1. Should a firm with a reputation
for outstanding service quality
offer a service guarantee?
Jochen Wirtz
Associate Professor, Department of Marketing, Faculty of Business
Administration, National University of Singapore, Singapore
Doreen Kum
Student, Department of Marketing, Faculty of Business
Administration, National University of Singapore, Singapore
Khai Sheang Lee
Associate Professor, Department of Marketing, Faculty of Business
Administration, National University of Singapore, Singapore
Keywords Services marketing, Service quality, Perception, Consumer behaviour,
Guarantees, Hotels
Abstract Studies reputation for service quality as a potential moderator of the
relationship between a service guarantee and its impact on consumer perceptions of
service quality, risk and purchase intent. A before-after experimental design, set in the
hotel industry, was employed to explore the impacts of a service guarantee for an
outstanding versus a good service provider. Contrary to what had been implied in the
past, the introduction of an explicit guarantee had no negative effect for the outstanding
service provider in our study. In fact, the provision of a guarantee marginally improved
expected quality, reduced perceived risk, and had no effect on purchase intent. However,
for the good quality provider, the impacts were all positive and strong, and apart from the
impact on perceived risk, the effects were significantly stronger than those for the
outstanding quality provider. Our findings thus support the hypothesized moderating role
of service quality.
Introduction
Service guarantees are often seen as an effective tool to jump-start quality
improvements, to maintain superior quality levels, and to credibly signal
high quality (Wirtz, 1998). Recent research has focused on the impact of
various guarantee design features on consumer decision making (e.g.
McDougall et al., 1998; Fruchter and Gerstner, 1999; Schmidt and Kernan,
1985; Wirtz, 1997; Wirtz et al., 1999). However, little has been done to
examine a firm's reputation for service quality as a moderating variable on
the impact of a guarantee on consumer perceptions. The role of a firm's
reputation as a moderating variable is plausible because a firm known for
service excellence may be perceived as offering an implicit guarantee. For
example, one would take for granted that Ritz Carlton or McKinsey offered
first-class service, and in the as unlikely perceived event of a quality
problem, service recovery is fully expected. Hence, an explicit guarantee
might puzzle clients as to why it is now necessary for the service provider to
explicitly specify and offer a guarantee. It is therefore not clear whether
outstanding service providers would benefit from the introduction of an
explicit guarantee. We explore this issue by examining a firm's quality
reputation as a moderating variable of the impact of an explicit guarantee on
The current issue and full text archive of this journal is available at
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The authors thank Shahrin Surif for his research assistance throughout this project,
and Irene C.L. Ng for valuable feedback on an earlier draft of this manuscript.
Service quality
502 JOURNAL OF SERVICES MARKETING, VOL. 14 NO. 6 2000, pp. 502-512, # MCB UNIVERSITY PRESS, 0887-6045
An executive summary for
managers and executive
readers can be found at the
end of this article

2. consumer perceptions of risk and service quality, and consumer purchase
intent.
Impacts of a guarantee on perceived risk, expected quality and purchase
intent
A well-designed service guarantee should be unconditional, easy to
understand and to communicate, meaningful, easy to invoke and to collect on
(Hart, 1993). A service guarantee benefits the consumer by reducing the
level of perceived risk associated with the service through various ways
(Wirtz, 1998). First, an unambiguous guarantee clarifies the standards of
performance a customer can expect, and thereby reduces the uncertainty
faced. Second, it promises high quality performance in those service
elements deemed as important by the consumer. Finally, it reduces negative
consequences should the service fail by promising a substantial payout and/
or rework (Berry, 1995).
In addition to reducing perceived risk, a service guarantee serves to increase
expected service quality. Consumers would reason that if a company had not
achieved high levels of service quality, it could not offer a guarantee (Hart,
1993). According to the theory of reasoned action, the belief that buying a
service will lead to a favorable outcome induces the customer to form a more
favorable attitude towards buying, which in turn leads to a stronger purchase
intention (Azjen and Fishbein, 1980; Sheppard et al., 1988). Thus, a well-
designed service guarantee is important in increasing consumers' likelihood
of purchase.
