Service Quality Perceptions’ Impact on Membership Renewal of Junior Executive Golf Memberships

Authors: Dr. Lorenda Prier

Corresponding Author:
Dr. Lorenda Prier
Consultant/Researcher, Prier Consulting
Online Sports Management Instructor, State University of New York at Canton
459 Juno Dunes Way
Juno Beach, FL 33408
Prierl@canton.edu

Dr. Lorenda Prier is a research consultant with sport industry, academic, and small business experience. Dr. Prier has conducted comprehensive research on age based marketing incentives and on the junior executive golf member segment.

Co-Author: Dr. Fred J. Cromartie

Fred J. Cromartie, Ed. D.
Director of Doctoral Studies
United States Sports Academy
One Academy Drive
Daphne, AL 36527
cromarti@ussa.edu

Dr. Fred J. Cromartie, is the Director of Doctoral Studies at the United States Sports Academy.

Co-Author: Dr. Stephen L. Butler

Stephen L. Butler, Ed. D.
Dean of Academic Affairs
United States Sports Academy
One Academy Drive
Daphne, AL 36527
sbutler@ussa.edu

Dr. Stephen L. Butler, is the Dean of Academic Affairs at the United States Sports Academy.

Service Quality Perceptions’ Impact on Membership Renewal of Junior Executive Golf Memberships

ABSTRACT
This research addresses age based price incentives in private golf courses in South Florida. These membership options are often termed junior executive memberships and provide initiation and annual membership dues discounting for members under a set age, often 45. The evaluation is a comparison of family and nonfamily subgroups within junior executive membership categories. Due to the newness of this marketing strategy, insight into member perceptions is desired for retention efforts.
A survey instrument developed by Prier (2016) was distributed to 25 golf courses with age based price incentives in the South Florida region. The components relating to service quality and behavior intentions are addressed in this research. The service quality components of the survey instrument were selected from the SERVQUAL scale for measuring customer perceptions of service quality (Parasuraman, Zeithaml, & Berry, 1988).

Survey respondents provided expectation levels and club evaluation levels on a 5 point Likert scale and a resultant gap was also utilized in analysis. Family respondents, those indicating a membership size of three or more, had higher expectations of service quality, lower club evaluations of service quality, and thus higher negative service quality gaps than nonfamily respondents (membership size of one or two).

Additionally, family respondents had a significantly lower proportion of likeliness to continue membership to the next membership tier, willingness to recommend, and intention to renew next year. The combination of more negative service quality evaluation and less favorable renewal intentions by family memberships provides an alert that managerial efforts to alleviate these perceptions is necessary. The significant differences between family and nonfamily membership perceptions supports the need for recognition of subgroups within the junior executive membership category. Service quality enhancement, specifically in employee behavior, provides an actionable strategy to enhance junior executive membership renewal.

Keywords: Golf memberships, age based price incentives, market segment, service quality, membership renewal, customer expectations, and family memberships.

INTRODUCTION
Many golf course managers are combating aging membership. A review of 39 private golf courses in the eastern section of Palm Beach County, Florida categorized over half (58%) of the courses as having an average membership age of 65 or older (Appendix A). This aging golfer scenario puts a strain on the usual management focus of retaining current customers versus attracting new golfers.

A specific population that some private golf courses have targeted is the junior executive membership segment (under 45 years of age). In 2010, the National Golf Foundation identified that over 45% (11.9 million) of golfers are between 18 and 35 years of age (Miller & Washington, 2010). By expanding the junior executive segment to 50 years of age or younger, this segment becomes 77% of all golfers, certainly a significant percentage.

Growing time constraints and increasing family activities have been cited as concern areas for member retention in golf (Graves, 2014). Constraints have also been found to prompt substitution of one location for another (Samdahl & Jekubovich, 1997, as cited in McGinnis & Gentry, 2006). Barriers such as work responsibilities, family responsibilities, cost of greens fees, and lack of time are examples of constraints that impact retention of junior executive members.

