature on service guarantee, service recovery, and complaint management shall be provided. This would lead to the privacy issues related with CRM. 2. 1 What is Customer Relationship Management? Customer Relationship Management (CRM) â€Å"is the core business strategy that integrates internal processes and functions, and external networks, to create and deliver value to targeted customers at a profit. It is grounded on high-quality customer data and enabled by IT† (Buttle, 2004). CRM is a business strategy to identify, cultivate, and maintain long-term profitable customer relationships. It requires developing a method to select your most profitable customer relationships (or those with the most potential) and working to provide those customers with service quality that exceeds their expectations. McDonald, 2002) An organization’s survival depends largely on harmonious relationships with its stakeholders in the market. Customers provide the ‘life-blood’ to the organization in terms of competitive advantage, revenue and profits. Managing relationships with customers is imperative for all types and size of service organizations. A sound base of satis fied customers allows the organization to move on the path of growth, enhance profitability, fight out competition and carve a niche in the market place. Bennett (1996) described that CRM seeks to establish long term, committed, trusting and cooperative relationship with customers, characterized by openness, genuine concern for the delivery of high quality services, responsiveness to customer suggestions, fair dealings and willingness to sacrifice short term advantage for long term gains. Schneider and Bowen (1999) advocated that service business can retain customers and achieve profitability by building reciprocal relationships founded on safeguarding and affirming customer security, fairness and self esteem. It requires that companies view customers as people first and consumers second. Trust, commitment, ethical practices, fulfillment of promises, mutual exchange, emotional bonding, personalization and customer orientation have been reported to be the key elements in the relationship building process (Levitt,1986; Gronroos, 1994; Morgan,1994; Gummesson,1994; Bejou et al,1998 ). CRM refers to all business activities directed towards initiating, establishing, maintaining, and developing successful long-term relational exchanges (Heide, 1994; Reinartz Kumar, 2003). One of the results of CRM is the promotion of customer loyalty (Evans Laskin, 1994), which is considered to be a relational phenomenon, (Chow Holden, 1997; Jacoby Kyner, 1973; Sheth Parvatiyar, 1995; cited by Macintosh Lockshin, 1997). The benefits of customer loyalty to a provider of either services or products are numerous, and thus organizations are eager to secure as significant a loyal customer base as possible (Gefen, 2002; Reinartz Kumar, 2003; Rowley Dawes, 2000). Recent developments in Internet technology have given the Internet a new role to facilitate the link between CRM and customer loyalty (Body and Limayem, 2004). It is common knowledge that a dissatisfied and unhappy customer will share his unfortunate experience more than a satisfied customer. It is also observed that a fraction of unhappy customers choose to complain while others simply switch their loyalty to others service providers. Loss of customer is loss of business along with the opportunity for business growth and profitability. Feedback collection from the customer is essential for the supplier to ascertain customer satisfaction and scope for improvisation (Sugandhi, 2002). The fundamental reason for companies aspiring to build relationships with customers is economic. For survival in the global market, focusing on the customer is becoming a key factor for companies big and small. Establishing and managing a good customer relationship is a strategic endeavor. Having a CRM software installed does not ensure a successful customer relationship. For this to happen business processes and company culture have to be redesigned to focus on the customer. CRM software can be only a tool to implement a customer strategy. It is known that it takes up to five times more money to acquire a new customer than to get an existing customer to make a new purchase. Improving customer retention rates increases the size of the customer base. Thus, customer retention is essential. (Baumeister, unknown). 2 Customer satisfaction, loyalty and business performance The rationale for CRM is that it improves business performance by enhancing customer satisfaction and driving up customer loyalty (see figure 4). There is a compelling logic to the model, which has been dubbed the ‘satisfaction-profit chain’ (Anderson and Mittal, 2000). Satisfaction increases because customer insight allows companies to understand their customers better, and create improved customer value propositions. As customer satisfaction rises, so does customer repurchase intention (Anderson, 1994). This in turn influences actual purchasing behaviour, which has a significant impact on business performance. [pic] Figure 4: Customer satisfaction, customer loyalty and business performance (Buttle, 2004) Customer satisfaction has been the subject of considerable research and has been defined and measured in various ways (Oliver, 1997). Customer satisfaction may be defined as the customer’s fulfillment response to a consumption experience, or some part of it. Customer satisfaction I a pleasurable fulfillment response while dissatisfaction is an unpleasurable one (Buttle, 2004). Satisfaction and dissatisfaction are two ends of a continuum, where the location is defined by a comparison between expectations and outcome. Customers would be satisfied if the outcome of the service meets expectations. When the service quality exceeds the expectations, the service provider has won a delighted customer. Dissatisfaction will occur when the perceived overall service quality does not meet expectations (Looy, Gemmel Dierdonck, 2003). Sometimes customer’s expectations are met, yet the customer is not satisfied. This occurs when the expectations are low (Buttle, 2005). For example, the customer expects the flight to be late and it gets late. Customer satisfaction is considered to be one of the most important outcomes of all marketing activities in a market-oriented firm. The obvious need for atisfying the firm’s customer is to expand the business, to gain a higher market share, and to acquire repeat and referral business, all of which lead to improved profitability (Barsky, 1992). Studies conducted by Cronin and Taylor (1992) in service sectors such as: banking, pest control, dry cleaning, and fast food; found that customer satisfaction has a significant effect on purchase intentions in all four sectors. Similarly, in the health-care sector, McAlexander et al. (1994) found that patient satisfaction and service quality have a significant effect on future purchase intentions. Kandampully and Suhartanto, 2000) Customer loyalty can be defines as â€Å"customer behavior characterized by a positive buying pattern during an extended period (measured by means of repeat purchase, frequency of purchase, wallet share or other indicators) and driven by a positive attitude towards the company and its products or services† (Looy, Gemmel Dierdonck, 2003). Practitioners and researchers have not clearly identified a theoretical framework, identifying factors that could lead to the development of customer loyalty (Gremler and Brown, 1997). However, there is a consensus amongst practitioners and academics that customer satisfaction and service quality are prerequisites of loyalty (Gremler and Brown, 1997; Cronin and Taylor, 1992). Those technical, economical and psychological factors that influence customers to switch suppliers are considered to be additional prerequisites of loyalty (Selnes, 1993; Gremler and Brown, 1997). Recent studies also indicate that the firm’s image may influence customer enthusiasm: value, delight, and loyalty (Bhote, 1996). (Kandampully and Suhartanto, 2000) Loyalty behaviors, including relationship continuance, increased scale or scope of relationship, and recommendation (word of mouth advertising) result from customers’ beliefs that the quantity of value received from one supplier is greater than that available from other suppliers. Loyalty, in one or more of the forms noted above, creates increased profit through enhanced revenues, reduced costs to acquire customers, lower customer-price sensitivity, and decreased costs to serve customers familiar with a firm’s service delivery system (Reicheld and Sasser, 1990). Yi’s â€Å"Critical review of customer satisfaction† (1990) concludes, â€Å"Many studies found that customer satisfaction influences purchase intentions as well as post-purchase attitude† (p. 104). Customer loyalty can be viewed in two distinct ways (Jacoby and Kyner, 1973). The first views loyalty as an attitude. Different feelings create an individual’s overall attachment to a product, service, or organization (see Fornier, 1994). These feelings define the individual’s (purely cognitive) degree of loyalty. The second view of loyalty is behavioural. Examples of loyalty behaviour include continuing to purchase services from the same supplier, increasing the scale and or scope of a relationship, or the act of recommendation (Yi, 1990). The behavioural view of loyalty is similar to loyalty as defined in the service management literature. In brief, there are two dimensions to customer loyalty: behavioural and attitudinal (Julander et al. , 1997). The behaviour dimension refers to a customer’s behaviour on repeat purchases, indicating a preference for a brand or a service over time (Bowen and Shoemaker, 1998). Attitudinal dimensions, on the other hand, refer to a customer’s intention to repurchase and recommend, which are good indicators of a loyal customer (Getty and Thompson, 1994). Moreover, a customer who has the intention to repurchase and recommend is very likely to remain with the company. (Kandampully Suhartanto, 2000 and Hallowell, 1996) Customer attitude being difficult to measure, for financial and practical purposes, customer retention is widely used as an indicator of customer loyalty. Researchers have combined both views into comprehensive models of customer loyalty. Dick and Basu (1994) came up with a two-dimensional model of customer loyalty identifying four forms of loyalty according to relative attitudinal strength and repeat purchase behavior. The true loyal are those who have high levels of repeat purchase behavior and a strong relative attitude. Spuriously loyal customers tend to be more motivated by impulse, convenience and habit i. e. if the conditions are right. Latent loyalty applies to those customers who are loyal simply because they have no other choice. Lastly, there will always be some customers who shall not be loyal to any particular brand. 2. CRM and Service Quality Service quality is essential for an organization’s survival and growth. Interest in service quality emerged in 1970s. Ever since, the topic has attracted substantial attention among researchers and practitioners (Gronroos, 2001). Service quality is a form of attitude representing a long-run, overall, evaluation, which is different from customer satisfaction, a more short term, transaction specific judgment. The level of customer satisfaction is a result of the customer’s comparison of the service quality expected in a given service encounter with perceived service quality. This implies that satisfaction assessments require customer experiences while quality does not (Caruana, Money and Berthon, 2000). 