From the current literature, it can therefore be concluded that a well-
designed service guarantee can lead to increased service quality
expectations, lower perceived risk, and increased purchase intent. However,
implicit in the research mentioned, the service providers examined are less
known for their service quality, but are aspiring to improve consumer
perceptions. Whether the benefits of introducing an explicit guarantee would
extend to firms already known for their service excellence is a key research
issue that is addressed in this paper.
Hypothesis development
While there seem to be substantial benefits from introducing an explicit
service guarantee, the effects for a firm already known for its service
excellence are less certain. It has even been suggested that it may not be
advisable for a highly reputed service provider to offer an explicit guarantee
(Hart, 1988). This is because consumers would already take outstanding
quality for granted, and would fully expect service recovery in the case of an
as unlikely perceived quality problem. Hence, outstanding service providers
are often seen as providing implicit guarantees. This may be regarded as the
pinnacle of customer service, as the guarantees are not explicitly stated, but
yet customers are confident that they can count on the firm to do what is
right. Hence, for such firms, advertising the ``known'' would produce little
gain. Worse still, an explicit guarantee offered by such a firm may be seen as
incongruent with the company's prestigious image (Hart, 1988), and may
even be interpreted as a signal for potential quality problems (Wirtz, 1998,
p. 71), resulting in negative consumer perceptions.
An implicit guarantee is an unsaid promise that a firm will do whatever is
necessary to satisfy a customer. This is the scope that is also offered by
``unconditional full satisfaction guarantees,'' which have been advocated as
the best possible guarantee design (e.g. Ettore, 1994; Hart, 1988). Hence,
firms that are known for their service excellence have little to gain and may,
Service guarantee
Implicit guarantees
JOURNAL OF SERVICES MARKETING, VOL. 14 NO. 6 2000 503

3. as suggested in the previous paragraph, even risk creating negative
perceptions by making their service guarantees explicit.
In summary, prior research suggests that the introduction of an explicit
guarantee will affect consumers' perceptions positively for service providers
that are less known for outstanding service quality, but has limited or
potentially even negative effects for service providers with a reputation for
service excellence. We therefore hypothesize that a firm's reputation for
service quality moderates the impact of an explicit service guarantee on
consumer quality expectations, perceived risk, and purchase intent.
Hypotheses: An explicit service guarantee (a) increases consumers' expected
quality, (b) reduces consumers' perceived risk, and (c) increases
consumers' purchase intent, to a larger degree for a good quality
provider than for an outstanding quality provider.
Methodology
A before-after experimental design (Aaker and Day, 1990) using a role-
playing technique was employed. The role-playing approach was used to
avoid the problem of individuals reacting differently to the study context. For
a more detailed discussion of the benefits of the role playing technique, refer
to Havlena and Holbrook (1986).
Manipulations
Two hotels that differ in their reputation for service quality were selected.
However, care was taken that the two hotels did not differ too greatly, as the
intended benefits of a guarantee can only be realized if the hotels concerned
have bond credibility, and are seen to fulfill their promise on the guarantee
(Boulding and Kirmani, 1993). The impact of a guarantee would become
weaker, and perhaps even insignificant, when the bond credibility of a
provider is low. Accordingly, two five-star hotels were selected. The good
reputation hotel (subsequently referred to as the ``good hotel'') was
operationalized as the ANA Hotel, Singapore. The hotel with an outstanding
reputation for service quality (subsequently referred to as the ``outstanding
hotel'') was operationalized as the Ritz Carlton in Singapore. Both hotels
belong to well known international chains.