Private golf courses are in a competitive marketplace in which remaining stagnant is not an option. It is often visually obvious that golf membership is aging and this does not equate to a long term sustainable business model. For this reason, the longevity of private golf courses is tied to management’s ability to adapt and attract the next generation of golfers. This customer segment is price sensitive, time constrained, and family focused and requires specific marketing and product offerings to be convinced of membership value.

With insight into the next generation of private golf course membership, sport managers can more effectively cater to this particular segment. Golf course managers should recognize the revenue potential of adapting membership categories to include junior executive categories and have the understanding of expectation and sensitivities in service quality to effectively cater to the market segment.

This research adds to the body of scholarly research by adding insight into private golf course membership segmenting. Offering a junior executive golf membership option is a new phenomenon and has not yet been evaluated for effectiveness. Most service quality research has been on fitness centers, thus research related to golf course service quality expands research into other participant sport facilities.

Golf consumers are not identical and there is a literature gap on membership perceptions of junior executive aged golf members. There is a need to analyze this segment’s expectations and evaluation of service quality. Junior executive golf member expectation of renewal to the next membership tier will serve to identify the urgency of managerial efforts to convert junior executive members into regular golf members in order to capitalize on lifetime customer value of graduating junior executive members. The analysis of junior executive member perceptions through comparison of family and nonfamily memberships (membership size) can also guide programming and service quality delivery.

Service quality expectations and evaluations are the key assessment of this research and are influenced by individual perceptions. Both terms are outlined below.

Service Quality
Fogli (2006), defined service quality as the customer’s overall impression of the relative inferiority or superiority of the organization and its services (as cited in Srivastava & Rai, 2014). Further, Parasuraman, Zeithaml, and Berry (1985) defined the two components of service quality as technical (customer perception of the outcome of the service) and functional quality (the processes for delivering technical services). Gummesson (1991) asserted the importance of accessing both components for the assessment of quality (as cited in Srivastava & Rai, 2014).

Service quality was found to be positively related to readiness to recommend the company (Boulding, Kalra, Staelin, & Zeithaml, 1993; Parasuraman, Berry, & Zeithaml, 1991), willingness to pay more, and customer loyalty (Baker & Crompton, 2000; Zeithaml, Berry, & Parasuraman, 1996) as cited in Srivastava & Rai (2014).

Srivastava & Rai (2014) enhanced the understanding of the relationship between service quality and customer loyalty by looking at the effects of trust, switching costs, commitment and corporate image as moderator variables. Corporate image yielded a positive relationship with customer loyalty (better image increases impact of service quality on loyalty). Commitment also had a significant relationship and was a negative moderator (weaker effect of service quality on loyalty when commitment is present). Thereby, establishing customer commitment can provide a cushion for inevitable service quality gaps. Also, corporate image can assist in customer evaluation of services by providing a cue of trust and by mitigating long term uncertainty.

Perception
Perception is the process of evaluation and relates to how individuals cognitively place an organization into classifications (Lock, Filo, Kunkel, & Skinner, 2015). The Lock et al. (2015) study utilized perceptions to evaluate and judge organizational legitimacy of a community sport organization. Key considerations in interpreting perceived dimensions were whether judgments represented evaluations in alignment with self-interest, or social or cultural norms.

The Lock et al. (2015) results were nonhomogeneous in nature with these results serving as a reminder that perception is based on unique experiences and contextual understanding. Diversity in perceptions is likely to result in the evaluation of sport facilities and more specifically to this study, in the evaluation of golf course membership. Utilizing perception can provide valuable insight into individually, socially, and culturally based sport decisions.

METHODS
Private golf courses are facing an aging membership concern. Coupled with this financial dead end is a decrease in rounds played since the peak in participation in 2005. According to the World Golf Foundation, the sport had 30 million participants playing 550 million rounds in 2005, compared to 25 million participants and 465 million rounds in 2013 (Picchi, 2014). The Professional Golfers Association (PGA) of America, the national governing body that certifies professionals for private golf course management and teaching, is well aware of this current state of decline and is in active pursuit of encouraging youth and family programming.

At the club level, several courses have initiated a new membership category available to members under the age of 35, 40, and 45. This research provides information for improved managerial understanding of this customer segment by comparing family and nonfamily membership types in terms of their service quality evaluations.