2. 3. 1 Customer’s perception of quality: Quality of a particular service is whatever the customer perceives it to be. Service quality as perceived by the customer may differ from the quality of the service actually delivered. Services are subjectively experienced processes where production and consumption activities take place simultaneously. Interactions, including a series of moments of truth between the customer and the service provider occur. Such buyer-seller interactions or service encounters have a critical impact on the perceived service. The Nordic Model, originated by Christian Gronroos and developed by others, adopts a disconfirmation of expectations approach. This claims that customers have certain expectations of service performance with which they compare their actual experience. If the expectations are met, this is confirmation; if they are over performed, this is positive disconfirmation; if they are underperformed this is negative disconfirmation. According to Gronroos (1984), the quality of service as perceived by customers has two dimensions; a technical or outcome dimension and a functional or process-related dimension. What customers receive in their interaction with a firm is clearly important to them and their quality evaluation. This is one quality dimension, the Technical Quality of the outcome of the service production process. However, as there are numerous interactions between the service provider and customers, including various series of moments of truth, the technical quality dimension will not count for the total quality which the customer perceives he has received. The customer will also be influenced by the way in which technical quality- the outcome of the process is transferred to him and this will have an impact on the process experience. Examples include the accessibility of ATM, a website, appearance and behavior of waiting staff, how service employees perform their task, what they say and how they do it. Interestingly, other customers simultaneously consuming the same or similar services may influence the way in which customers will perceive a service. Thus, the consumer is also influenced by how he receives the service and how he experiences the simultaneous production and consumption process. This is the second quality dimension, the Functional Quality of the process, closely related to how the moments of truth of the service encounters themselves and are taken care of and how the service provider functions. Illustrated in figure 1, there are the two basic quality dimensions, namely, What the customer receives and How the customer receives it; the technical result or outcome of the process (technical quality) and the functional dimension of the process (functional quality. An organization’s image is an important variable that positively or negatively influences marketing activities. Image is considered to have the ability to influence customers’ perception of the goods and services offered (Zeithaml and Bitner, 1996). Thus, image will have an impact on customers’ buying behaviour. Image is considered to influence customers’ minds through the combined effects of advertising, public relations, physical image, word-of-mouth, and their actual experiences with the goods and services (Normann, 1991). Similarly, Gronroos (1983), using numerous researches on service organizations, found that service quality was the single most important determinant of image. Thus, a customer’s experience with the products and services is considered to be the most important factor that influences his mind in regard to image. For instance, if the service provider shares a positive or favorable image in the minds of the customers, minor mistakes will probably be overlooked or forgiven. However, if the image is negative, the impact of any mistake will often be considerably greater than it otherwise would be. This entire combination shall lead to total quality. [pic]Figure 1: Two service quality dimensions (Gronroos, 2001) 2. 3. 2 The Perceived Service Quality approach Gronroos (1982) introduced a service oriented approach to quality with the concept of Perceived Service Quality and the model of Total Perceived Service Quality. This approach is based on research into consumer behavior and the effects of expectations concerning goods performance on post-consumption evaluations. In previous sections, the two basic quality dimensions (the what and the how) in the minds of the customers has been discussed. However, the quality perception process is more complicated. It is not the experiences of the quality dimensions alone that determine whether quality is perceived as good, neutral or bad. Figure 2 illustrates how quality experiences are connected to traditional marketing activities resulting in a Perceived Service Quality. Good perceived quality is obtained when the experienced quality meets the expectations of the customers i. e. the expected quality. If expectations are unrealistic, the total perceived quality will be low, irrespective of the experienced quality measured in an objective way being good. As illustrated in figure 2, the expected quality is a function of factors, namely, marketing communication, word of mouth, company/local image, price, customer needs and values. Marketing communication includes advertising, direct mail, sales promotion, websites, internet communication and sales campaigns. These are directly under the control of the company unlike the image and word of mouth factors which are indirectly controlled by the company. Image of the company plays a central role in customer perception of service quality. Thus, it is imperative that image be properly managed. External impact on these factors could possibly occur, but they are a basically a function of the previous performance of the firm, supported by for instance advertising. Lastly, the needs of the customers as well as the values that determine the choice of customers also impact on their expectations. Thus, the level of total perceived quality is not determined simply by the level of technical and functional quality dimensions, but rather by the gap between the expected and experienced quality. [pic] Figure 2: Total Perceived Quality (Gronroos, 2001) 2. 3. 3 Gaps between customer expectations and perceptions: There exists a gap between expected service quality and perceived service quality. In an attempt to explain such gap, Parasuraman et al (1985), came up with a ‘gap model’ which is intended to be used for analyzing sources of quality problems and help managers understand how service quality can be improved. The model is illustrated in figure 3. Figure 3: The Gaps Model (Source: Parasuraman et al, 1988) Firstly, the model demonstrates how service emerges. The upper portion of the model includes phenomena related to customers, while the lower portion includes phenomena related to the service provider. The expected service is a function of the customer’s past experience and personal needs and of word of mouth communication. It is also influenced by the market communication activities of the firm. The service experienced, which in this model is termed as perceived service, is the outcome of a series of internal decisions and activities. Management perceptions of customer expectations guide decisions regarding service quality specifications to be followed by the company when service delivery (i. e. the execution of the service express) occurs. The customer experiences the service delivery and production process as a process-related quality component and the technical solution received by the process as an outcome-related quality component. As illustrated, marketing communication can influence the perceived service and also the expected service. This basic model demonstrates the steps that have to be considered during analyzing and planning service quality. The five discrepancies (so-called quality gaps) between the various elements of the structure are a result of inconsistencies in the quality management process. The ultimate gap (Gap 5) i. e. the gap between expected and perceived (experienced) service is a function of other gaps that possibly occurred in the process. The five gaps are discussed below: 1. The Management Perception Gap (Gap1): This gap occurs when the management perceives the quality expectations inaccurately due to inaccurate information from market research and demand analyses, inaccurately interpreted information about expectations, nonexistent demand analysis, bad or nonexistent upward information from the firm’s interface with its customers to management and numerous organizational layers which stop or change the information that may flow upward from those directly involved in customer contacts. Necessary action to open up or improve the various internal information channels has to be taken in such situations. 2. The Quality Specification Gap ( Gap 2): This gap signifies that service quality specifications are not consistent with management perceptions of quality expectations due to planning errors or insufficient planning procedures, bad management of planning, lack of clear goal-setting in the company and insufficient support for planning service quality from top management. The planning related problems vary depending on the size of the first gap. However, even if there is sufficient accurate information on customer expectations, planning of quality specifications may fail due to lack of real commitment to service quality among top management. Commitment, dedication and devotion to service quality among management as well as service providers are of highest importance and priority in closing the Quality Specification Gap. 3. The Service Delivery Gap (Gap 3): This gap means that quality specifications are not met by performance in the service production and delivery process due to specifications which are too complicated and/or too rigid, employees not agreeing with the specifications and therefore not fulfilling them, specifications not being in line with the existing corporate culture, bad management of service operations, lacking or insufficient internal marketing and technology and systems not facilitating performance according to specifications. The possible problems here are many and varied and usually the reasons for the existence of a Service Delivery Gap are complicated and so are the cures. The reason for this gap can be divided into three categories: management supervision, employee perception of specifications and rules/customer needs and wishes, and a lack of technological/operational support. Management and supervision related problems may be varied too. For instance, supervisors may not be encouraging and supportive of quality behavior or the supervisory control systems may be in conflict with good service or even with quality specifications. In an organization where control and reward systems are decided upon separately from the planning of quality specifications, which is the case often, there is inherent risk of a Service Delivery Gap occurring. Often non-essential or important activities are controlled, perhaps even rewarded; and activities that contradict quality specifications are encouraged by the control system. Control and reward systems partly determine the corporate culture, and goals and specifications that do not fit the prevailing culture tend not to be well executed. The cure here involves changes in the way managers and supervisors treat their subordinates and in the way supervisory systems control and reward performance. Since the way in which performance requirements of the specifications, on one hand and existing control and reward systems on the other hand, are in conflict with each other, an awkward situation may arise for personnel when a customer contact person realizes that a customer requires different behavior on the part of the service provider than that expected according to the company’s specifications. It must be noted that situations where the service provider is aware of the fact that the customer is not receiving what he expects and may feel that the demands and wishes of the customer are justified and perhaps could be fulfilled, however, the service provider is not allowed to perform accordingly, may ruin the motivation for quality-enhancing behavior among personnel. The skills and attitudes of personnel may cause problems if the wrong people are recruited. For instance, the firm may have employees who are unable to adjust to the specifications and systems that guide operations. Furthermore, the workload perceived by employees may be a problem. For example, there may be too much paperwork or some other administrative tasks involved, so that quality specifications cannot be fulfilled and a result of which, the service provider does not possess time to attend to customers as expected. Lastly, the technology or the systems of operating, including decision making may not be suitable to employees. The problem may be the employees, but it is quite probable that technology and operational and administrative systems have been introduced inappropriately. Perhaps the technology and systems do not support quality behavior, or they have been improperly introduced to the employees. To close the Service Delivery Gap, the problems need to be dealt with effectively and efficiently. 