Procedure
250 questionnaires were randomly distributed to business travelers at Changi
Airport in Singapore. Potential respondents were screened, and
questionnaires were only given to travelers who were familiar with both
hotel chains. A final sample of 95 respondents was achieved. The real
research purpose was disguised to minimize potential demand effects, and
respondents were told that they participated in a study that examined the
level of service quality of hotels in Singapore. First, respondents were asked
to read a short description of the hotel and then to answer a series of
questions on expected service quality, perceived risk and purchase intent.
Following which, the respondents were required to read a scenario in which
the introduction of a service guarantee was simulated (refer to the Appendix
for a sample). After reading the simulation, respondents again responded to
items that measured the independent variables.
Measures
To check that the operationalization of reputation was successfully
manipulated with the two hotels selected, respondents were asked for their
opinion of the hotel's reputation for service quality. This measure was
adapted from Boulding and Kirmani (1993). Expected service quality was
Two hotels
504 JOURNAL OF SERVICES MARKETING, VOL. 14 NO. 6 2000

4. measured using the question ``How would you describe this hotel's
reputation for service quality?'' with responses being anchored in ``1 = very
poor service'' and ``5 = excellent service.''
The dependent measures for this study were expected service quality,
perceived risk, and purchase intention. Expected service quality was
measured with a five-item seven-point scale, which was adapted from
Boulding and Kirmani (1993). The first item asked the respondents to
compare the hotel's overall level of service to other hotels of the same class
on a scale anchored at ``much lower than average quality'' and ``much higher
than average quality''. The second item asked the respondents to rate the
overall service quality of the hotel on a scale with ``low quality'' and ``high
quality'' as anchors. Respondents were also asked to indicate their
perceptions of the likelihood of service failure, non-breakdown in
performance, and the likelihood that the hotel would resolve any service
failure to their satisfaction, on seven-point rating scales anchored at ``very
unlikely'' and ``very likely.''
A one-item scale was used to measure respondents' perceived risk that is
associated with making a purchase decision about the hotel. The scale was
anchored in ``very little risk'' and ``a great deal of risk.'' Finally, the measure
for purchase intent again was adapted from Boulding and Kirmani (1993).
The measure asked respondents about the perceived likelihood that they
would pick the hotel in question over other hotels on a scale anchored at
``very unlikely'' and ``very likely.''
Data analysis
Preliminary analyses
The Cronbach alpha values for expected quality, the only multi-item scale,
was high with a value of 0.85 at the first measurement before the service
guarantee was introduced, and 0.86 at the second measurement after the
guarantee introduction.
The preliminary analysis showed that the hotels' quality levels were
perceived as intended. The Ritz Carlton (thereafter referred to as
``outstanding hotel'') was perceived as offering significantly higher levels of
service quality (mean = 5.6 on a scale from 1 to 7, 7 being highest quality)
than the ANA Hotel (thereafter referred to as ``good hotel'') (mean = 4.6,
t = 6.0, p < 0.001).
Hypothesis testing
To test the hypothesis advanced, a series of repeated measures analyses of
variance tests were conducted with the guarantee condition (before and after
introduction of the guarantee) and the hotel condition (the good and
outstanding hotel) as independent variables. Expected quality, perceived risk
and purchase intent were the dependent variables. The F-values of the main
and interaction effects resulting from the ANOVA are presented in Table I,
and the mean values of the dependent variables are plotted in Figure 1. To
Guarantee main effects
Guarantee and hotel
interaction effects
F-value P F-value P
Expected quality 42.09 <0.001 5.24 <0.05
Perceived risk 4.50 <0.05 0.08 >0.10
Purchase intent 8.63 <0.05 8.63 <0.05
Table I. Results of repeated measures analysis of variance
Expected service quality
Perceived risk
Variance tests
JOURNAL OF SERVICES MARKETING, VOL. 14 NO. 6 2000 505

5. directly contrast the impact of the guarantee on the two quality conditions,
the means for the two hotels before and after the guarantee introduction were
tested for significance (Table II).
