SU+ @ Strathmore University Library Electronic Theses and Dissertations This work is availed for free and open access by Strathmore University Library. It has been accepted for digital distribution by an authorized administrator of SU+ @Strathmore University. For more information, please contact library@strathmore.edu 2023 Factors influencing customer satisfaction with services offered by tours and travel agencies in Nairobi. Adundo, Martin Strathmore Business School Strathmore University Recommended Citation Adundo, M. (2023). Factors influencing customer satisfaction with services offered by tours and travel agencies in Nairobi [Strathmore University]. http://hdl.handle.net/11071/13413 Follow this and additional works at: http://hdl.handle.net/11071/13413 https://su-plus.strathmore.edu/ https://su-plus.strathmore.edu/ http://hdl.handle.net/11071/2474 mailto:library@strathmore.edu http://hdl.handle.net/11071/13413 http://hdl.handle.net/11071/13413 FACTORS INFLUENCING CUSTOMER SATISFACTION WITH SERVICES OFFERED BY TOURS AND TRAVEL AGENCIES IN NAIROBI ADUNDO MARTIN MCOM/072649 THESIS SUBMITTED IN PARTIAL FULFILMENT OF THE REQUIREMENTS FOR THE AWARD OF A MASTER IN COMMERCE, STRATHMORE UNIVERSITY BUSINESS SCHOOL STRATHMORE UNIVERSITY JUNE, 2023 i DECLARATION I hereby declare that the work contained in this research project is my own, original work, and has not been previously published or submitted for any other degree or award. I have properly cited and referenced any sources used in the project, and I have obtained appropriate consent from any participants involved in the research. I take full responsibility for the content and accuracy of the work presented. Adundo Martin 7th June, 2023 ……………………………. Approval This research thesis of Adundo Martin was reviewed and approved by: Dr. Tabitha Waithaka (Supervisor) Lecture Strathmore University Business School 7th June, 2023 … ………………………………. Dr. Ceasar Mwangi Executive Dean Strathmore University Business School. Dr. Bernard Shibwabo Director, Office of Graduate Studies ii DEDICATION To my parents, who have always supported and encouraged me in all my endeavours, and who have instilled in me a love of learning and a commitment to excellence. iii ACKNOWLEDGEMENT To God, who is the source of all knowledge and wisdom, and who guides and directs my path. I am also grateful to Strathmore Business School, which has provided me with the opportunity to pursue my studies and to conduct this research, and which has supported me with the resources and expertise necessary to complete this project. I would like to thank my supervisor Dr. Tabitha Waithaka, who has provided invaluable guidance and support throughout this research process, and who has helped me to develop my skills and knowledge as a researcher. iv TABLE OF CONTENTS DECLARATION.................................................................................................................. i DEDICATION..................................................................................................................... ii ACKNOWLEDGEMENT ................................................................................................. iii TABLE OF CONTENTS .................................................................................................. iv LIST OF TABLES ........................................................................................................... viii LIST OF FIGURES ........................................................................................................... ix ABSTRACT ......................................................................................................................... x CHAPTER ONE ................................................................................................................. 1 INTRODUCTION............................................................................................................... 1 1.1 Background of the study ................................................................................................. 1 1.1.1 Customer Satisfaction .............................................................................................. 2 1.1.2 Factors Affecting Customer Satisfaction ................................................................ 4 1.1.3 Tour and Travel Agencies in Kenya ........................................................................ 6 1.2. Problem Statement ......................................................................................................... 8 1.3 Research Objectives ...................................................................................................... 10 1.3.1 Specific Objectives ................................................................................................ 10 1.4 Research Questions ....................................................................................................... 11 1.5 Scope of the Study ........................................................................................................ 11 1.6 Significance of the Study .............................................................................................. 11 1.7 Chapter Summary ......................................................................................................... 13 CHAPTER TWO .............................................................................................................. 14 LITERATURE REVIEW ................................................................................................ 