Major Goals Of Educational Institutions Management Essay

This chapter is on the reviews of literature on student loyalty, student satisfaction, service quality, relationship commitment and trust. The reviews of this literature are to understand the nature and characteristic of student loyalty, also to examine the four (4) variable of relationship marketing.


One of the major goals of educational institutions is to gain the loyalty of their students. A population of loyal students is a source of competitive advantage to every university. Student loyalty has gained much attention to university (educational institutions), due to the benefits that is been derived from a loyal students. There has been an increase in the level of competition with universities, as a result of student focus to gain knowledge and certification (Disney, 2009).

Gaining the loyalty of student being one of the major goals of universities, a loyal student is a source of competitive advantages, with an outcome such as positive words of mouth (WOM) communication and retention.

There are various definitions on student’s loyalty but a simple definition of student loyalty is when an educational institution receives a ultimate reward for its interaction with its students. According to Boulding, Kalra and Zeithaml, (1993) tsays that a student who receives a good service and is satisfied with it, is more likely to be loyal to that institution either through recommending it to others.

Egan, (2001) defined loyalty as the state of the mind and a basis for developing sustainable advantage. Loyalty of students has to do with “behaviors and attitude of the students

Dick & Basu (2003) propose two (2) conditions in defining students’ loyalty, which represent the intersection of relative attitude and repeat patronage. First, student who exhibit loyalty behavior, engage in repeated purchase whenever appropriate. Secondly, student who are loyal in attitude are likely to make recommendations to some-else and sometime their loyal attitude will lead to loyal behavior in form of repeat purchase. In order words, students who posses both dimension tend to form a long-term relationship with the institution.

Loyalty of students manifested in different ways, including a commitment to patronize a preferred service or product (Oliver, 1999 & Dick and Basu, 1994). Loyalty of students can be both in short-term and long-term impact on universities. Teaching quality is been influence by loyalty in student, through active participation and committed behavior (Rodie and Kleine, 2000). Probably, loyal students are good advocates of the universities and will always recommend the university to others. Marzo-Navarro et al., (2006) says that there are increasing growing number of former students who are returning to universities in order to update their knowledge.

Loyalty is assumed as positively related to the ability of universities to both attract new students and also retain existing one (See, e.g; Dick and Basu, 1994; Oliver, 1997; Henning-Thurau et al., 2001). Loyalty of student is been influence by increase mobility, which give the process of attracting students a new dimension. According to Henning-Thuau et al., 2001; & Marzo-Navarro et al, (2005a) said that loyalty of students contains an attitude component and a behavioral component.

A loyal student even after graduation will recommend his/her university to friend and will also continue to support the university through donations, financial support or offering placements to existing students (Henning-Thurau et al., 2001). Therefore the advantages of loyalty in students are not only limited to students study period but it even last after their graduation, therefore the importance of loyalty is far reach and achieve.


Paul et al., (2011) said that today, constructing and maintaining relationships with students has become a distinctive business activity of higher educational institution. Lehitnen (2002) says; that relationship marketing is a core issue for the growth of any service industries in the economy in the last decades. It is now important for higher educational institution to build a relationship with their students who are their customers and in order to be competitive (Wong & Sohel, 2004).

Berry and Westfall (2007) defines Relationship Marketing as “attracting, maintaining and enhancing student’s relationship” p.25. Relationship Marketing is a concept that focus on building ties with existing students with intention of retaining them (Boyt & Westfall, 2007; Van Meer, 2006 & Summer, 2003).

Relationship marketing as defined by (Berry, 1995; Morgan & hunt, 1997) says; “is an activity that is used to establish, develop and maintain a long-term successful relationship with students and other stakeholders.

From the Journal “Treating Students like Customers”, by David Bejou (2005) pp44 – 47; says that its more effective for institutions to keep current students enrolled in programs and retain them as alumni than to recruit new students. Therefore, if there is a good encounter between students and their institutional staffs and the relationship is strong, this will lead to commitment in their relationship, student satisfaction, trust in the students and institutions providing quality in their service to students, of which the end product will now be loyal students.

According to Henning-Thurau et al., (2002) said that application of relationship marketing concepts in higher institutions have been minimal and if there is a higher level of relationship between the students and institutions, this will lead to higher intention of the parties remaining in a relationship.