The interaction effect for expected quality (F = 5.2, p < 0.05; Table I)
showed that an explicit guarantee had a significantly stronger impact on the
good hotel than the outstanding hotel, thus supporting our hypothesis.
Furthermore, the t-tests showed that an explicit guarantee had a significant
and positive effect on expected quality for both hotels (good hotel: t = 5.3,
p < 0.001; outstanding hotel: t = 3.7, p < 0.001; Table II). In summary, an
explicit guarantee significantly increased the expected quality for both
hotels, but the impact was significantly stronger for the good hotel than for
the outstanding hotel. Hence, H(a) is supported.
The interaction effect for perceived risk was in the intended direction (see
Figure 1), but was not significant (F = 0.08, p > 0.10). A significant
guarantee main effect and an insignificant interaction effect together suggest
that perceived risk was reduced by the explicit guarantee, regardless of the
reputation of the hotel. Although the t-value was only marginally significant
Figure 1. Interaction effects
506 JOURNAL OF SERVICES MARKETING, VOL. 14 NO. 6 2000

6. for the outstanding hotel, the impact was in the intended direction and
relatively large with a delta of 0.31. In conclusion, an explicit guarantee
reduced perceived risk independent of the reputation of the hotel. Hence,
H(b) is only partially supported.
Purchase intent showed a significant interaction effect (F = 8.6, p < 0.05).
For the outstanding hotel, the before and after guarantee means were
identical (delta = 0, t = 0.00, n.s.). This showed that an explicit guarantee
impacted the purchase intent for the good hotel, but not so for the
outstanding hotel, thus supporting the interaction effect advanced in H(c).
In summary, the impact of the explicit guarantee was positive and highly
significant for the good quality provider along all dependent variables, i.e.
expected quality was improved, perceived risk was reduced, and purchase
intention was increased. The effects of an explicit guarantee for the
outstanding quality provider were weaker. Only expected quality and
perceived risk were affected by the introduction of an explicit guarantee, and
no increase in purchase intent was observed. The ANOVAs showed that the
hypothesized interaction effects were significant for two of the three
dependent variables (i.e. for expected quality and purchase intent). However,
for the third variable (perceived risk), the effects were insignificant, though
they were at least in the hypothesized direction. Overall, the findings
therefore lend support to our hypothesis that an explicit guarantee has a
stronger impact for a good quality provider than for an outstanding provider.
Finally, our findings suggest that an explicit guarantee will not negatively
affect consumers' perceptions for an outstanding provider, contrary to what
had been implied in the literature. Rather, all the effects observed in this
study were either positive (i.e. increased expected quality and reduced
perceived risk), or null (for purchase intent), but not negative.
Discussion and implications
The results showed that the change in the expected quality for the good
quality provider was significantly larger than for the outstanding provider.
The expected quality for the outstanding provider was already high before
the introduction of an explicit guarantee. Consequently, it might have been
more difficult for customers to perceive large increases in expected quality.
In contrast, it was easier for the good provider to boost quality expectations
by offering an explicit service guarantee.
Dependent variables
Before
guarantee
(mean value)
After
guarantee
(mean value)
Delta mean
values t-value
P
(one-tailed)
Expected quality
Good hotel 4.61 5.30 0.68 5.3 <0.001
Outstanding hotel 5.58 5.90 0.33 3.7 <0.001
Perceived risk
Good hotel 3.09 2.67 0.42 2.0 <0.05
Outstanding hotel 2.47 2.16 0.31 1.2 <0.10
Purchase intent
Good hotel 3.89 4.80 0.91 3.9 <0.001
Outstanding hotel 5.94 5.94 0.00 0.0 n.s.
Note: Higher numbers mean higher expected quality, more perceived risk and higher
purchase intention. All variables were measured on seven-point Likert scales
ranging from 1 to 7
Table II. Impact of the introduction of a guarantee on consumer perceptions
Good quality provider
JOURNAL OF SERVICES MARKETING, VOL. 14 NO. 6 2000 507

7. There was no significant difference in the reduction in perceived risk
between the two hotels, meaning that the impact of an explicit guarantee on
perceived risk was independent of reputation level. This suggests that
although highly reputed hotels may have implicit guarantees, consumers still
prefer to have the certainty of an explicit promise.