Assessment involved email survey distribution to private golf courses in South Florida. Courses in the following regions were approached for participation: Naples (10), Palm Beach (8), Vero Beach (3), Lake Worth (1), Delray Beach (1), Boca Raton (1), and Tequesta, FL (1). These 25 courses met the criteria of having an age incentive membership category listed on their website. The comprehensive list of golf courses was obtained from a PGA of America website listing of Florida Golf Courses (Turner Sports Interactive, 2016). Membership directors and general managers were approached for participation and three (12%) of the approached golf courses participated in the survey. Barriers to participation included difficulty with the timing of “the season,” lack of approval from the board of directors, less than ideal timing (managers traveling), club restructuring, and concern for endorsing and exposing member information to an outside agency.

Once participation was secured the survey was presented to the primary member on each membership account endorsed and sent by the club’s membership director. The survey instrument developed had demographic, experience use history (participation), constraint, perceived value, service quality, customer satisfaction, and behavioral intention components (Appendix B) and was developed by Prier (2016) in the examination of junior executive golf member perceptions. The instrument components of this research are outlined below.

Service Quality: Components were selected from the SERVQUAL scale for measuring customer perceptions of service quality (Parasuraman et al., 1988). Specifically, the six service quality questions related to four of the five dimensions utilized by Parasuraman et al. (1988): tangibles (2), reliability, responsiveness, and empathy (2). The utilization of these established survey questions aided in ensuring a valid evaluation of service quality.

Behavior Intentions: Repurchase intentions, in this case membership renewal, was one of the behavioral intention measures. Perceived intention to renew in conversion to full membership was also evaluated to identify members at risk of terminating future membership. Additionally, perceptions were captured on willingness to recommend the club’s membership.

The service gap analysis is the methodology for comparing family and nonfamily membership types. Family versus nonfamily membership type comparisons were selected based on significant group differences in customer satisfaction responses in Prier (2016). Service gaps represent an area of opportunity for the club to alter these factors and bridge the gap between customer expectations and current perceptions. The service quality evaluation relates to facility adequacy, golf course appeal, employee responsiveness, and other member considerations. The following hypothesis relates to the evaluated service quality dimension.

  • Ho: There is no significant difference in perceived service quality gap between family and nonfamily junior executive membership types.
  • Ha: There is a significant difference in perceived service quality gap between family and nonfamily junior executive membership types.

Another objective of this study was to evaluate for differences in intentions to renew to the next membership tier.

  • H0: There is no significant difference in intention to convert membership between family and nonfamily junior executive membership types.
  • Ha: There is a significant difference in intention to convert membership between family and nonfamily junior executive membership types.

RESULTS
The survey response rate was 23.78% and 44 responses were collected. Response rates for Courses A, B, and C were 16%, 32%, and 12% respectively (Table 1.1). Group D represents a group of golf contacts who were sent the survey link to create an under age 55 category. This category was created to provide further insight on the preference of the next generation of members. Subject selection for this group was based on a requirement of involvement in the sport of golf, young family lifestyle, or home location in a golf community.

Table 1

In total, 25 age incentive golf courses were contacted and the age incentive membership categories are illustrated in Appendix B. Six (24%) of the courses had multiple tiers for age incentive membership categories. To classify these age incentives into age ranges, three courses had categories with criteria of being under the age of 35, 14 courses had membership categories with criteria being under the age of 45, 10 courses for under the age of 55 membership categories, and five courses with membership categories for members under the age of 65.

Of the 44 responses collected, 37 (84%) were from male participants and 7 (16%) from female participants. The sample had representation in four age categories with three responses indicating an age of under 25, nine between the ages of 25 and 34, 25 between the ages of 35 and 44, and seven between the ages of 45 and 54.

The majority of family representation perceptions is located in the 25-44 category with 15 of the 18 responses indicating a membership unit size of three or more. It is important to note an inconsistency in several responses in which participants stated a membership size of one or two yet indicated spouse or children participation in the usage and clinic questions. This writer chose to retain the original size response to reflect the perception of the responder on the priority components towards perceived responses.