The frameworks of student satisfaction have been very popular among researchers (Oliver, 1997; Giese and Cote, 2000; Wiers-Jenssen et al., 2003). Satisfaction is defined as the perception of pleasurable fulfillment of service (Oliver, 1997). The construct operationally is similar to an attitude, as it can be assessed as the sum of the satisfactions with various attributes of a service (Churchill & Surprenant, 1982).

Satisfaction as define by Kolter (2000) is a person’s feeling of pleasure or disappointment, resulting from comparing a product/service, perceived performance in relation to his or her expectation. Hoyer and Maclanis (2001) said that satisfaction is associated with feelings of acceptance, happiness, relief, excitement and delight.

It’s has been argued that there is a link between student satisfaction, loyalty and profit (Hesket et al., 1997). There has been an increase in student satisfaction that leads to increase in loyalty and has a positive outcome on profit. Usually, student’s satisfaction is regarded as fundamental determinant of student loyalty. The more students are satisfied, the greater their loyalty. Therefore, satisfaction measurement is difficult task to achieve, as student satisfaction is similar to attitude (Attiyamen, 1997).

A student satisfaction concept in education have been proposed by Elliot and Healy (2001), they indicated that student satisfaction result from the evaluation of their experience with the education service received. Student satisfaction is influence by variety of factors. These factors can be divided into personal factors relating to student and institutional factors relating to educational experience;


Personal factors include age, gender (Brokaw, Kennedy & Merz, 2004; Stokes, 2003) and Institutional factors include instructor teaching style (Dana, Brown & Doodd, 2001), quality of instruction (DeBourgh, 2003), quality and promptness of feedback from instructor, interaction with classmates (Fredericksen et al., 2000) and infrastructural facilities (Helgesen, 2007).

Student satisfaction is perceived as summary of psychological state or subjective summary judgment based on student experiences compared with expectations. The concept has been defined in various ways, for example; it is the overall feelings or attitude the student has about the educational service, after he/she has been a student of the higher institution (Solomon, 1994: 346), or as a “summary, affective and variable intensity response centered on specific aspects of acquisition, which takes place at the moment the student evaluate the institution.

Oliver and Swan, (1989) defined satisfaction as the evaluation, affective or emotional response that develop with the experience of the student with the university services over time. Student satisfaction is perceived as a parallel concept that can be defined in various ways (Elliott and Shin, 2002; DeShields et al., 2005) for example, is a short-term attitude resulting from an evaluation of a student’s university experience (Elliott and Healy, 2001: 2) or ‘as a student’s subjective evaluation of the various outcomes and experience with education and campus life’ (Elliott and Shin, 2002: 198).

A student that is satisfied will always recommend his/her university to friends and may also continue to support the university through donations, financial support or offering placement to existing students. The advantages of a loyal student when satisfied, is not limited to only student period; they last after their graduation, therefore the student is being satisfied and stay loyal (Hennig-Thurau et al, 2001).

Student satisfaction is positively related to student loyalty (Marzo – Navarro et al., 2005). Thus student’s loyalty and drivers of student’s loyalty should be of great importance in determining strategy in creating student satisfaction (Helgesen & Nesset, 2007).

Fornall (1992) stated that the fundament aims of university are to manage and increase student satisfaction in order to increase student loyalty rate. Cronin & Taylor (1997) and Patterson et al., (1998) founds that student satisfaction has a great significant impact on acquisition intention of the student on the institutional range of service.

Kolter (1995) summarizes by stating: “the solution to student loyalty is student satisfaction”. A loyal student is defined as a student who would continue to be part of the university, even after graduation from the university and will still be loyal by contributing in various ways to the growth of the university. He/she will continue to maintain a positive attitude towards the services from the university (Zain et al., 2004).

Despite how student satisfaction is measured, it is proven that a satisfied student will exhibit loyalty and provides positive word – of – mouth, as reported by Kim, Lee and Yoo (2006). Student Satisfaction as describe by Machleit & Mantel (2001) says that it is the heart of all marketing activities and there is no doubt that student satisfaction has been identified as one of the most important determinant to student loyalty.

In the context of university, student satisfaction (SS) plays an important role in determining the originality and accuracy of the educational system because the higher the level of satisfaction experience by the student, the better the students ability to groom their skills development, course knowledge and mentality (Muhammad et al., 2010).

Zeithaml (2001) mentioned that student satisfaction is an proof to measure how well effective an institution administrates itself, as well as its educational system. Rodie and Klein (2001) posited that if an institution possesses essential educational facilities with affective teaching and training staff, students will be likely motivated, loyal and good performer in their academic.