14 2.1 Introduction ................................................................................................................... 14 v 2.2 Theoretical Framework ................................................................................................. 14 2.2.1 The Value-Percept Disparity Theory .................................................................... 14 2.2.2 Complex Adaptive Theory .................................................................................... 16 2.3 Empirical Review.......................................................................................................... 18 2.3.1. Promotional Value and Customer Satisfaction .................................................... 18 2.3.2 Functional Value and Customer Satisfaction ........................................................ 20 2.3.3 Emotional Value and Customer Satisfaction ......................................................... 22 2.3.4 Innovative Value and Customer Satisfaction ........................................................ 23 2.4 Research Gap ................................................................................................................ 24 2.5 Conceptual Framework ................................................................................................. 27 2.6 Operationalization of Study Variables .......................................................................... 29 2.7 Chapter Summary ......................................................................................................... 30 CHAPTER THREE .......................................................................................................... 31 RESEARCH METHODOLOGY .................................................................................... 31 3.1 Introduction ................................................................................................................... 31 3.2 Research Philosophy ..................................................................................................... 31 3.3 The Research Design .................................................................................................... 31 3.4 Population of the Study ................................................................................................. 32 3.5 Sampling Design ........................................................................................................... 32 3.6 Data Collection Methods .............................................................................................. 33 3.7 Data Analysis and Presentation .................................................................................... 34 3.8 Quality of the Research ................................................................................................. 34 3.8.1 Reliability Tests ..................................................................................................... 34 3.8.2 Validity .................................................................................................................. 35 3.9 Ethical Issues in Research ............................................................................................. 36 3.10 Chapter Summary ....................................................................................................... 36 CHAPTER FOUR ............................................................................................................. 37 PRESENTATION OF RESEARCH FINDINGS ........................................................... 37 4.1 Introduction ................................................................................................................... 37 4.2 Response Rate and General Information of Respondents ............................................. 37 4.2.1 Response Rate ....................................................................................................... 37 vi 4.2.2 General Information of Respondents .................................................................... 38 4.3 Descriptive Analysis ..................................................................................................... 43 4.3.1 Customer Satisfaction of Tour and travel agencies ............................................... 43 4.3.2 Promotional Value ................................................................................................. 44 4.3.3 Functional Value ................................................................................................... 45 4.3.4 Emotional Value .................................................................................................... 46 4.3.5 Innovative Value ................................................................................................... 47 4.4 Inferential Analysis ....................................................................................................... 48 4.4.1 Effect of Promotional Value on Customer Satisfaction ........................................ 49 4.4.2 Effect of Functional Value on Customer Satisfaction ........................................... 51 4.4.3 Effect of Emotional Value on Customer Satisfaction ........................................... 53 4.4.4 Effect of Innovative Value on Customer Satisfaction ........................................... 55 4.5 Overall Regression Values and Customer Satisfaction ................................................ 57 4.6 Chapter Summary ......................................................................................................... 