The statistical results were completed utilizing on-line statistical calculators for z-tests and Fischer Exact tests of independence. Both online sources were recommended and verified by a contributing mathematician to this research (W. McGovern, personal communication, August 17, 2016). The z testing calculator was provided by in-silico, a project support company for scientific projects (Z-test, 2016). The Fisher’s test was calculated using the scientific software provided by GraphPad software. The analysis utilized the 2×2 contingency table provided in their Quickcalcs scientific software section (GraphPad Software, 2016). The accuracy of the Fisher 2×2 contingency table at all sample sizes is ideal especially with the small sample sizes in this data set. In order to offset the concern for a small sample size and to ensure that the difference between values due to chance is challenged, an alpha value of 0.05 (p < .05) was selected for this study.

The service quality evaluation was threefold. Responders were asked to rate their expectation on six statements (Appendix C). Secondly they evaluated their current club. These two response sections created a gap analysis on these responses for each of the six statements as well as an overall gap from compiling the six statements. On the expectation levels there was a significant difference between family and non-family groups on two statements: “The club should have up to date facilities,” and, “The club’s employees should be polite.” Mean responses were utilized in this evaluation to capture sensitivity between very satisfied (coded as 1) and satisfied responses (coded as 2). Higher mean values indicate directionality towards a strongly disagree value of 5. For instance, family mean values are lower than non-family mean values (Table 1.2) indicating a higher expectation level for those statement service quality dimensions.

Table 2

In the analysis of family versus non-family member evaluation of their current club, two statements identified statistically significant differences in levels of agreement with the statements: “My club’s employees are polite,” and “My club’s employees do not give me personal attention.” The family mean of 2.118 is closer to the agree response which was coded as 2 as compared to the non-family mean of 1.423 which is closer to strongly agree, coded as 1 for the evaluation of club employee politeness (Table 1.2). Families indicated higher levels of expectation for employee politeness and perceived statistically lower levels of agreement on the performance of this measure.

The club evaluation statement regarding personal attention is a negative statement written as my club’s employees do not give me personal attention. A favorable response from the club’s perspective is a higher mean value indicating disagreement with the statement. Non families had statistically significant higher mean values than families on this measure.

Gap evaluation of the six factors was executed and significant mean values were identified between family and non-family on three factors: employees’ politeness, employees’ promptness to respond, and employees not expected to give personal attention. Negative gaps indicate a higher expectation level than perceived club performance. Negative statements were reversed in the calculation so that evaluated responses are subtracted from the expectation (higher evaluation rather than expectation indicates higher disagreement with a negative dimension such as too busy or do not give personal attention) rather than expectation level minus actual in positive statements. Family mean values were a higher negative number on the three significant gap statements as well as on the combined gap, therefore indicating a larger perceived service quality gap (Table 1.2).

Survey respondents were asked three questions related to behavior intentions in the evaluation of their intentions to continuing to the next membership tier, recommending the course, and renewing membership next season. Continuing to the next membership tier responses in the strongly agree/agree category were significantly different between family and non-family survey groups (Table 1.3). Non-family responders (13 of 23) had a significantly higher proportion of responses in the desirable behavior intention response category than families (4 of 17). The Fisher exact test between the strongly agree/agree and neutral/disagree categories yielded a p value of .0544, not significant. Thirteen (76%) family survey responders can be labeled as being at risk in terms of membership termination as indicated by disagree/neutral intention responses to continuing to the next membership tier.

Table 3

Behavioral intentions toward recommending the club and renewing next year both had significant findings (Table 1.3). The significant difference was found in the proportion of affirmative (yes) responses between family and non-family categories. Family responders had a significantly lower affirmative response proportion (.722) with five responders indicating no or undecided on recommending the club. There was one non-family responder that indicated no or undecided compared to the 24 (.960 proportion) indicating a willingness to recommend the club.

Significant z test values resulted from family and non-family comparisons in responses for planned membership renewal for both the yes and no responses. Two (8%) non-family responders indicated a no response whereas, six (38%) family responders indicated a nonrenewal behavior intention.