In recent years, Service Quality has gain attention and universities leveraging on service quality (SQ) have gained competitive advantages in loyalty. Service is said to be intangible, it’s becoming more challenging for service providers to distinguish themselves from their competitors, compared to those that are involves in producing tangible products but one way to differentiate themselves from the competitors is through service quality.

Quality has been defined “as the ability of a service to satisfy customers” (ISO, 9004-2) (ISO, 1991). Asthiyaman (1997) defined service quality as the overall examination of the goodness or badness of a service”. Studies have confirmed that service quality (SQ) is an antecedent of loyalty in student (Cronin and Taylor, 1992; Shemwell et al., 1998). Researchers have considered service quality to be an important outcome in the educational system to the universities.

Service quality (SQ) according to Cheng (2004) is the character of an input, process and output of the educational system that satisfy both internal and external stakeholders by meeting their expectations. According to Zeithaml and Bitner (2003), service quality (SQ) is defined as a focused evaluation that reflects the customer’s perception of specific dimensions of services provided.

Devinder and Datta (2003) argue that institutions which deliver service quality programs and services to students must be concerned with every aspect of the students’ experience on campus. In other words, educational service quality is not only limited to the lectures and notes received in class or advice and guidance given by lecturers during the consultation hours, but it also includes students’ experience while interacting with the various non-academic personnel and components in the university, the physical infrastructure provided by the university etc.

Service quality has been link with increase in profitability and it provides an important advantage by generating sales, positive word – of – mouth, feedback and customer loyalty. Zeithaml & Bitner (1996, p. 76) point’s outs:

. . . The issue of highest priority today involves understanding the impact of service quality on profit and other financial outcomes of a higher institution.

Service quality has emerged as a strategic force and a key strategic issue on management agenda. These days, higher institutions are driver towards commercial competition imposed by economic forces, which result from the development of global educational market. Higher institutions are not only concerned with only what the society value in the skills and abilities of their graduates (Ginsberg, 1991; Lawson, 1992) but how their students feel about their educational experience (Bemowski, 1991).


Service quality is considered a determinant to competitiveness (Lewis and Gale, 1989) and the attention given to service quality can help higher institution to differentiate itself from others and gain lasting competitive advantage (Moore, 1987).

Service quality is the student’s perception of the level of success or failure in meeting expectation (Zeithaml et al., 1990). Service quality model consists of five dimensions that are; tangibles, reliability, responsiveness, assurance and empathy. These dimensions of service quality are widely accepted and used by researchers in various industries. Various researchers have investigated service quality in various dimensions of educational set-up, like Hill (1995) investigated the use of service quality in higher education; Anderson (1995) used SERVQUAL to evaluate quality of administration department in educational set up.

Key performance measure in educational excellence and a main strategic variable for universities to increase market share is Service Quality (Donaldson and Runciman, 1995). Service quality creates positive image in the mind of students which ultimately leads them to satisfaction (Alves and Raposo, 2010). Mazzarol (1998) say that universities should maintain a distinctive image, to have a competitive advantage.

A student who has a positive experience with his/her university is more likely to be more loyal with such university then those who don’t have any positive experience (DeShields Jr et al., 2005). Students always have certain expectation from the universities and how well these expectations are met, affects the student level of loyalty with the university and their perceptions regarding the university effectiveness (Juillerat and Schreiner, 1996).

Level of service quality provided to a student brings about positive future intentions in the students to stay with the university (Ahmad et al., 2010). Ser behvice quality is said to be the beauty of the university and it lies in the eyes of the beholder; in other words, it is person-dependent and has different meanings to different people (Galloway & Wearn, 1998). Quality is said to be excellence in education (Peters & Waterman, 1982); “value added in education” (Feigenbaum, 1951); “fitness of educational outcome and experience for use” (Juran & Gryna, 1988); “conformance of educational output to planned goals, specifications and requirements” (Gilmore, 1974; Crosby, 1979); and “meeting or exceeding students expectations of education” (Parasuraman et al., 1985).


A good relationship with students can enhance competitive edge and profits for the university, which brings about high level of student loyalty and lower costs in attracting a new student (Berry, 1999). Relationship commitment is a key element of long-term loyalty of students (Morgan & Hunt, 2000). Pass research have prove that relationship commitment is a construct that bring about loyalty of students. Enhancing student relationship commitment with the university is now a top priority in university management. Adidam et al, (2004) and Holdford & White (1999) suggested that relationship commitment has a positive impact on students and higher institutions.