59 CHAPTER FIVE .............................................................................................................. 60 DISCUSSION, CONCLUSIONS AND RECOMMENDATIONS ............................... 60 5.1 Introduction ................................................................................................................... 60 5.2 Discussions of the Findings .......................................................................................... 60 5.2.1 Promotional Value and Customer Satisfaction ..................................................... 60 5.2.2 Functional Value and Customer Satisfaction ........................................................ 61 5.2.3 Emotional Value and Customer Satisfaction ......................................................... 62 5.2.4 Innovative Value and Customer Satisfaction ........................................................ 62 5.3 Conclusions ................................................................................................................... 63 5.4 Recommendations ......................................................................................................... 64 5.4.1 Policy Recommendations ...................................................................................... 64 5.4.2 Managerial Recommendations .............................................................................. 65 5.4.3 Theoretical Recommendations .............................................................................. 65 5.5 Study Limitations and Suggestions for Further Studies ............................................... 65 5.5.1 Geographical Limitation ........................................................................................ 65 vii 5.5.2 Sampling Bias ........................................................................................................ 66 5.5.3 Self-Reported Measures ........................................................................................ 66 REFERENCES .................................................................................................................. 67 APPENDICES ................................................................................................................... 77 Appendix I: Letter of introduction ...................................................................................... 77 Appendix II: Questionnaire................................................................................................. 78 Appendix 3: List of Category A, B, and C KATO Members ............................................. 82 Appendix 4: Timeline of Activities .................................................................................... 85 Appendix 5: Research Budget ............................................................................................ 86 viii LIST OF TABLES Table 4.1: Choice of Tours and Travel Agency .................................................................. 25 Table 4.2: Number of Years using the Travel Agency........................................................ 25 Table 4.3: Times of using the Travel Agency Annually ..................................................... 25 Table 4.4: Customer Satisfaction ........................................................................................ 25 Table 4.5: Promotional Value ............................................................................................. 40 Table 4.6: Functional Value ................................................................................................ 25 Table 4.7: Emotional Value ................................................................................................ 41 Table 4.8: Innovative Value ................................................................................................ 25 Table 4.9: Correlation Promotional Value and Customer Satisfaction ............................... 49 Table 4.10: Regression Summary Promotional Value and Customer Satisfaction ............ 49 Table 4.11: ANOVA Summary Promotional Value and Customer Satisfaction ................ 50 Table 4.12: Regression Coefficient Promotional Value and Customer Satisfaction .......... 50 Table 4.13: Correlation Functional Value and Customer Satisfaction ............................... 51 Table 4.14: Regression Summary Functional Value and Customer Satisfaction ............... 51 Table 4.15: ANOVA Summary Functional Value and Customer Satisfaction .................. 52 Table 4.16: Regression Coefficients Functional Value and Customer Satisfaction ........... 52 Table 4.17: Correlation Emotional Value and Customer Satisfaction ................................ 53 Table 4.18: Regression Summary Emotional Value and Customer Satisfaction ................ 54 Table 4.19: ANOVA Summary Emotional Value and Customer Satisfaction ................... 54 Table 4.20: Regression Coefficients Emotional Value and Customer Satisfaction............ 54 Table 4.21: Correlation Innovative Value and Customer Satisfaction ............................... 55 Table 4.22: Regression Summary Innovative Value and Customer Satisfaction ............... 56 Table 4.23: ANOVA Summary Innovative Value and Customer Satisfaction .................. 56 Table 4.24: Regression Coefficients Innovative Value and Customer Satisfaction ........... 56 Table 4.25: Regression Summary Factors and Customer Satisfaction ............................... 