The impact of an explicit guarantee on purchase intent was strong for the
good quality provider, but there was no change in the purchase intent for the
outstanding provider. There are two plausible reasons for this. First, purchase
intent was already high for the outstanding provider, hence it might have
been difficult to boost the ratings much further. Second, the outstanding
provider might have already captured the high-end of the market, even when
it did not offer an explicit guarantee. Thus, the impact of providing an
explicit guarantee would be minimal. In other words, it would be difficult for
a highly rated hotel to attract new customers by signaling even higher
quality, if it already was regarded as the quality leader. On the other hand,
for a reputable service provider, the introduction of a guarantee would be
seen as signaling higher quality. Therefore, by providing an explicit
guarantee and signaling higher quality, it could more successfully attract the
more quality conscious customers, in addition to its traditionally more value-
for-money oriented clientele.
The findings on the reputation effect are important for service managers
when deciding on whether or not to implement a service guarantee. First, the
findings confirm that a service provider with a good but not outstanding
reputation for service quality has much to gain from the introduction of a
well-designed service guarantee. Second, the findings suggest that the
benefits of a guarantee would also be positive, but less so for an already
highly reputed firm. This suggests that firms with a reputation for service
excellence should carefully consider whether the costs of implementing a
service guarantee are justifiable in terms of its market and/or operational
impacts.
In addition, contrary to what had been proposed earlier (e.g. Hart, 1988;
Wirtz, 1998), the introduction of a service guarantee had no negative effects
on customer perceptions of the outstanding provider. The guarantee caused
none of the mean values of the dependent variables to move in an
unfavorable direction. Managerially, this suggests that firms with a
reputation for excellent quality need not shy away from launching an explicit
service guarantee for fear of its negative impact on customer perceptions.
The option of using a guarantee as a tool for competitive advantage and/or as
a management tool to put pressure on operations to maintain and improve
service quality is still open.
Finally, this research suggests that for all practical purposes, offering an
explicit guarantee is still better perceived by customers, than not offering
one. We operationalized the outstanding provider with the Ritz Carlton in
Singapore, which is probably the best hotel in the region. Still, an explicit
guarantee could improve customer perceptions in our study. This was found
although an implicit guarantee suggests unlimited scope and high service
recovery expectations, as the hotel implicitly promises to satisfy its
customers no matter what. However, our findings imply that consumers
discount the expected value of implicit guarantees due to the uncertainty of
what is covered and of the recourse in the event of service failure (Wirtz,
1997). In short, customers of even the best providers may prefer the certainty
of an explicit guarantee over the uncertainty intrinsic in an implicit
guarantee, although the latter may potentially cover a wider scope and offer a
larger payout.
Two plausible reasons
Service guarantee
508 JOURNAL OF SERVICES MARKETING, VOL. 14 NO. 6 2000

8. Limitations and further research
The conclusions drawn from this study are made with the usual caveats of
experimental research. Also, future research could use a true experimental
design, ideally the Solomon Four-Group Design (Aaker and Day, 1990,
p. 327). We believed that testing effects would be negligible in the present
study, since both the before- and after-measures were taken shortly one after
the other, thus ruling out maturation and history effects, which are the most
serious threats to validity in before-after tests. Furthermore, in the
debriefings after each experimental session, respondents indicated that they
were unaware of the experimental hypotheses of this study. Finally, any
testing effect that might have occurred for one hotel should also have
occurred for the other, thus the net effect would be negligible.