4. The Marketing Communication Gap (Gap 4): This gap occurs when promises given by market communication activities are not consistent with the service delivered due to market communication planning not being integrated with service operations, lacking or insufficient coordination between traditional external marketing and operations, the organization failing to perform according to specifications, whereas market communication campaigns follow these specifications and an inherent propensity to exaggerate, and, thus, promise excessively. The reasons for Marketing Communication Gap can be divided into two categories: the planning and executing of external market communication and operations and a company’s propensity to over-promise in all advertising and marketing communication. The cure in the first situation could be creating a system that coordinates planning and execution of external market communication campaigns with service operations and delivery. For instance, every major campaign could be planned in collaboration with those involved in service production and delivery for Dual goal to be achieved. First, promises in market communications become more accurate and realistic and second, a greater commitment to what is promised in external campaigns could be achieved. The second category of problems i. e. over-promising can be dealt with by improving planning of marketing communication and/or closer management supervision. 5. The Perceived Service Quality Gap (Gap 5): This gap signifies that the perceived or experienced service is not consistent with the expected service resulting in negatively confirmed (bad) quality and a quality problem, bad word of mouth, a negative impact on corporate or local image and lost business. However, this gap may also be positive, which leads either to a positively confirmed quality or over-quality. If a Perceived Service Quality Gap occurs, the reason could be any one or a combination of those discussed above or other additional reasons. Addressing these gaps could be a basis for developing service processes in which expectations and experience consistently meet and a good perceived service quality will enhance. Some of the possible strategies that could be adopted by organizations to close these quality gaps are tabulated in Table 1. Gaps |Possible strategies to close gaps | | | | |1 |Change of management (in extreme situations), otherwise normally, learn from front-line customer contact | | |staff, flatten the hierarchical structure, include expectations data in consumer records, market research| | |for improvement in the knowledge of the characteristics of service competition, etc. | | | |2 |Change in firm’s priorities, Commitment to develop service standard s wherever possible, feasibility | | |assessment of customer expectations, develop a standards documentation process, automation of processes | | |wherever possible and desirable, activities outsourced wherever competencies are lacking, development of | | |service quality goals, etc. | | | |3 |Investment in people: (recruitment, training and retention), investment in technology, redesigning | | |workflow, encourage self organized teams; improve internal communication, clear job specifications to | | |avoid ambiguity, reward service excellence, etc. | | | |4 |Brief the advertising agency of the company, external communication of what the customer can expect | | |through advertising, training employees not to over-promise, penalize employees who over-promise, | | |encourage customers to sample the service experience, excel at service recovery, encourage and manage | | |customer complaints, etc. | Buttle, 2004; Gronroos, 2001 and Looy, Gemmel Dierdonck, 2003) 2. 3. 4 Service Guarant ee An organization tries to balance its customers’ expectations with the delivered service. A service guarantee promises the customers a certain service quality and backs up such promise with a payout, making services more ‘tangible’, reducing the perceived risk of purchasing a service. â€Å"A service guarantee makes the customer a meaningful promise and specifies a payout and an invocation procedure in case the promise is not kept. Each of these elements is equally important in making a guarantee successful† (Looy, Gemmel Dierdonck, 2003) The key elements of this definition are discussed below: The Promise Through introduction of a service guarantee, an organization makes a credible promise to its customers. For example, PTT Telecom promise to connect new telephones within three working days and to fix telephone lines within a day and a half. This promise is a credible one in a European context, where shorter lead times are highly desirous by customers (Looy, Gemmel Dierdonck, 2003). In defining a promise, a company should be careful not to promise what would be expected anyway. This may negatively signal that service failures are likely to be expected. Some promises are limited in scope i. e. guarantee only less important service aspects or are highly conditional, excluding all major causes of service failure. For example, Lufthansa guarantees that its customers will make their connecting flights if there are no delays due to weather or air-traffic control problems. Ironically, these two problems cause in total 95 percent of all flight delays. Furthermore, the guarantee is applicable only if all flights including connecting flights are with Lufthansa (Lufthansa airlines, 1987). The presence of a service guarantee can support the perception of service reliability, which is one of the most critical determinants of customer satisfaction. However, sometimes a guarantee may give out a negative message, indicating that service failures may occur due to customers wondering why it is necessary to provide a guarantee. For example, Lufthansa promises its customers that their luggage will arrive with them. However, this created the perception that lost luggage is more a problem with Lufthansa than its competitors (Lufthansa airlines, 1987). The effectiveness of communicating a service guarantee also depends on the source of the message, especially if the form has a history of service problems, making it difficult for a service firm with bad service reputation to send out credible message. The Payout In a situation where promises are not kept, the customer shall receive a payout which will encourage the customer to communicate all service failures, which has a double effect: †¢ Service recovery: The customer who claims his payout is less likely to defect or spread a negative word of mouth. Hence, service recovery becomes a possibility. Service quality improvement: Each claim represents valuable information about quality errors and their possible causes, but the avoidance of future payouts functions as an incentive to all staff to participate in improvement projects. In order to achieve service recovery, the payout has to be meaningful to customers. It should not only make up for all the damage and inconvenience suff ered but also make the customer ‘whole. ’ For example, the payout offered by the Dutch bus service organization, â€Å"Interliner,† makes their customer ‘whole’ by guaranteeing that their passengers will reach their connecting flights and buses. A refund would not adequately compensate the passenger who missed a connection. Therefore, any passenger who would have to wait for more than fifteen minutes for a connection due to delay by Interliner would be taken to his destination by taxi at Interliner’s expense (www. interliner. nl). A payout can also be too high. For example, in India atleast, Domino’s Pizza offers customers its pizza free of charge if they were not delivered within thirty minutes from ordering. The Invocation Procedure The final aspect of the service guarantee is the invocation procedure. Invocating a guarantee should be either easy or proactive. For example, supermarkets Hoogvliet (Netherlands) and Match (Belgium) promise short queues at their checkouts. If all tills are not manned and if some customer is the third one (Hoogvliet) or the fourth one (Match) in the queue, he does not have to pay (Hoogvliet) or receives a significant discount (Match). An example of unconditional satisfaction guarantee which is easy to invoke is that of Superquinn’s Goof Card System. Superquinn is the leading supermarketing chain in the Greater Dublin area. Periodically, customers who participate in the loyalty saving system called ‘Superclub’ receive a ‘Goof Card’. Each time Superquinn ‘goofs’ i. e. produces a service failure, the customer simply has to point it out to any member of staff, and he shall receive thirty bonus points worth ? 1. The guarantee offers unconditional satisfaction guarantee as customers are able to define the goof themselves, however, for further help to customers, Superquinn lists ten examples of goofs. The invocation of PTT Telecom’s guarantee for example is proactive as well. After each connection or repair, PTT Telecom makes an after-sales call to the customer trying to assess customer’s satisfaction. If there is a failure of promise, the customer is immediately informed of the payout (Looy, Gemmel Dierdonck, 2003). 2. 3. 