57 Table 4.26: ANOVA Summary Factors and Customer Satisfaction .................................. 57 Table 4.27 Regression Coefficients Factors and Customer Satisfaction ............................ 58 ix LIST OF FIGURES Figure 2.1: Conceptual Framework .................................... Error! Bookmark not defined. Figure 4.1: Response rate on pie chart ................................................................................ 38 Figure 4.2: Age distribution of respondents on the bar graphError! Bookmark not defined. Figure 4.3: Gender .............................................................. Error! Bookmark not defined. Figure 4.4: Level of Education on thebar graph ................. Error! Bookmark not defined. Figure 4.5: Choice of Tours and Travel Agency ................ Error! Bookmark not defined. Figure 4.6: Number of Years using the Travel Agency ...... Error! Bookmark not defined. Figure 4.7: Times of using the Travel Agency Annually ... Error! Bookmark not defined. x ABSTRACT Customer satisfaction is a measure of how well a product or service meets the needs and expectations of its customers. It is a complex and multi-dimensional construct that can be influenced by various factors such as product or service quality, price, convenience, responsiveness, and customer service. Customer satisfaction is generally considered to be a positive outcome, as it indicates that customers are happy with the product or service they have received. To this end, this study aimed to investigate the factors influencing customer satisfaction with services offered by high-end tours and travel agencies in Nairobi County. The factors that the study considered were promotional value, functional value, emotional value, and innovative value. The study adopted a descriptive research design. The target population in this study was customers who utilize the services of high-end tour and travel agencies in Nairobi. A sample of customers from four high-end tour agencies, Abercrombie & Kent Ltd, African Horizons Travel Safaris, Bush and Beyond Ltd, and Pollmans Tours Safaris Ltd-Msa was selected using judgmental sampling technique. Data was collected using a structured questionnaire. It was then analysed using descriptive statistics and inferential statistics and presented using tables and figures. The questionnaires issued were responded to and returned to the researcher. The correlation tests for promotional value, functional value, emotional value, and innovative value and customer satisfaction showed there existed a significant and strong positive effect these four factors on the Customer Satisfaction of the tour and travel agencies in Kenya. The research concluded that all four factors significantly influence customer satisfaction with the services provided by tours and travel agencies in Nairobi. The study recommends that the management of tour and travel agencies aim to increase their promotional, functional, emotional, and innovative values to increase their customer satisfaction and improve their brands. Policy-makers should encourage collaboration among tours and travel agencies, industry associations, government bodies, and other relevant stakeholders to create platforms for knowledge sharing, best practice exchange, and joint initiatives to improve overall service quality and customer satisfaction. The study limitations include the focus only on high-end tours and travel agencies. Also, the study has geographic limitation as it only focuses on Nairobi. Future research should build upon existing theories and frameworks related to customer satisfaction and service quality in the context of tours and travel agencies. Future studies could consider a more diverse, incorporate objective measures or employ mixed-method approaches and representative sample to obtain a comprehensive understanding of customer satisfaction. xi 1 CHAPTER ONE INTRODUCTION 1.1 Background of the study The globalization of the world economy has heightened the pressure on businesses to enhance their competitiveness and ensure long-term sustainability. Organizations have to keep reinvent their business processes, procedures, policies, and their market niche, as a way of staying relevant and sustainable (Anand & Selvaraj, 2013). To remain sustainable, organizations have to be profitable, and equally, have to gain sizeable control of their market in terms of the products and services they are offering on the market. As such, the threat of new entrants particularly with multinationals have organizations are continuously forcing organizations into strategic reinventions as a way of dealing with the global pressure to offer products and services at the global market standards (Arbore & Busacca, 2016). Many organizations are therefore pointing to customer satisfaction as a way of developing and differentiating their services from their competitors, and also as a tool for developing competitive advantage (Narteh & Kuada, 2014). The customer assumes a pivotal role in every business, and the success of the enterprise is inconceivable without their presence. Working closely with customers is of paramount importance. They are not only a vital component of the business but also an integral part of the market. In order to thrive, companies must provide products and services of exceptional quality, resulting in highly satisfied and loyal customers (Nazariah et al., 2022). In Africa, one of the major challenges faced by managers in the hospitality industry is to consistently deliver and maintain high levels of customer satisfaction (Ofosu-Boateng & Acquaye, 2020). In addition to Africa, managers in the hospitality industry in various regions face similar challenges in maintaining high levels of customer satisfaction. For instance, in Europe, where tourism is a thriving industry, managers in popular destinations such as Paris, Rome, and Barcelona strive to consistently deliver exceptional experiences to their guests (Cheng et al., 2016). In Asia, countries like Thailand, Japan, and Maldives attract a significant number of tourists, and managers in the hospitality industry there work hard to meet the expectations of diverse international visitors. Customer requirements for quality products and service in the tourism industry have become increasingly evident to any that wants to remain in business. The consumer’s satisfaction is a consequence of the purchasing activities, of the consumption and of the use of some goods and services and defines both as 2 an emotional answer, and a cognitive answer (Song & Lim, 2022). Quality of service and customer satisfaction is critical factors for success of any business (Yuniari & Giantari, 2020). As Willie (2020) points out: enterprises exist because they have a customer to serve. The key to achieve sustainable advantage lies in delivering high quality service that results in satisfied customers (Gakii et al., 2022). Service quality and customer satisfaction are key factors in the battle to obtain competitive advantage and customer retention. The Kenya Tourism Research Institute (TRI) (2022) reported that in 2022, there was a remarkable growth in earnings from inbound tourism. The earnings reached Kshs. 268.09 billion, a significant increase from Kshs. 146.51 billion in 2021, reflecting an impressive growth rate of 83%. According to the TRI data, tourism made a direct contribution to the growth of hotel industry and other related sectors. There has been a wide range of domestic hotels and hospitality enterprises whose service offering not only complements those of world class hotels but also serve the domestics guests or tourists (Mbuthia et. al., 2013). However, according to Watiki (2014) the domestic tours industry in Kenya is experiencing increasing competition with major international brands increasingly setting up operations in Kenya hence the need for the current study to establish factors influencing customer satisfaction with the services offered by the tour and travel agencies. 1.1.1 Customer Satisfaction According to Andrianto et al. (2023), customer satisfaction is the judgment a consumer makes in relation to his/her sense of fulfillment related to his/her choices about the purchase and use of specific products and services. Various definitions of customer satisfaction are found in literature. One of the earliest definitions of customer satisfaction was proposed by Cardozo (1965). According to Cardozo (1965), customer satisfaction is the result of a cognitive comparison between the expected and actual performance of a product or service. He suggested that customers evaluate a product or service based on their pre-purchase expectations, and their satisfaction is determined by the degree to which the product or service meets or exceeds those expectations. Arslanagic-Kalajdzic et al. (2020) highlights customer satisfaction as an emotional response resulting from a comparison of pre-purchase expectations with the actual performance of the product or service. He proposed that customer satisfaction is a multi-dimensional construct, and it depends on both product-related and service-related factors. Oliver's study also revealed that customer satisfaction is positively related to customer loyalty and repurchase intentions. 3 Mustaffa et al. (2016) developed a new model of service quality that emphasized the importance of customer expectations. They suggested that customer satisfaction is influenced by the degree to which the service meets or exceeds customer expectations. They further added that customer expectations are shaped by past experiences, word-of-mouth communication, and marketing communications. Similarly, Díaz and Duque (2021) formulated a satisfaction model that focused on the relationship between customer expectations, perceived performance, and customer satisfaction. According to their model, customer satisfaction is the result of a comparison between customer expectations and perceived performance. They suggested that the greater the gap between expectations and perceived performance, the lower the customer satisfaction. Lin and Chen (2012) looks at customer satisfaction as a customer's subjective evaluation of the service received, based on a comparison of perceived performance against expectations. The study focused specifically on the impact of customer satisfaction on customer loyalty in the airline industry. The study acknowledged that customer satisfaction is a complex construct that is influenced by various factors, including service quality, price, convenience, and personal expectations. As such, the study focused specifically on the impact of service quality and customer satisfaction on customer loyalty. Kchaou et al. (2018) study scrutinized the relationship between corporate social responsibility (CSR) and customer satisfaction and loyalty in the telecommunication industry. The study found that CSR positively influenced customer satisfaction and loyalty. Alves et al. (2019) conducted a study on customer satisfaction in the hospitality industry. They defined customer satisfaction as the degree to which customers perceive their expectations to have been met or exceeded by the service provided. They found that customer satisfaction is positively related to customer loyalty, and customers are more likely to recommend the service to others. Hong and Lee (2020) study examines the relationship between customer satisfaction, trust, and loyalty in the online shopping industry. Hong and Lee's study defined customer satisfaction as "a customer's overall evaluation of their experience with the online shopping service". The study found that trust mediates the relationship between customer satisfaction and loyalty. According to the study, positive impact of customer satisfaction on loyalty is partially explained by the positive impact of customer satisfaction on trust. 