This study was conducted with firms in the hotel industry, and we used only
high-end hotels as the research context. This is because of our intention to
test whether the implicit guarantee offered by such high-end providers would
reduce, or even reverse the effects of an explicit guarantee. An interesting
issue for future research is whether our findings can be extended to firms
positioned at lower-service levels (e.g. motel chains or fast food restaurants),
which nonetheless are known for outstanding quality in terms of consistently
satisfying their target customers.
In our study, we only examined reputable five-star hotels from international
chains with high bond credibility. The selection of high-end providers was
guided by Boulding and Kirmani's (1993) study on warranties, where it was
found that sufficient bond credibility was a necessary condition for
warranties to be effective. Future research could examine the moderating
effects of quality reputation on consumers' perceptions for lower quality
providers who possess little bond credibility. From past studies, it can be
inferred that the impact of a service guarantee becomes weaker as a firm's
reputation decreases (Boulding and Kirmani, 1993; Tucci and Talaga, 1997).
This suggests that consumers may discount their expected value of
warranties to the extent that perceived risk and likelihood of failure may not
be reduced. This would mean that firms with a poor reputation would need to
first improve their reputation by some other means (e.g. by communicating
success stories on quality improvements, or by using testimonials of satisfied
customers to signal improved quality), before they effectively could use
service guarantees to gain more positive consumer perceptions. Examination
of the interaction effect between bond credibility and reputation for service
quality, is yet another research avenue worth pursuing. This discussion
combined with the findings of our study suggests that the impact of a
guarantee shows an inverted U-shape, with reduced or even insignificant
impacts for firms with a reputation for very low and outstanding quality, and
a maximum impact for providers with quality levels between the two
extremes.
References
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pp. 18-23.
Solomon Four-Group
Design
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9. Fruchter, G.E. and Gerstner, E. (1999), ``Selling with satisfaction guaranteed'', Journal of
Service Research, Vol. 1 No. 4, pp. 313-23.
Hart, C.W.L. (1988), ``The power of unconditional service guarantees'', Harvard Business
Review, July-August, pp. 54-62.
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Your Company and Ensure Satisfaction For Your Customers, AMACOM, New York, NY.
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comparing two typologies of emotion in consumer behavior'', Journal of Consumer
Behavior, Vol. 13, pp. 174-84.
McDougall, G.H.G., Levesque, T. and VanderPlaat, P. (1998), ``Designing the service
guarantee: unconditional or specific?'', Journal of Services Marketing, Vol. 12 No. 4,
pp. 278-93.
Schmidt, S. and Kernan, J.B. (1985), ``The many meanings (and implications) of satisfaction
guaranteed'', Journal of Retailing, Vol. 61 No. 4, pp. 89-108.
Sheppard, B.H., Hartwick, J. and Warshaw, P.R. (1988), ``The theory of reasoned action: a
meta-analysis of past research with recommendations for modifications in future
research'', Journal of Consumer Research, Vol. 15, pp. 325-43.
Tucci, L.A. and Talaga, J. (1997), ``Service guarantees and consumers' evaluation of
services'', Journal of Services Marketing, Vol. 11 No. 1, pp. 10-18.
Wirtz, J. (1997), ``Is full satisfaction the best you can guarantee ± an empirical investigation'',
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Malaysia, Academy of Marketing Science, Vol. 8, pp. 416-18.
Wirtz, J. (1998), ``Development of a service guarantee model'', Asia Pacific Journal of
Management, Vol. 15 No. 1, pp. 84-102.
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pp. 198-203.
Appendix. Operationalization of service guarantee
&
Figure A1.
510 JOURNAL OF SERVICES MARKETING, VOL. 14 NO. 6 2000

10. Executive summary and implications for managers and
executives
Advantages of an explicit service guarantee
Service guarantees are often seen as an effective way to jump-start quality
improvements, maintain superior quality levels and credibly signal high
quality. A well-designed service guarantee should be unconditional, easy to
understand and to communicate, meaningful, easy to invoke and collect
upon.