5 Service Recovery The real test of the customer orientation of a service provider takes place when service failure has occurred. Ideally, quality should be high throughout and failures should not occur in the service processes. However, in reality employees makes mistakes, systems break down, customers in the service process may cause problem for other customers, etc. Service recovery is a strategy for managing mistakes, failures and problems in customer relationships (Gronroos, 2001). As defined by Tax and Brown (2000) (in gronroos 2001), â€Å"Service recovery is a process that identifies service failures, effectively resolves customer problems, classifies their root cause(s), and yields data that can be integrated with other measures of performance to assess and improve the service system. † Service recovery includes all actions taken by company when there has been a service failure. Services fail for different reasons- sometimes technical service fails; sometimes functional service quality (Keaveney, 1995 in Buttle, 2004). Problems caused by a service failure are two-fold; factual and emotional problems (Gronroos, 2001). In a problematic situation when service recovery is called upon, customers are often frustrated, possess high expectations and tend to have a narrower zone of tolerance that normal (Tax et all, 1998). Therefore, service recovery could be risky (Smith and Bolton, 1998) and needs to be well managed. Service recovery performance can be better if the employees are more committed to the visions, strategies and service concepts of the firm. Moreover, empowered employees can be expected to perform better in recovery situations, inclined to deal quickly and effectively with service failures (Boshoff and Allen, 2000). When companies resolve problems quickly and effectively there are positive consequences for customer satisfaction, customer retention and word-of-mouth (Tax et al, 1998). Service recovery process should be developed and exercised to maximize fairness as perceived by the customer (Ruyter and Wetzels, 2000). In addition to mistake correction, quick response and adequate compensation are considered crucial elements of service recovery (Johnston and Fern, 1999). It has been discovered that customers who have been let down, then well recovered, are more satisfied than customers who have not been let down all (Hart et al, 1990). A well managed recovery has positive impact in development of a trusting relationship between a firm and its customer and may also deepen the customer’s commitment towards the service provider (Tax et al, 1998). Service recovery is an important factor influencing perceived service quality and is a criterion which can have a positive effect on functional quality. Satisfaction with the service can be increased through good service recovery (Spreng, Harrell Mackoy, 1995). According to Patrick Mene, Director of Quality at the Ritz-Carlton Hotel Company â€Å"1-10-100 rule of service recovery†, what costs the firm one pound, euro or dollar to fix immediately will cost ten the next day and hundred later on (Patlow, 1993). An example of quick service recovery is an incident that took place at the Ritz-Carlton Hotel in Phoenix, Arizona. A group of four MBA students from Europe had attended a seminar at the hotel and wished to spend a few hours of leisure time at the swimming pool before leaving for the airport. When they arrived at the swimming pool around mid afternoon, they were politely told that the pool area was closing because the area was to be prepared for an evening reception and dinner. The students explained that during their stay at the hotel, that was the only time they could spend at the pool before returning to the freezing temperature of their country and they had been looking forward to this opportunity. The waiter requested them to wait while he sorted out the situation. After a short while, a supervisor arrived to inform them that the hotel unfortunately had to close the entire pool area for evening preparation. However, he added that a limousine was waiting for them outside the main entrance to take them and their luggage to Biltmore Hotel where the pool area would be at their disposal. This limousine was at the Ritz-Carlton’s expense undoubtedly. This delighted the group and their already favorable perception of the hotel was improved further. They also engaged in considerable amount of positive word-of-mouth communication (Gronroos, 2001). 2. 3. 6 Complaints management Customers complain under one or both of the conditions: their expectations being underperformed to a degree that falls outside their zone of tolerance or unfair treatment. Complaints management process should be developed to take a positive view of customer complaints. Customers who complain provide an opportunity for the service firm to identify root causes of problems as well as win back unhappy or dissatisfied customers to retain their future value (Buttle, 2005). A complaints management process should allow company to capture complaints before customers spread a negative word-of-mouth or take their business elsewhere (Buttle, 1998). Up to two-thirds of customers who are dissatisfied do not complain to the organization (Richins, 1983). However, they may complain to their social networks. Dissatisfied customers are likely to inform twice as many people about their experience than customers with a positive experience (TARP, 1995 in Buttle, 2005). According to Wilson (1991), only 4 percent of the dissatisfied customers actually complain, providing valuable feedback to the company. The remaining 96 percent choose to simply leave the business and go elsewhere. Companies choose to deal with complaints efficiently to bring about customer retention, continuous improvement in service quality and build a customer- focused organization (Looy, Gemmel Dierdonck, 2003). The customers choose not to complain for some reasons listed in table 2 below. They do not know how to register a complaint |They believe complaining will be useless because the company don’t care| | |about them or their complaints | |They believe it is not worth the time or trouble |They fear retribution. For example, many people are reluctant to | | |complain about the police. | (Wilson, 1991 and Buttle, 2005) Now, we shall move into the section of the literature review where we shall highlight the privacy issue with CRM. . 4 Do all customers want a relationshi p with their service provider? It is clear that companies want relationships with customers, but it is far less clear that customers universally want relationships with their suppliers. In a business to customer context, relationships may be sought when the customer seeks benefits over and above those directly derived from acquiring, consuming or using the service. The benefits include recognition, personalization, power, risk reduction, status and affiliation (Buttle, 2004). Examples of each such benefit are mentioned below Recognition: A customer may feel more valued and important when recognized and addressed by name †¢ Personalization: For example, over time, a hotel manager may understand a customer’s particular preferences or expectations †¢ Power: For instance, some of the power asymmetries in relationships between banks and their customers may be reversed when customers feel that they have personal relationships with their bank officers and managers. †¢ Risk reduction: Risk may be in the form of performance, physical, financial, social or psychological. High levels of perceived risk are uncomfortable for many customers. A relationship has the ability to reduce, or even eliminate risk. For example, a customer may develop a relationship with a garage to reduce the perceived performance and physical risk attached to having a car serviced. The relationship provides the assurance that the job has been skillfully accomplished and the car is safe to drive. †¢ Status: For example, customers may feel that their status is enhanced by a relationship with an organization, say, the Hilton. †¢ Affiliation: people’s social needs can be met through relationships. For example, many people join particular forums or associations to be a part of a community. However, there are some customers who would be satisfied with the service quality and perhaps decide to be loyal, but not want a relationship as such with the supplier for privacy issues. It is a known fact that suppliers wish to increase their sales to customers. In order to know and analyze their customers, companies collect extensive data on their customers through various channels. One popular rather common channel is through loyalty programs and cards. Examples include Tesco loyalty cards, Hilton hhonors program, British Airways frequent flyer cards, etc. The companies provide some benefits to customers and collect data like contact name, history of purchase, money spent in the past on company’s services, etc. However, if the data is mishandled or incorrectly handled, it can destroy the trust and loyalty in the relationship. (Vargas, 2006) Privacy and data protection are key concerns of customers, who are increasingly concerned about the amount of information that organizations have about them and the uses to which information is put. In reality, most customers are unaware of the quantity of information available to companies. Some customers may wish to simply not join any loyalty programs in order to secure their privacy and prevent intrusion into personal information. 2. 5 Synopsis This section has provided available literature about CRM. The gap model explained shall be a strong basis for explaining the dark side of CRM. Privacy issues shall be given importance as well. The customers’ perception of service quality is to be given supreme priority by the hotel industry. It is important how customers perceive the service quality to be. What they receive and how they receive corresponding to their expectations helps them judge the service quality to a large extent. Chapter 3: CRM and Hotel Industry The hotel industry today has been recognized as a global industry, with producers and consumers spread around the world. The use of hotel facilities such as: room, restaurant, bar, nightclub or health club; are no longer considered a luxury. For many people these services have become an integral component of lifestyle. Moreover, in the last two decades, demand for and supply of hospitality services beyond that of the traditional services intended for travelers have escalated the growth of the hospitality industry globally, leading to intense competition in the market-place. One of the greatest challenges facing hotel organizations today is the ever-growing volume and pace of competition. Competition has had major implications for the customer, providing increased choice, greater value for money and augmented levels of service. Additionally, there is little to distinguish one hotel’s products and services from another. Thus it has become imperative for hotel organizations to gain a competitive advantage. There are two strategies most commonly used by hotel managers in order to gain a competitive advantage, which are low-cost leadership through price discounting and developing customer loyalty by providing unique benefits to customers. Hotels that attempt to improve their market share by discounting price run the serious risk of having a negative impact on the hotel’s medium- and long-term profitability. As a result, it is quality of service rather than price that has become the key to a hotel’s ability to differentiate itself from its competitors and to gain customer loyalty. Getty and Thompson (1994) studied relationships between quality of lodging, satisfaction, and the resulting effect on customers’ intentions to recommend the lodging to prospective customers. Their findings suggest that customers’ intentions to recommend are a function of their perception of both their satisfaction and service quality with the lodging experience. However, satisfying customers alone is not enough, since there is no guarantee that satisfied customers will return to purchase. It is now becoming apparent that customer loyalty is significantly more important than customer satisfaction for success. Numerous examples illustrate that it is important that the hotel industry develop customer loyalty, as opposed to relying solely on pricing strategies. Researchers have shown that a 5 per cent