In organizational behavior literature, commitment is said to comprise of; Affective (Emotional) and Cognitive (Calculative) aspects (Allen and Meyer, 1990; O’Reilly and Chatman, 1986). Affective commitment is known as students’ emotional bonding and sense of belonging to the university and students attachment to the university (Fullerton, 2005; Mattila, 2004; Gruen et al., 2000). Cognitive commitment is said to be the extent of the need to maintain a relationship due to significant perceived termination or switching costs (Venetis & Ghauri, 2004).

In service marketing literature, “Relationship Commitment is built on the foundation of mutual commitment” (Berry and Parasuraman, 1991). In relationship marketing literature, relationship commitment is described as “an enduring desire to maintain a valued relationship” (Moorman et al, 1992). Relationship commitment entails a desire to develop a state relationship and confidence in the stability of the relationship (Anderson and Weitz, 1992).

This study adopts Moorman et al., (1998) concept of relationship commitment, which says that an enduring desire to maintain a value relationship and examines relationship benefits, relationship termination costs and share value as the key factors affecting relationship commitment because these factors impact relationship commitment in terms of loyalty of students to their university. The following three factors; relationship benefits, relationship termination costs and share value are examine in details.

Relationship Benefits

Relationship benefits refer to the quality of services and goods relative to other suppliers. Relationship benefits are the superior benefits provided to students, and these superior benefits are highly valued by students.

The benefits students receive from a relationship are risk-reducing benefits and social benefits (Berry, 1995). Bitner (1995) conceptualized relationship benefits in four aspects: reducing stress, simplifying one’s life, enjoying social support system, and precluding the need to change. Benefits addressed by Berry (1995) and Bitner (1995) can be generalized into two types: functional benefits and social benefits (Beatty et al., 1996).

Relationship benefits generate positive impact on relationship outcomes, such as, continuation of a relationship (Gwinner et al., 1998; Patterson and Smith, 2001), In education context, Adidam et al. (2004), and Holdford and White (1997) suggested that students will continue their relationship with their school if the school offers superior benefits in terms of education quality, location, cost of tuition, internship opportunities, better placements and networking opportunities.

The higher the relationship benefits obtained by the students, the higher will be the relationship commitment of students to their education institution. This study follows Morgan and Hunt’s (1994) conceptualization of relationship benefits, which has been used by Adidam et al. (2004) and Holdford and White (1997).

Relationship Termination Costs

“Termination costs are all expected losses from termination and result from the perceived lack of comparable potential alternative partners, relationship dissolution expenses” (Morgan and Hunt, 1994).

“Expected termination costs lead to an ongoing relationship being viewed as important, thus generating commitment to relationship” (Morgan and Hunt, 1994), In education context, Adidam et al. (2004) studied the relationship between students and their school and defined relationship termination costs as the perception of net losses (financial, emotional, or time) that may result from dissolution of the relationship.

Findings suggest that relationship termination costs have a positive impact on relationship commitment in higher institutions.

Shared Values

Different studies have used different names to describe shared values. For instance, Levin (2004) used shared perspective to investigate shared vision and shared language of two parties, while Orr (1990) and Monteverde (1995) used shared perspective to investigate shared language and shared narratives. Tsai and Ghoshal (1998) used shared vision to refer to the common goals or aspirations the organization members share which help members to communicate and exchange ideas freely. According to Schein (1990), values shared between two parties are the underlying assumption.

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Further, there is a broader interpretation of shared values by Morgan and Hunt (1994). Shared values are defined as “the extent to which partners have beliefs in common about what behaviors, goals and policies are important or unimportant, appropriate or inappropriate, and right or wrong” (Morgan and Hunt, 1994).

It means two parties are having similar perceptions about how to interact with others to enhance their communications and avoid misunderstanding. Shared values will bring more opportunities for two parties to exchange their ideas (Tsai and Ghoshal, 1998). In service industry, shared values is the extent to which a service provider and a client have common beliefs in what services are important or unimportant, appropriate or inappropriate, and right or wrong (Morgan and Hunt, 1994; Levin, 2004).

Parties that share similar values about appropriate behaviors, goals and policies are more likely to be committed to a relationship (Morgan and Hunt, 1994; Holdford and White, 1997). In education, Holdford and White (1997) found that students who shared the same goals, ideals and codes of conduct with their school were more likely to commit to a relationship with the school.