An unambiguous service guarantee clarifies the standards of performance a
customer can expect. It promises high quality performance in the areas
which the customer deems to be important. It also reduces negative
consequences should the service fail by promising a substantial payout and/
or the service being offered again. In addition, a service guarantee increases
expected service quality. Customers reason that if a company had not
achieved high levels of service quality, it could not offer a guarantee. This, in
turn, makes it more likely that a consumer will buy the service in the first
place.
Potential drawbacks for top service companies
Most of the companies which introduce a service guarantee are striving to be
known for offering a high quality service, rather than already known for
their service excellence. Firms already known for service excellence may be
perceived as offering an implicit guarantee. For example, one would take for
granted that Ritz Carlton or McKinsey offer first class service and, in the
unlikely event of a problem arising, that the matter would be put right. An
explicit guarantee might cause clients to wonder why it is now necessary for
the company explicitly to specify a guarantee. They might even take it as a
sign of potential quality problems.
Wirtz et al. carried out research among business people familiar with two
five-star hotels in Singapore ± the ANA Hotel, which has a good reputation
for service quality, and the Ritz Carlton, which is known as outstanding. The
research was designed to show what people would think if the hotels decided
to offer an explicit service guarantee.
Good firms benefit more than outstanding ones
The results showed that, for the ANA Hotel, expected quality was improved,
perceived risk was reduced and purchase intention was increased. For the
Ritz Carlton, only expected quality and perceived risk were affected by the
introduction of an explicit guarantee. No increase in purchase intent was
observed. However, nor was there any decrease in purchase intent, so an
explicit guarantee did not harm the way consumers viewed the outstanding
provider.
Purchase intent was already high for the Ritz Carlton, so it might have been
difficult to boost the ratings much further. The Ritz Carlton might already
have captured the high end of the market, even when it did not offer an
explicit guarantee, so the impact of providing an explicit guarantee would be
minimal. For the ANA Hotel, in contrast, the introduction of a guarantee
would be seen as signalling higher quality. This would improve its chances
of attracting the more quality conscious customers, in addition to its
traditionally more value-for-money orientated clientele.
The change in the expected quality for the ANA Hotel was significantly
larger than for the Ritz Carlton. The expected quality for the Ritz Carlton
JOURNAL OF SERVICES MARKETING, VOL. 14 NO. 6 2000 511
This summary has been
provided to allow managers
and executives a rapid
appreciation of the content
of this article. Those with a
particular interest in the
topic covered may then read
the article in toto to take
advantage of the more
comprehensive description
of the research undertaken
and its results to get the full
benefit of the material
present

11. was already high before the introduction of an explicit guarantee, so it might
have been hard for customers to perceive large increases in expected quality.
In contrast, it was easier for the ANA Hotel to boost quality expectations by
offering an explicit quality guarantee.
There was no significant difference in the reduction in perceived risk
between the two hotels. This means that the impact of an explicit guarantee
on perceived risk was independent of reputation level. This suggests that
although highly reputed hotels may have implicit guarantees, customers still
prefer to have the certainty of an explicit promise.
Cost-benefit analysis required
The findings on reputation confirm that a service provider with a good, but
not outstanding, reputation for service quality has much to gain from
introducing a well designed service guarantee. There would also be benefits
for an already highly regarded firm ± but these would be less significant.
This suggests that firms with a reputation for service excellence should
carefully consider whether the costs of implementing the service guarantee
outweigh the advantages.
Offering an explicit guarantee is, it seems, better perceived by customers
than not offering one. Customers of even the best service providers appear to
prefer the certainty of an explicit guarantee over the uncertainty intrinsic in
an implicit guarantee, although the latter may potentially cover a wider
scope and offer a larger payout.
(A preÂcis of the article ``Should a firm with a reputation for outstanding
service quality offer a service guarantee?''. Supplied by Marketing
Consultants for MCB University Press.)
512 JOURNAL OF SERVICES MARKETING, VOL. 14 NO. 6 2000