DISCUSSION
Upon further review of the data, an at-risk of terminating group was created based on the response to the survey question indicating the likeliness of continuing to the next membership tier. Those that indicated a Likert response of four or five, with five indicating they are not likely to continue their membership into the next category of membership, were included in the at-risk-of-terminating group. This at-risk-of-terminating group was compared against new and returning junior executive members who had responses between one and three on the Likert scale for likeliness of continuing to the next membership tier.

A two sample z test of sample means identified a significant difference between the new/returning junior executive group and the at-risk of terminating group for family respondents (p=0.0177) in terms of the service quality gap analysis. The non-family new/returning junior executive group and the at risk of terminating group were not significantly different with both groups having a service quality gap evaluation of -0.5. Looking specifically at the differences between the new/returning junior executive group and the at risk of terminating group, a significant difference was found with the new/returning junior executive group having a mean service quality gap of -1.964 and the at risk of terminating group having a -4.0 mean service quality gap (p<.0001).

Service quality expectations, evaluations, and the resulting gap also had significant differences between family and non-family groups. In terms of expectations, family respondents had higher expectation levels (more strongly agreed) for the statement, “The club should have up to date facilities.” Family respondents also had significantly higher expectation levels (more strongly agreeing) for the statement, “Employees should be polite.” Family and non-family respondents also perceived employee politeness at their current club differently with family respondents less strongly agreeing that their current club employees are polite. Family respondents were less favorable in their response to the importance of receiving personal attention at their current club. These differences along with significant differences in expectation and evaluation gap analysis all point in favor of the family respondent having higher expectations of service and receiving lower levels of perceived service quality. This difference in customer service evaluation is also evident in the significant difference found in the higher proportion of non-family respondents (79%) selecting the recommendation rationale of effective customer service versus 25% of family respondents selecting this factor.

The gap analysis is indicative of factors where the club exceeds the member’s expectation level or where the club falls short in meeting the member’s expectations. For family members, all of the six factors represented had a member evaluation in which the member expected higher levels than was perceived as delivered. The gap ranged from -0.611 to -1.333 whereas the non-family respondents perceived their club as exceeding expectations in employee promptness to respond and had much lower gap values between -.462 and .462 all of which are lower than the gaps for the family respondents.

Behavioral intentions seem consistent with the less favorable service quality, fit, and perceptions of the family respondent group. The proportion of very likely or likely to continue to the next membership tier was .235 as compared to that being more than doubled for the non-family behavior intentions to renew to the next membership tier (.565). A significant difference was also found in the non-family group’s higher intention to recommend the club. Non-family respondents also had higher response rates for intention to renew, with 92% planning on renewing their membership as compared to 67% of family members. The family respondents do appear to have members at risk of terminating with 38% indicating that they did not intend to renew for the upcoming year. This nonrenewal rate was significantly different than the very small amount of non-family respondents indicating nonrenewal (08%).

Crilley, Murray, Howat, March, and Adamson (2002) utilized the expectation evaluation service gap evaluation to identify problem and strength areas for specific groups. The largest service gap areas in their study were related to tangible areas of service such as facilities, course quality and conditions; however, the largest service gap areas in this study did not mirror Crilley et al. for one of the two groups. The family respondent gaps in this study identified much larger gaps for being given personal attention (empathy), fulfilling promises (staff responsiveness), and for employee politeness (empathy). The non-family respondents had the largest gaps for visually appealing facilities (tangibles), fulfilling promises (staff responsiveness) and up-to-date facilities (tangibles). The less favorable service quality evaluation of family respondents and the connectedness with less favorable satisfaction rates and renewal intentions is consistent with Chang and Lee (2004) in which perceived service quality affected renewal intention more than satisfaction effected renewal, indicating the relationship direction is service quality, satisfaction, and renewal rates.

Three behavioral intentions were examined in this study, satisfaction, intention to renew, and intention to recommend. Significant differences were found between family and nonfamily membership groups on intention to renew and on intention to recommend. The power in relying on the response to renewal intention was offset by much different response rates in terms of intention to continue to the next membership tier (23.5% and 56.5% for family and non-family groups compared to 66.7% and 92% intentions to renew).