4 Customer satisfaction continues to be a crucial factor for businesses to consider in their operations, as it directly impacts customer loyalty, repeat business, and positive word-of- mouth advertising. Several recent studies have further highlighted the importance of customer satisfaction. A study by Ruswanti et al. (2020) found that customer satisfaction has a significant positive impact on repurchase intention, Purchase frequency and positive word-of- mouth communication which greatly contribute to business growth. The study emphasized the importance of businesses focusing on customer satisfaction in order to drive growth. Another study by Eklof et al. (2018) examined the relationship between customer satisfaction and financial performance. The study found that companies with high levels of customer satisfaction tend to have better financial performance and greater returns on investment than those with lower levels of customer satisfaction. The study focused on measures of customer satisfaction suggested by Ruswanti et al. (2020) namely repurchase intention, Purchase frequency and positive word-of-mouth communication. 1.1.2 Factors Affecting Customer Satisfaction According to Noor and Ali (2018), customer satisfaction refers to the overall evaluation or perception of customers regarding the extent to which a product, service, or experience meets or exceeds their expectations and fulfils their needs. It represents the level of contentment, happiness, and positive sentiment that customers experience as a result of their interactions with a company or organization. To measure customer satisfaction, various operational variables such as customer surveys, customer feedback, repeat customers, and customer complaints can be used (Alzoubi et al., 2020). These variables are typically derived from surveys, questionnaires, or feedback mechanisms. Deng et al. (2016) study in China argues that in today's business world, customer satisfaction is of utmost importance as the service provider's ability to create a high degree of satisfaction is critical for product differentiation and the development of strong customer relationships. Soe (2019) carried a study on analysis of factors influencing customer satisfaction and customer loyalty at TrueMoney Myanmar. The study found that factors such as price and product features positively influence customer satisfaction, whereas factors such as place and promotion are not significant factors. Furthermore, customer satisfaction leads to customer loyalty. 5 Xia et al. (2009) conducted research to measure the factors that contribute to tourist satisfaction when visiting Guilin, China. The study found that tourists' expectations, destination image, service quality, and perceived value are all significant factors that contribute to their overall satisfaction. Additionally, the study revealed that perceived customer satisfaction has a positive effect on loyalty, while having a negative effect on tourist complaints. In their study conducted in Pakistan, Imran and Abbas (2018) investigated the impact of pricing on customer satisfaction in the airline industry. The study revealed that pricing is a significant factor that affects customer satisfaction, and airlines should consider its impact while setting prices. Several studies have shown that customers’ perceptions of price fairness significantly influence their satisfaction (Hride et al., 2021; Bernarto & Purwanto, 2022). Parasuraman, Zeithaml, and Berry (1985) study in the United States viewed service quality as “the degree and direction of discrepancy between customers’ expectations and perceptions of service delivery”. In their study, they identified five dimensions of service quality: tangibles, reliability, responsiveness, assurance, and empathy. Other studies have also supported the importance of service quality in determining customer satisfaction (Ali et al., 2021; Mutinda, 2020). Researchers have identified that product quality is an important predictor of customer satisfaction and repurchase intentions (Naini et al., 2022). Shamim and Zaman (2018) studied the impact of employee behaviour on customer satisfaction in the fast-food industry in India. The study found that employee behaviour as a factor significantly influenced customer satisfaction and that training employees to improve their behaviour could lead to higher customer satisfaction. Brand image, or the overall perception that customers have of a brand, has also been identified as a critical factor that can affect customer satisfaction. In previous studies, the factors influencing customer satisfaction were often limited to aspects such as product quality, price, convenience, and employee behaviour. Recognizing the need to explore a broader range of variables, the