Exploring the Utility of Importance Performance Analysis Using Confidence Interval and Market Segmentation Strategies

Authors

  • Jennifer O. Farnum
  • Troy E. Hall

Keywords:

Importance Performance Analysis, Loyalty, Outfi tter Guides, Segmentation, Whitewater Rafting

Abstract

In recreation and tourism industries, importance performance analysis (IPA) has become a widely used technique to determine how businesses are functioning and to guide resource allocation decisions. Despite its long history, IPA has been criticized for a variety of different reasons, causing some to question its overall usefulness. To determine whether IPA is a robust technique able to provide meaningful information about industry functioning, IPA’s utility was explored through two strategies: 1) use of a modifi ed IPA technique that employed confidence intervals (CI) rather than point estimates to establish the stability of attributes’ quadrant locations and 2) use of loyalty-segmented data (high versus low loyalty customers) to explore diff erences in attribute location. Using a survey methodology, 453 whitewater rafting customers from the Salmon River in Idaho and the Arkansas River in Colorado completed importance-performance assessments of 27 specifi c trip attributes (e.g., guide knowledge of the area and to experience challenging rapids) and a measure of customer loyalty. Results from the fi rst strategy (use of CI) showed that 9 of the 27 attributes had 95% CIs that overlapped IPA axes, indicating that a full third of experience attributes could not be reliably located within a single quadrant. For the second strategy (use of market segmentation), t tests were performed to determine whether signififi cant differences existed between high and low loyalty customers in terms of their importance and performance ratings. Results showed that high loyalty customers rated nearly all attributes as signifi cantly more important and better performing than low loyalty customers. However, IPAs constructed for the two market segments demonstrated few diff erences in attribute quadrant locations, indicating that IPA may have only limited ability to make distinctions among market segments or customer types. Taken together, findings from both strategies (modifi ed IPA and market segmentation) do not provide overwhelming support for traditional IPA as a reliable tool for developing management strategies. Recommendations are made for the rafting industry based on the modifi ed IPA.

Published

2007-04-18

Issue

Section

Regular Papers