increase in customer loyalty can produce a profit increase of 25 per cent to 85 per cent (Reichheld and Sasser, 1990). Hence a dedicated focus on customer loyalty is likely to become a necessary prerequisite for the future survival of hotel organizations. In the hotel industry, Customer relationship management (CRM) is more than the practice of collecting guest-centric data. It’s the art of using historical, personal, and experiential information to personalize a guest’s stay while generating incremental revenue opportunities. For instance, knowing a traveler is an avid sports fan creates the opportunity to market tickets to a game; knowing a guest had a less-than-memorable experience in the hotel restaurant gives you a chance to win them back the next time they are in town. With the latest offerings in CRM, hoteliers can develop comprehensive guest profiles from reservation information and demonstrate to guests that the property is in touch with their needs, drive guest-centric data down to the transaction level, allowing employees and guest-facing technology to deliver greater value to the guest, generate a realistic profile on the spending and stay patterns of guests, allowing the property to create guest-centric marketing for increased loyalty and spending, etc. Microsoft, 2006). To summarize, the shift in the sales and marketing landscape requires the hotel companies to be as advanced as technology will allow in managing their customer relationships. â€Å"There will be a sea change from management of customer data to management of customer relationships†. Hotel companies must carefully consider how they store, track, analyze and act upon every aspect of their relationships with their guests and booking customers. † The emphasis should be on using the data intelligently to predict consumer behavior, such as loyalty and usage patterns, and to use the customer knowledge to anticipate the customer needs or problems (EURHOTEC, 2000). Chapter 4: Methodology and Research Design 4. 1 Overview Methodology can be defined as (i) â€Å"a body of methods, rules, and postulates employed by a discipline†, (ii) â€Å"a particular procedure or set of procedures or (iii) â€Å"the analysis of the principles or procedures of inquiry in a particular field†, the common idea being the collection, the comparative study, and the critique of the individual methods that are used in a given discipline or field of inquiry (Wikipedia, 2006). This chapter of the paper provides an overview of the research design (i. e. the case study) used for research about the hotel industry. The objectives of the research have been mentioned followed by a definition of research design and the qualitative approach of the case study. The researcher then presents his justification for choosing Ritz-Carlton Hotel Company as his case example leading to methods of data collection for the research conducted along with each method’s strengths and weaknesses. This chapter concludes with discussion on data analysis and the reliability and validity issues with data collection 4. 2 Research objectives A review of the present literature is a stepping stone in compiling the objectives behind the research. In this regard, the literature review enabled an understanding of how can the hotel industry improve its business performance through service quality, customer satisfaction and customer loyalty. The service quality is provided by hotels to ultimately satisfy the customers and the hotel managers must know what their customer wants rather than blindly assuming. Even though the service quality may be satisfactory, there may be a gap between the expected service quality by the customer and their experienced service quality. The hotel management has to strive to bridge these gaps to improve service quality and customer satisfaction and attempt to bring about customer loyalty which in turn would impact business performance. The literature review also highlighted that there is possibly a ‘dark side of CRM’ which refers to privacy issues of the customer and doubts about customers willing to build relationships in the long run. There is also not ample literature available on the customer’s perspective i. e. how he customer feels about what the hotel provides him with, if the hotel actually provides them with what they promise to deliver, if the customers value all they receive and how much, the privacy issues and possibly customers’ reaction to certain experiences during their stay, just to name a few not so explored sides of CRM. Inspired by the above, the research objectives are as follows: 1. Does the gap model explain the dark side of CRM? 2. Is there more to the dark side of C RM than what is explained in the gap model? 3. How can the dark side of CRM be reduced? . 3 Research design A research design can be explained as the â€Å"detailed blueprint used to guide a research study toward its objectives† (Aaker, Kumar and Day, 2003). Research design provides the â€Å"glue that holds the research project together. A design is used to structure the research, to show how all of the major parts of the research project the samples or groups, measures, treatments or programs, and methods of assignment work together to try to address the central research questions† (Social research methods, 2006) The process of designing a research study requires some interrelated decisions to be made. The most significant decision is the choice of research approach which determines how the information will be obtained. The choice of research approach is dependant on the nature of the research to be conducted. Research approaches can be categorized into one of the three general categories of research i. e. exploratory, descriptive and casual (Aaker, Kumar and Day, 2003). Exploratory research: This type of research is undertaken when one is seeking insight into the general nature of a problem area, the possible decision alternatives and relevant variable that are to be considered. The research methods are loosely defined, highly flexible, unstructured and qualitative. The researcher begins without firm preconceptions as to what will be the outcome. The absence of structure allows a thorough pursuit of ideas and clues about the problem situation. Such research is conducted because a problem has not been clearly defined. Explor

The Old Man and the Sea †by Earnest Hemingway

The Old Man and the Sea – by Earnest Hemingway Free Online Research Papers Ernest Hemingway, the author of The Old Man and the Sea, based a lot of his books on his life, friends, and family. I will briefly discuss some of these similarities between his life and his book The Old Man and the Sea. In the book, The Old Man and the Sea, the old man, Santiago, has excellent eyesight. In most of the story his eyes and eyesight are discussed as being good. In reality, Hemingway had very poor vision. He was even turned down by the US Army due to poor vision. Hemingway spent part of his life living in Cuba. He loved to fish off the coast in his boat named the Pilar. Hemingway later left Cuba and the Cuban government turned his estate into a museum. Santiago also lived in Havana, Cuba in the book. Hemingway had a special place he liked to go to and talk to others about fish and fishing stories. This place was called Sloppy Joe’s. Sloppy Joe’s was owned by Joe Russell. In The Old Man and the Sea, Santiago and others also had a similar meeting place. Santiago’s meeting place was the terrace. Hemingway also lived in Key West and would take frequent fishing trips to Cuba with Joe â€Å"Josie† Russell, a good friend and the owner of Sloppy Joe’s. While on one of these trips he met a man named Carlos Gutierrez. Carlos had been a marlin fisherman for nearly forty years. Hemingway thought that Carlos was an excellent storyteller. Today it is believed that Carlos may have been a prototype for Santiago, who also was a great marlin fisherman and a great storyteller in the book. These are just a few connections between Ernest Hemingway and his book. Many authors make similar connections in their books. If you are interested in other connection go to your nearest bookstore or library and search online or get a book on your author’s life and start searching for connections. Research Papers on "The Old Man and the Sea" - by Earnest HemingwayEffects of Television Violence on ChildrenHip-Hop is Art19 Century Society: A Deeply Divided EraQuebec and CanadaThree Concepts of PsychodynamicNever Been Kicked Out of a Place This NiceLifes What IfsThe Effects of Illegal ImmigrationAppeasement Policy Towards the Outbreak of World War 2Assess the importance of Nationalism 1815-1850 Europe

High School Journals English 1 for lesson 5 and 6 Essay

High School Journals English 1 for lesson 5 and 6 - Essay Example We are more than satisfied. You taught her things to do, how to behave. She's more manageable, cleaner. Annie Sullivan: Cleaner? Captain Arthur Keller: Well, we say cleanliness is next to godliness. Annie Sullivan: Cleanliness is next to nothing! Give me more time with her. Captain Arthur Keller: Look, what's she spelling? Teaching a dog to spell? The dog doesn't know what she means any more than she knows what you mean, Miss Sullivan. I think you ask too much of her and yourself. God may not have meant Helen to have the eyes you speak of. Annie Sullivan: I mean her to." This section of the play is informative in a number of ways. Firstly, it shows how Captain Arthur Keller feels towards his daughter, describing her as a 'dog'. It illustrates the attitudes of people at the time towards people who are deaf, blind and mute, and allows the achievements of Helen Keller to seem even more amazing than they previously did. Helen Keller survived and accomplished a lot despite this negative a ttitude from her father. The determination of Annie Sullivan is also illustrated well here, as she demands another week with Keller to help improve her spelling and other skills. She demands this time despite the protests of her boss, and is determined that Keller should be able to learn all the skills available to other children. It was the determination of Annie Sullivan against all odds that has allowed the development of Helen Keller into the famous figure she is today. Lesson 5 Journal Entry 3 The theme I have chosen for my interpretive essay on The Miracle Worker is perception. The main role of perception in this play is that it is a contrast between someone without typical perception, Helen Keller, and those around her with normal perception. It is about how the characters in the play assume that Keller cannot learn language because of her deafness, blindness and muteness. The perception of Keller also changes because Annie Sullivan shows that it is possible for someone with these setbacks to possess language and become involved in daily life. Lesson 5 Journal Entry 4 This entry is written from the perspective of Anagnos. Today, I awoke and performed my daily ablutions before walking to the Perkin's Institute for the Blind. I have a meeting with Annie today, someone who I placed into the home of a girl who is not only blind, but deaf and mute; Helen Keller. She's a highly intelligent girl with a lot to give as governess, although she tends to have a high opinion of herself and believe she can work miracles. It is both a blessing and a curse to have someone so dedicated working with the blind, as she gets rather frustrated when she cannot complete the task she has set herself, something which occurs frequently when working with other people, particularly young people. Annie today speaks to me of how Captain Arthur Keller, Helen's father, will not allow her to work with Helen longer, although she feels that she has something more to give to the child. It' s upsetting to see Annie might fail at her job, but I placed her in this household for a reason. She has to do as the Captain wishes, although she does present a good number of reasons why she should stay and be allowed further interaction with the girl. This is an example of the determination that I mentioned earlier. It will be interesting to see how this case progresses. Lesson 5 Journal Entry 5 The following timeline is based on how the perception of the world for Helen Keller has changed