present research draws inspiration from the study conducted by Leelakulthanit and Hongcharu (2011). Their investigation delved into the impact of factors beyond the traditional ones, including functional value, promotional value, innovative value, and emotional value, on customer satisfaction. Their study highlighted that these four factors had a huge impact on customer satisfaction. Promotional value refers to the perceived worth or benefit that a marketing campaign has for the consumer or target 6 audience. It can be in the form of a discount, a gift with purchase, or other incentive to make a purchase or take a specific action. Functional value refers to the usefulness or utility that a product or service provides to the consumer. Innovative value refers to the degree to which a product or service is perceived as being new, original, and different from other products or services in the market. Emotional value refers to the perceived worth or benefit that a product or service has in terms of the emotions it evokes in the consumer. Essentially, delivering customer values is a key means for companies to satisfy customer needs. Recognizing that delivering customer value is essential for satisfying their needs, the current study specifically investigates the impact of functional value, promotional value, innovative value, and emotional value on customer satisfaction in the context of tour and travel agencies. As high-end tour agencies cater to customers who are willing to pay a premium for services, understanding and effectively delivering these value dimensions becomes critical in ensuring customer satisfaction. By exploring these factors, the study aims to shed light on the drivers of customer satisfaction within the tour and travel industry and contribute valuable insights to the field. 1.1.3 Tour and Travel Agencies in Kenya Kenya is famous worldwide for its exceptional safari excursions. Through these vacation packages, travellers are able to enjoy Kenya’s breath-taking terrain and, most significantly, its abundant wildlife. Utilising travel agents and tour operators is one of the finest methods to enjoy the trip. Tour operators serve as intermediaries in the tourist allocation system, linking items and customers (Gakii et al., 2022). Tour companies handle all aspects of travel, including the purchase of plane tickets, assistance arrangements, and transport to and from the airport and itinerary. Tour and travel agencies in Kenya operate within a dynamic environment shaped by various factors. The operating environment of tour and travel agencies in Kenya is influenced by the tourism sector, government policies, competition, technology, infrastructure, safety and security, and environmental sustainability (KATO, 2022). For instance, competition is intense in the tour and travel industry in Kenya. These agencies need to differentiate themselves through unique offerings, quality services, and competitive pricing to attract customers and stay ahead of their competitors. Individual documentation of the barnstorm operators The Kenya Association of Tour Operators (KATO) is the parent organisation of the Kenya Association of Travel Agencies (KATA). KATO is the top tourist tours association in 7 Kenya, representing the interests of more than 300 tour operators (KATO, 2022). KATO seeks to simplify and improve the business environment of the travel sector in Kenya by promoting the goods of travel agents to the general public, defending the rights of travel agent organisations, and assisting businesses to optimize their accomplishments and profits. There are different classes of tour operators according to KATO ranging from A to E, with class A having 37 members offering the best of services hence higher customer satisfaction but charge a premium. On the other hand, class E are relatively cheaper tour operators but their service is relatively average. In terms of competition, Class A attract a niche clientele, hence the competition is among the Class A tour operators. These premium tours are designed to offer high-quality experiences, personalized services, and luxurious accommodations to their clients. Some of the benefits of premium tours may include private transportation, expert guides, and gourmet meals. The selection of Class A tour operators over others can be attributed to various factors, contributing to their prominence and preference. Class A operators are renowned for their exceptional services, offering high-quality experiences, personalized attention, and luxurious accommodations to their clients (KATO, 2022). These operators specialize in designing premium tours that cater to the expectations of discerning travellers who actively seek outstanding service and distinctive experiences. Consequently, customers who opt for Class A operators are more likely to experience heightened levels of satisfaction compared to those choosing other classes. Another significant factor is that Class A tour operators attract a specific niche clientele who are willing to pay a premium for top-notch services and exclusive experiences. This particular customer segment often possesses elevated expectations, actively pursuing exceptional quality, personalized care, and indulgence. By concentrating on this niche market, Class A operators can tailor their services precisely to fulfil the unique needs and desires of their clientele, thereby enhancing customer satisfaction significantly. Furthermore, Class A tour operators often go the extra mile by providing additional benefits and amenities that contribute to an elevated customer experience. These supplementary advantages may encompass private transportation, expert guides, gourmet meals, and exclusive access to locations or activities. Through offering such premium benefits, Class A operators strive to surpass customer expectations and create memorable, highly satisfactory experiences for their clients. 