Family respondents had higher expectations of service quality and appear more apt to complain. This could stem from a need to recoup on a higher financial investment. The average initiation fees for family respondents was $22,955. Similarly non-family respondents paid an average of $20,250 in initiation fees. This is not a significant cost difference between the groups (p=.8432). The family respondent average dues was $8,523 as compared to the significantly lower average of $5,586 for non-family respondents. This higher level of annual expenditure may be in the awareness of the family membership respondent and thus be creating the negative evaluation.

CONCLUSIONS
Younger members represent the future for golf course membership stability and clubs have recognized this with the implementation of age-based price incentive categories to increase demand within this age segment. Prevalent among this younger group of golf club members are family membership groupings. This study has identified that younger members, with membership size greater than two, are in need of initiatives to continue their membership to the next membership tier. Managerial efforts are required to counteract the family club members that are leaning towards nonrenewal. A common factor influencing this terminating susceptibility is negative customer service evaluations at the club level.

APPLICATION IN SPORT
Marketing incentives such as age based membership programs are a sign of the times in which private golf course managers make an active charge against an aging membership situation. However, this is only the beginning, in effectively capturing junior executive members. A key insight on junior executive golf members is the difference in perceptions among this group as defined by membership size. Perceptions among respondents with membership size of one or two (singles and couples as defined by the responder and still may contain children in the family unit but not in the club utilization group) had vastly different service quality and behavioral intention perceptions.

Armed with this knowledge, private club managers can further segment and serve the different needs of family and nonfamily junior executive members. The targeted outcome is to alleviate negative service quality perceptions for the family defined memberships that were associated with at risk of terminating membership intentions. The method of addressing negative perceptions lies in club employees. Specifically, the highest gaps and therefore the areas of largest potential impact were found on prompt responsiveness, employee politeness, promise fulfillment, and personal attention delivery. The course tangible gaps were not as high ranking as employee behavior for the family defined membership respondents.

This research links negative service quality evaluations with decreased positive responses for behavioral intentions for club recommendation and renewal. The concepts are linked to alert club managers on the impact of servicing this sub-segment (family memberships) of junior executive golf members because of its potential impact on the bottom line. An attrition rate of 25-35% was presented by one private golf course manager (K. Trebbi, personal communication, May 7, 2015) and was stated as a managerial concern and area of needed research. This research identifies a specific area responsible for negative renewal intentions for junior executive members to combat attrition.

The junior executive membership category may be a “build it and they will come” but it cannot stop there for sport managers. Attrition of this group is on the horizon if the distinct needs of members with family defined membership size are not addressed and monitored. The age based price incentive is only as good as its conversion rate to full members and therefore requires maintenance, specifically employee service delivery, to keep these members in the pipeline to higher revenue membership.

ACKNOWLEDGMENTS
This research was initiated from bombarding many golf sport managers on what would be valuable research content for their private golf club. PGA National Golf Club, previous managing director Joel Paige and Members Club general manager, Kathi Trebbi, were instrumental in identifying this research need. Clubs agreeing to participate in the survey were PGA National Golf Club, (James Gelfand), The Dye Preserve (Joseph Webster, Jenny Suh, and Karla Bass), and the Country Club of Naples (Tim Lynch and Holly Stephens). Thank you to these membership directors and general managers for their openness to research and their willingness to aid in my academic pursuit.

Thank you to my dissertation committee chair Dr. Fred Cromartie and members Dr. Stephen Butler and Dr. Anthony Borgese. I had an extremely positive dissertation experience and gained tremendously from their expertise and feedback. I was energized by their suggestion of continuation within the research area of age based price incentives to include journal article submission. I seek to continue to strengthen my expertise in this research area and appreciate their suggestions and backup to be able to effectively contribute to the field of sports management.

Dr. Warren McGovern, Florida Atlantic University, was a valuable asset in identifying statistical methods of analysis to decipher the survey data. Dr. McGovern was inspiring for jumping in to the project with extreme energy and passion and was truly a pleasure to work with. It is a great journey to be able to identify an area then with combining academic minds be able to make conclusions that are concise and actionable. I truly hope sport managers take this information to heart and action and reap the benefits of membership stability into the future.

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