Adidam et al. (2004) found that the more the staff and students have similar concerns and ideas on important issues, such as work-load, learning behavior and assessments, the more the students will be committed to the relationship. Both studies suggest that the construct of shared values is one of the factors affecting relationship commitment in higher institution. This study adopts the conceptualization of shared values in Morgan and Hunt (1994).


Trust has been one key issue to a successful relationship between two or more parties. Berry (1993) argued that trust is fundamental to the development of loyalty in students; Sherman (1992) identifies trust as a pivot to success of strategic alliance and Spekman (1998) labeled trust as a cornerstone of strategic partnership.

Trust is generally ill defined (Egan, 2004) but is often taken to mean “an acceptance of vulnerability to another’s possible but not expected, ill will or lack of good will” (Blois, 1997; 58). Trust is built upon experience, satisfaction and empathy. A high level of trust is likely to engender a more positive attitude, which in turn is likely to increase the level of student orientation (Conway & Swift, 2000).

In the educational field, students’ trust may be understood to be student confidence in the university integrity and reliability. Student trust is developed through personal experience with the university’s employees. Many researchers consider trust a kind of belief or conference (Crisby et al., 1990; Moorman et al., 1992; Morgan & Hunt, 1994). Trust is related to benevolence, which refer to the services provider’s motive and intention toward the client (Crosby et al., 1990; Doney and Cannon, 1997).

Trust is defined as “when one party has confidence in an exchange partner’s reliability and integrity”. A trust worthy party is one that is considered reliable and having high level of integrity and associating qualities of competence, consistence, fairness, honesty, responsibility, helpfulness and benevolence (Morgan and Hunt, 1994).

Trust enhance loyalty of students to their university by reducing transaction costs in an exchange relationship, reducing risk perceptions associated with the partner and increasing confidence that short-term inequities can be resolved in long-run. Trust has been found to be a factor affecting loyalty of student in many previous studies (Morgan and Hunt, 1994; Gannesan, 1994; Moorman, Zaltman & Desphande, 1992; Kassim and Abdulla, 2006; Liang and Wang, 2007),

Callagham et al., (1995) defines trust as “the level of which each party feels they can rely on the integrity of the promise offered by the other”. Gronroos (1994) states that in order for a university to gain the trust of its students, it has to ensure that students trust its resources which include: – personnel, technology, systems – to deliver as promised. Generally, it appears that the higher the level of trust between students and their university, the greater the probability of continuance or long-term of relationship (Yau et al; 2000).

Promise made by universities must be fulfilled, in order to increase the level of trust. “Fulfilling promises that have been given is important means of achieving students’ loyalty, retention of student and long-term profitability (Gronros, 1994). Trust leads to cooperation, communication, bargain and most importantly loyalty (Yau et al; 2000).

University should always seek contact with their students to get to know there’s need desires and demands, in order to satisfy them and gain their trust. Researchers have established that trust is essential for building and maintaining long-term relationship (Burt and Camerer, 1998; Singh, 2000). A number of researchers have advocated that trust is fundamental in student loyalty (Morgan and Hunt, 1994).

Trust is shown to encourage contract self-enforcement (Gow et al; 2000), to reduce opportunistic behavior (Mongan and Hunt 1994), to lower transaction cost (Sartorious and Kristen, 2007) and most importantly, to improve business performance (Sako, 1997).

Rauyruen and Miller (2007) observe that student trust influence positively on student loyalty. Trust is logically and experiencetically a critical variable in relationship, as marketing literatures shows its (Green and Orth, 2009). It’s been argued by some researcher that trust is stronger emotion than satisfaction, so it may have a greater impact on student loyalty (Hart and Johnson, 1999).

Several studies have shown that trust is an important mediator in creating loyalty in students (e-g Morgan and Hunt, 1994; Garbarino and Johnson 1999; Caceres and Paparoidamis, 2007). In social psychology, trust is considered to consist of two elements: Trust in the partner’s honesty and Trust in partner’s benevolence (Wetzel et al., 1998).

Doney and cannon (1997) emphasized that trust is the perceived credibility and benevolence. Based on the above definition, it is clear that trust is a human characteristic that is based on assessment of one another’s personality traits (Chu, 2009), motives and behavior (Tian et al., 2008).

If an educational institution desires to build long-term loyalty with its constituents (students), it has to develop trust as part of the relationship. The lack of trust may severaly underline long-term relationship (Andaleeb, 1994).

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