Fundamental of Advertising Essay Example | Topics and Well Written Essays - 1500 words

Fundamental of Advertising - Essay Example Moreover, if the endorsing celebrity were to be experiencing scandals, then this could actually damage the corporate image of the advertiser. In addition, recommendation fatigue could ensue, if there were to be a high frequency use of the same celebrity (Huang, Hsieh, & Chen, 2011, p. 9971). It has been a long standing practice with marketers to improve the appeal of a brand by resorting to celebrity endorsement. Celebrities, unlike non – celebrities, can significantly improve the image of a product, and render an advertisement outstanding. In fact, a global celebrity can successfully traverse language barriers and promote a product in the international market. They serve to develop a para – social relationship, despite the absence of direct contact with consumers (Tantiseneepong, Gorton, & White, 2012, p. 57). A major advertising strategy is to resort to celebrity endorsers. In this advertising technique, a famous person recommends a product in an advertisement. It has been demonstrated by several studies that celebrity endorsers enhance recall rates with regard to marketing communications. Moreover, this strategy achieves a positive impact upon the attitude of consumers with regard to the brand (Boyland, Harrold, Kirkham, & Halford, 2012, p. 659). Consequently, there is an increase in the likelihood that these consumers would purchase the product. As such, these celebrities increase sales, due to an increase in attention towards advertisements, in which they participate. Furthermore, there is an extension of the celebrities’ credibility from their areas of fame to the product that they endorse (Boyland, Harrold, Kirkham, & Halford, 2012, p. 659). Moreover, sensationalism has made its way into marketing strategy, as consumers tend to identify to a greater degree with products that are endorsed by the so called regular guy. As a result, advertisers now believe that celebrity endorsement is very effective. The relationship between

Managing People and Change Case Study Example | Topics and Well Written Essays - 4000 words

Managing People and Change - Case Study Example These reforms included having a financial budgeting that was strict. The job specifications were revised. Fund holding was also reintroduced by the Blair government. The Blair government emphasized outsourcing of medical services. (Rudolf, 2006) Research shows that the medical staff are demoralised since the Blair government came to power. This is because of the NHS redundancies and staff cuts. The NHS has encountered problems since the initiation of the Blair reforms. This is in relation to IT innovations and incorporation into the organization. The National Programme for IT was though to be the worlds largest. This project had conflicts with programme contractors and the Blair government. The estimated budgets for this program kept on rising from 2.3 billion to 30 billion. (David, 1989) The National Health Service Act was passed in the year 1946. It was implemented in the year 1948. Nigel Lawson described it as a national religion. The services in the NHS are free of charge. After the World War II there were great reforms which were initiated by William Beveridge. Large sums of money were used by the NHS in funding. During the 1980s there was the reformation of the management processes in NHS. This organization had tough strains in financing until the year 1987. During this year the government provided 101 million for use in NHS. There are various NHS agencies such as NICE and SIGN. (Allyson, 2004) Improvement agencies role in health sector used to implement changes in NHS The role of the modernization agencies is to give assistance to the local clinicians. They help in the redesigning of the local services in the health sector. They ensure that the health sector provides services that are patient oriented. They also provide clinical governance services to the health sector. Modernization agencies help in leadership development in the health sector. They ensure that there is the improvement of the services that are given to patients and other customers in the health. There is provision of a regulatory oversight that is independent. (DoH, 1997) Improvement agencies have helped in implementing various changes in the NHS. These include ensuring that the length of waiting time for the patients is greatly reduced through variations in the discharging of the patients. The admission process of the patients is also changed. The patients follow up has been changed such that it is only done when necessary. There is the reduction of the queue numbers such that patient access to the services is greatly improved. (DoH, 1999) Care & Repair England This health improvement agency established with an objective of meeting the health needs of older and disabled citizens. Its roles are; to act as agents of service users in the health sector. It also provides the necessary policy framework for the other agencies within the mandate offered by the department of health. (Rampton, 2003) Organisational change models used by improvement organizations NIATx process improvement model This process model is based on some key principles which entail; involving and understanding the customer, fixing key challenges for the chief executives, picking powerful change leaders, adopting rapid-cycle testing procedures and obtaining ideas from partners outside the organizational field. (Burnes, 2004) Penn State improvement model

Interaction nexus between real estate market and macroeconomics

Interaction nexus between real estate market and macroeconomics In this chapter, I will review the existing researches about the interaction nexus between real estate market and macroeconomics while analyzing and summarizing the data structure and the methodologies used. Considering Chinas specific national conditions and policies, I will shed light on Chinese housing empirical studies, and estimate their research from different economic aspects, expecting to provide a useful perspective for my further research. Housing price is the price formed by both supply and demand sides in the real estate market. According to the fluctuations in property prices in each country, housing prices generally have three characteristics: periodicity, city differences, and bubble. Periodicity refers to how real estate price fluctuations are cyclically or periodically associated with both microeconomic and macroeconomics fluctuations. Early in the 1960s, after Richard Muth (1960) rigorously developed a housing market competitive theory, a lot of economist studied the housing market from the perspective of microeconomics. In 1969, under a lot of assumptions, Olsen (1969) found that if the housing market were perfectly competitive, the poor would not pay more per unit for housing. However, in the survey done by Richard Arnott (1987), which reviewed the microeconomic modeling of the housing sector developed at that time, it was found that even if the competitive theory of housing market is reasonably sophisticated and well developed, it is still hard to ascertain the adequacy of it in explaining the effects of a particular housing policy since there are no well-articulated alternative models. Then, in later years, scholars focused more on the study of the relationship between the real estate market and macroeconomic fundamentals. According to business cycle theory, there is interaction between real estate prices and macroeconomic fundamental variables. One or more macroeconomic variables will cause fluctuations in real estate prices, but, in the meantime, changes in the real estate industry also will lead to macroeconomic volatility. In the change process, they formed a mutually reinforcing interaction mechanism. On the basis of the existing literature, macroeconomics affect real estate prices primarily through the real estate supply and demand, which can be subdivided into GDP, income, consumption, interest rates, exchange rates, inflation, construction costs, land prices, bank credit, and other basic economic variables. In order to understand the impact of real estate price fluctuations on the macroeconomics, most existing studies analyzed from the perspective that the prices affect total consumption and total investment. Since there is a close relationship between real estate prices and macroeconomic volatility, the empirical research of their interactive relationship has always been very important in the field of economics. At present, the relevant research literatures can be divided into two categories: (a) The first type mainly analyzes the relationship between real estate prices and the whole macroeconomic fundamentals; (b) The second type analyzes the relationship between real estate prices and one or several specific macro-basic variables (GDP, income, interest rates, investment and so on). We will now detail the two types. 2.2 Housing prices and macroeconomic fundamentals The real estate industry has become a mature industry in many developed countries. According to existing literature, most of the economists empirical research is derived primarily from the perspective of equilibrium theory. Based on the traditional regression analysis model, they used more independent linear systems, numerical economic models and others to analyze the dataGenerally speaking, the macroeconomic fundamentals will affect the investment, credit, and also, the change of interest rate will affect the supply of real estate. On the other hand, economic growth will affect the income and thus affect the demand for real estate. According to equilibrium theory, under the market competition mechanism, the market will eventually be cleared through real estate prices. However, Case and Shiller(1987, 1989, 1990) found that the housing market does not appear to be very efficient; it is contrary to the efficient market hypothesis. Then, in Clapp and Giaccottos study (1994), they not only confirmed Case and Shillers (1987, 1989, 1990) result but also found macroeconomic changes have a good predictive ability for real estate prices. Clapp and Giaccotto (1994) used the data of East Hartford, Manchester, and West Hartford over the period from October 1, 1981, to September 30, 1988, with 2 methods: the repeat sales method and the assessed value (AV) method. They found that the local unemployment and expected inflation have considerable forecasting ability for the housing prices; and compare with the first-time house, the repeat housing index is more sensitive in the short run due to the lagged economic factors; It showed the housing market does not meet the efficient market hypothesis (Clapp and Giaccotto, 1994). With a much longer data set than common literature, Holly and Jones (1997) provided a more comprehensive perspective on the behavior of housing prices in UK. In order to seek the co-integrating relationships between housing prices and long run, they ran a regression with the housing prices and economic factors such as real income, the user cost, and building society lending. The results showed that, with the exception of population, almost all the factors were rejected at the 1% level in the unit root test, and that the most important determinant of real housing prices was real income; the dynamic adjustment of housing prices is asymmetrical; it depends on whether housing prices are below or above the long run equilibrium. When housing prices are above equilibrium, they seem to adjust back more quickly (Holly and Jones, 1997). But, Brown, Haiyan, and McGillivray (1997) thought that since the early 1980s, the UK housing market had suffered a number of structural changes; consequently, the parameter was instable, meaning those models that assume the underling data-generating process are not appropriate. Under an assumption that the economic system is unstable, they adopted the Time Varying Coefficient (TVC) methodology, and found TVC specification outperforms the alternative constant parameter specifications of housing prices. Because most of the models have failed to predict the 1992 housing price downturn, part of further research was planned to use the TVC specification to examine the models forecasting ability beyond 1992. Using the data in the past 25 years of 6 European countries (France, Germany, Italy, Spain, Sweden and the UK), Iacoviello (2002) established dynamics of house prices by using a tractable value at risk framework in a straightforward way, which we call SVAR model. He pointed out that house price inflation is highly sensitive to the forces driving economic fluctuations; different housing and credit market institutions play different role in the IS-LM Phillips curve paradigm, but this relationship might change with the changing of institutions; in addition, regulatory legal structure and new monetary policy also will affect that relationship (Iacoviello, 2002). Similarly, using the SVAR model, DeHaant and Sterken (2004) studied 13 developed countries real estate markets. Their results showed that, to one country, compared with stock, housing plays a more important role in consumption and output; when housing price raise 1%, consumption will raise 0.75%; when housing price raise 1.5%, GD P will raise 0.4% (DeHaant and Sterken, 2004). In the Asian market, Quigley (2002) pointed out that, although most of the existed models can generate patterns of housing price changes over time in response to varying conditions in economic fundamentals, there was little research on the effect of changes in property markets upon subsequent economic conditions. With his empirical study, he determined that economic fundamentals do not explain most of the variation in the housing prices in short run, and that there were many bubbles in Asian property market during the late 1990s (Quigley, 2002). At the same time, Miki Seko (2003) adopted the SVAR model to analyze the Japanese housing prices. In his paper, the results showed there is a strong relationship between Japanese housing market and its economic fundamentals; and by analyzing the economic factors, the development of the real estate market can be predicted (Miki Seko, 2003). It is clear that housing is not just a normal consumption goods, it is a large share of the overall macro-economy. Significant fluctuations in macro-economy would cause significant volatility in housing market. On the other hand, the volatility in housing market also implies the fluctuations in macro-economy. However, the interactive nexus between housing market and the different aspects of macro-economy is different. Thus, besides the studies that analyzed the macro fundamentals-housing market, some economists study from different angles to examine the interactive nexus between housing market and one or several specified macro variables. 2.3 macro-basic variables 2.3.1 Supply and demand Theoretically, price is determined by supply and demand sides. In the housing market, the relationship between supply and demand is formed by many macroeconomic factors, and with the changes in these factors, supply and demand continues to change. Therefore, some economists thought the greatest impact on housing prices comes from the supply and demand, and have dedicated their research in this area. Normally, in the real estate industry, the supply side is mainly affected by land price, facilities costs, construction tax, construction exploration and design cost, and so on. And, among them, land price is the most important factor. Since housing is a product, it is not just a demand price, but also a supply price. In the real estate economic activities, land purchase and development is the beginning and the foundation, and land purchase cost is the most important part of housing costs. From the supply perspective, the land price fluctuations are an important factor in housing price volatility. On the contrary, due to land supply is restricted by the natural; there is a lack of flexibility. Therefore, land price is mainly decided by its demand side, which is mainly composed by the real estate business. The real estate industry has a huge impact on the land market as well. In order to examine the interactive nexus between housing price and land price, Peng and Wheaton (1994) analyzed the Hong Kong market. Because Hong Kong is a small island with a fixed boundary, it would be clear what the influence of land supply on housing prices. Using a modified stock-flow model, their results showed that the supply restrictions in Hong Kong have caused higher housing prices but not lower housing output (Peng and Wheaton, 1994). Similar outcomes can be found in Alyousha and Tsoukis (1999) study. They employed the quarterly data from England and Wales from the period Q1, 1981-Q2, 1994 to explore the implications of intertemporal optimization for house and land prices (Alyousha and Tsoukis, 1999). Adopting a simple housing flow supply model, which is based on the Euler equation (Hall, 1978), they found that, under a perfect competition, house prices are co-integrated with land prices and house building costs. But, through the Granger test, Hall (1987) found housing price is not the land prices cause. Also, after an econometric analysis of American cities, Edward, Joseph and Hilber (2002) determined that land price was positively correlated with regional economic development, the level of human capital, and have no direct relationship with housing price. As for demand side, existing research usually examined from the aspects which are disposable income, GDP, property taxation, population and so on. There is a large diverse literature related to the housing and taxation because it is clearly that property taxation would directly affect the housing purchasing decisions, and further affect the housing demand. Just like United States, the tax system seems to favor housing ownership in many countries. Thus, Dimasi (1987) employed a computable, spatial general equilibrium model; and found out that differential tax treatment on land and capital can cause a significant social welfare loss. Many other general equilibrium models also found out tax policies that favor the housing sector would lead to a significantly negative impact on both housing sector and aggregate income. From another special perspective, Mankiw and Weil (1989) examined the relations between demography-induced changes in housing demand and real house prices in the United States. They thought that the Baby Boom generation into its house-buying ages was the major cause of the increase in housing prices in the 1970s and the housing demand would grow more slowly in the next decade because of the population structure. Changes in housing demand will further affect the housing price (Mankiw and Weil, 1989)). However, unlike the estimations of Mankiw and Weil (1989), Gary and James (1990) using postwar data from Canada, and found that even if the demographic patterns were similar in Canada and United States, the aggregate time series correlation between shifting demographics and real house prices is distinctly different. From the empirical analysis, they considered there is a statistically insignificant, but in most cases, demographic demand is negative associated with house prices (Gary and James, 1990). 2.3.2 Monetary policy Generally speaking, as an overall policy, monetary policy is mainly concerned to control the trend and fluctuations of aggregate demand; the impact on the real estate market and the sensitivity of the housing price should be limited. However, as the changing in the structure of global financial markets and developing in real estate industry, the nexus between them has become more and more close, financial sector has become an important reference index in the housing market. It is also proved in Alan, John and Brians (2005) study. They found, in eighteen major industrial countries, certain financial conditions (ample liquidity, low interest rates, and financial deregulation) were usually present in past housing price surges, and could conceivably raise the probability of the intensity or the occurrence of the rise. As for interest rate, considering from the supply side, when it decline, real estate investment and real estate mortgage loans will continuously pour into the real estate industry, and promote housing prices continuing to rise. But, as for the demand side increasing in interest rates will directly affect consumers credit repayment costs; so that some consumers would out of the housing market, which affecting the real estate demand, and further led to corresponding changes in real estate prices. By studying the impact of real and nominal interest rates on real estate prices, Harris (1989) thought that changes in real interest rates could explain the market price level; nominal interest rates affect housing price only when the real estate value is expected to rise. Among the monetary policy, bank credit and investment are the most important determinates. As the real estate industry is capital-intensive industry, and most of the funds come from the bank credit and investment, the change in bank load will significantly affect the supply of real estate industry. Besides, a large part of real estate loans are mortgage loans, the value of real estate products in the market determines the size of the loan amount in this industry. In 2004, Davis and Zhu (2004) discovered, in the long term, bank credit is positively correlated with house prices, and effect of housing price on the bank credit is very significant, but in their paper, the reverse impact was still uncertain. Matteo (2005) developed and estimated a monetary business cycle model with nominal loans and collateral constraints tied to housing values. Since collateral effects allow the model match the positive response of real spending to a housing prices shock, Matteo (2005) found fall in the housing prices will reinforced the impact negative monetary shock on real rate, consumption and output. Similarly, based on the Hong Kong sample, Gerlach and Pengs (2005) thought property prices would determine bank lending, but, it was interesting that they found bank lending does not appear to influence property prices in Hong Kong. 2.3.3 Cycles Empirical evidence shows that there is a cyclical movements and volatility in the housing market, and obviously, this kind of cyclical movements would relate to the economic cycles. Economics found that it would be useful and interesting to explore these movements in the housing market, thus many studies examined the housing-economy cycle relationship from both qualitative and quantitative aspects. Greenwood and Hercowitz (1991) and Baxter (1996) build up a dynamic general equilibrium models to reproduce the co-movement of business and residential investment that observed in the US. Davis and Heathcote (2001) also considered that, in the US, the residential investment lead the cycle while the non-residential investment lags the cycle, and this co-movement between housing market and macro-economy has been documented for several countries. Also, economics often analyze real property market tie to long cycles. Gottlieb (1976) considered, the amplitudes of housing cycles are larger than typical business cycles, and the periodicity might be significantly longer than those of the business cycle. For instance, Ball (1998) showed, in UK, new commercial property cycles have a 10 years duration while they are independent of the business cycle. Employing the cross-country data and the Kalman Filter technique, Ball (1999) again found significant long cycles of new construction, which with periodicity of 20-30 years in both residential and non-residential real estate markets. As we can see, the importance and sensitivity of real estate prices attracted a large number of scholars to concerned. Based on the review above, the existing literatures are mainly adopting the cross-section data and time series data, so that the specific econometric methods of housing models are mostly focusing on: traditional ordinary least squares model (OLS), value at risk model (VAR), tractable value at risk framework in a straightforward way (SVAR), co-integration and so on. 2.4 Empirical evidence in the Chinese context Compare with developed countries, Chinese real estate market started relatively late. But along with Chinas rapid economic development, the real estate industry is also showing a good development trend. As real estate investment occupies a very high proportion of total investment in fixed assets, and the volatility in real estate market is closely related to macroeconomic and national policy, the issue of housing prices is not only related to a citys development, but also related to financial security and the living cost of ordinary people. Thus, Chinese economists have also attached great importance to the development of the real estate market, and conducted extensive research. However, since the late development of Chinas statistical system, the database is not perfect, most of the Chinese scholars just analyzed the relationship between housing market and macroeconomic theoretically, empirical studies are relatively small. 2.4.1 Fundamentals First, because of the importance impact of macro fundamentals on real estate prices, using appropriate data and models to estimate the nexus between them has always been the focus of Chinese economists. Adopting the housing index and macro fundamental data (1995-2002) of 14 cities, Shen and Liu (2004) employed a mixed regression, and empirically examined the relationship between housing prices and economic fundamentals. The results showed the impact of macro fundamentals on housing market is quite different in different cities. The explain model was significant affected by the city characteristics (Shen and Liu, 2004). Song and Wei (2009) using a co-integration and vector error modified model, and considered that, in long run, there is a long-term stability of the dynamic equilibrium between real estate prices and macroeconomic; but when short-term imbalances, it becomes into a negative feedback mechanism. Song and Wei (2009) also found that fluctuation of GDP and inflation is the Granger cause of housing price volatility and the impact of interest rates is not significant. Based on partial least-squares regression (PLS), Wang and Xie (2010) estimate the annual data of China within the period of 1999-2008. They thought land prices, capital size and national wealth are the top three factors that affect Chinas price changes at present; although the influence of long/middle-term loan rate is weak, money supply do play a very prominent role in Chinas housing prices volatility (Wang and Xie, 2010). In addition to the analysis of real estate market and macro fundamentals, Chinese economists also studied the housing market from different economic perspective and tie to their own national circumstances and policies. 2.4.2 Land price As the reforming of Chinese housing system and land system, the housing sales prices were climbing higher and higher until the financial crisis in 2008, but, after a short depression, the price still maintain the rising trend. General view is that, due to the land purchase cost is the main cost which constitute the housing costs, high land prices is the main reason of high housing prices. Especially after the Ministry of Land Resources released two new policy  [1]  of land sale, more people think that the skyrocketed of housing prices is because of the high land prices. The policies require that any commercial, tourist, entertainment, commercial housing and other kinds of business land must be transferred by tender, auction or listing mode. After the new land policies, the land transfer cost rose sharply; and almost in the same period, the housing prices have skyrocketed as well. Thus, from the point of view of China Real Estate Association, Yang (2003), Bao (2004) and Cheng (2004) thought since a large number of land transactions using auctions, land prices increased dramatically. And land purchase costs account for 30% percent of the housing prices, hence construction costs raised, further driving a rapidly rise in housing prices; this Cost-push theory was also supported by a large number of real estate developers (Yang, 2003; Bao, 2004; Cheng, 2004). But, Ministry of Land Resources hold the opposite view. Deputy Minister Fu (2006) considered that even if the tender, auction or listing transaction mode will lead an increase in land prices, it might not raise the housing price, the most important factor affecting housing prices is still supply and demand in the housing market. On the contrary, Fu (2006) thought, land is a production factor of real estate industry; the demand for land is generated by the demand for housing, therefore, huge demand in housing m arket and the rapidly increase in housing prices makes demand for land, and further drive the land prices rise. However, Wang and Wu (2009) did not agree both of them. Employing the panel data from 28 regions, they found, in China, although land prices promoting housing prices in long-run and housing prices driving an increase in land prices in both long-run and short-run, this mechanism depends on the region. Wand and Wu (2009) thought that the interaction between land prices and housing prices is different in different regions, so the relationship between them should be implement regional studies and cannot be generalized. 2.4.3 Bank credit After the 1997 Asian financial crisis, in order to stimulate economic growth, China implemented a proactive fiscal and monetary policy: repeatedly issued bonds, reduced interest rates several times, vigorously infrastructure; real estate industry become a national priority support industry and the financial sector continue to increase the real estate credit. But until now, Chinas banking system is still not perfect; most of the loans are mortgage loans, therefore, value of real estate products in the market will directly determine the size of credit. Typically, the credit will play two roles in the housing market. If the real estate prices cyclical rising, since financial institutions anticipate the housing prices can keep rising in the following, banks will relax lending conditions, thus, the increasing housing prices will directly lead to the upswing in real estate bank credit. Because of land and real estate products supply is very inelastic in the short-term, to some extent, the upswing in real estate bank credit will further push up house prices increase. By the same token, the decline in house prices leads to a decline in the quality of bank assets, reduce the size of bank funds, so banks will abate the amount of credit, which will further decrease the housing prices. Based on the panel data of credit and housing market, Li (2004) considered that among Chinas current macro-economic control policy, credit policy play the most significant role in the real estate market. He also believed the flexibility of supply side and demand side is different, so the impact of monetary policy on the supply is greater than that on demand (Li, 2004). Employing the error correction model and VAR model, Zhong and Yan (2009) thought that there existed a stable equilibrium relationship between the volatility of real estate prices and credit in long-run. After the Granger test, Zhong and Yan (2009) found real estate prices and the amount of real estate credit influence each other and they both are the Granger cause for each other. Studying on the East Asian financial crisis, Xiang and Li (2005) also believed bank credit expansion played a very important role in the formation of the real estate bubble in East Asian countries. Thus, in order to ensure the health of Chinas real estate development, it should strengthen the financial system construction and regulation (Xiang and Li, 2005). 2.4.4 Others In addition, through calculating the Lerner index  [2]  (Lerner, 1934) of the real estate market in China, Li (2005) considered the level of monopoly in Chinas real estate market is very high. Even if as the market economy developing, the competition in the real estate market will gradually get better, but this process will be very slow (Li, 2005). And from another special perspective, Yin (2010) thought the existence of North paradox  [3]  behavior (North, 1981) in the local government is an important cause of housing price fluctuations. Local government is lack of intrinsic motivation to stabilize the real estate market; local governments various rescue policies are also mainly based on the purpose of obtain more land transfer fees; thus just depends on local governments behavior can not maintain healthy and sustainable development of the real estate market, the central government should implement more effective macroeconomic policies (Yin, 2010). Comparing with foreign literatures, Chinas real estate market research also adopting cross-section data, time series data, especially panel data. Relevant econometric methods are: co-integration approach, Granger test, error correction model (ECM), and panel data model; in the meantime, the analysis about the impact of macroeconomic policy is also Chinese economists priority concerns. 2.5 Deficiencies However, for the following aspects, Chinas research is still inadequate: The studies on macroeconomic policy are more focused on the theoretical analysis; they are lack of a comprehensive empirical analysis. Currently, the analysis of macroeconomic fluctuations is mainly under an assumption of closed economy. But, with economic globalization, Chinas real estate market will be more affected by international economic development, so the discussion of the relationship between the real estate prices and macro economic fluctuations that under an open economy is more meaningful. There is no analysis of government expenditure in Chinas real estate literatures. However, according to macroeconomic theory, government investment will promote private investment, thereby affecting the real estate investment and price. So, the empirical quantitative estimation about the real estate prices and government spending will contribute to the in-depth analysis of the relationship between the government and the real estate market.