8 This study focused on four Class A tour operators namely; Abercrombie & Kent Ltd, African Horizons Travel Safaris, Bush and Beyond Ltd, and Pollmans Tours Safaris Ltd-Msa. The choice of these four tour companies can be attributed to several reasons. On top of their excellent services and a strong market presence and brand recognition, the choice to carry-out research on these four was influenced by practical considerations such as availability, accessibility, and cooperation from the agencies. Given the increasing level of competition both globally and locally, it is critical for tour and travel companies to strive to deliver customers satisfaction to ensure their survival. Therefore, the study aimed to establish factors influencing customers’ satisfaction with the services offered by the high-end tour and travel agencies in Nairobi county. 1.2. Problem Statement Customer satisfaction is a critical aspect for firms operating in the service industry, where customer needs and expectations are continually evolving (Rosak-Szyrocka et al., 2022). The selection of functional value, promotional value, innovative value, and emotional value as independent variables is based on previous research and the unique context of high-end tours and travel agencies. Nsobiari and Anyadighibe (2014) study in Nigeria argues that the ability to satisfy consumers remains one of the greatest tasks for any firm to achieve as customer needs and expectation are changing at all time. Studies like Nsobiari and Anyadighibe (2014) highlight the importance of understanding customer expectations and market characteristics. Promotional value, which encompasses appealing advertisements and incentives, can significantly influence customer satisfaction. It aligns with the notion that effective promotional strategies positively impact customers' perception of a company's goods or services. Understanding customers’ expectation is crucial in-service industry such as tours and travel industries and therefore managers should endeavour to carry out initial market surveys to find out what the market needs which should also give an insight on the market characteristics (Kabuitu & Ngige, 2016). According to Adil and Sadiq (2019), certainty, tangibility, and empathy are the factors of efficient customer satisfaction in India. These elements are crucial for evaluating the quality of customer service in any hotel environment. In addition, it has been shown that consumers appropriately evaluate the services they get based on their promptness, transaction correctness, and security features (Fida et al., 2020). Previous studies, such as Adil and Sadiq (2019), have emphasized the significance of functional factors, such as certainty, tangibility, 9 and empathy, in achieving customer satisfaction. These elements are critical for evaluating the quality of customer service, and their inclusion allows for an examination of the tangible aspects of the services provided by high-end tour operators. According to Waitiki (2014), the management of organizations in Kenya should seek to know the level at which the customers are satisfied with their services and the kind of service quality levels their customers would like in order to offer the exactly what would be taken positively Hashem and Ali’s (2019) studies the link between service quality and customer satisfaction in Jordan emphasises the significance of the five service quality characteristics. Therefore, the research suggests that customer happiness is easily achieved via the continual delivery of superior services. Emotional value, as emphasized by studies like Hashem and Ali (2019), plays a crucial role in customer satisfaction. This variable captures the emotional connection and positive experiences that customers derive from high-end tours and travel services. Emotional value encompasses factors such as pleasure, enjoyment, and the overall affective response evoked by the services provided. Ali et al. (2021) extended the significance of customer happiness based on service quality. Atilgan et al. (2003) focused on the five aspects of service quality in the tourism sector in Ankara, Turkey. Based on the survey, the study determined that the five-dimensional factors had a significant impact on consumer satisfaction. Moreover, the research highlighted the importance of dependability for customer satisfaction in contrast to the tangibility factor. Despite earlier research indicating a strong correlation between customer satisfaction and service quality, there remains a gap in the literature regarding the specific elements of service quality and their association with customer satisfaction. Mutinda (2020) focused on the effect of service quality on customer satisfaction among hotels in Nairobi, Kenya. The study found a positive correlation between good service quality and customer satisfaction. Forozia et. al., (2013) study on customer satisfaction in the hospitality industry within the Middle East argues that customer satisfaction is the determinant and inevitable secret of success and therefore organizations are not able to compete with other competitors without fulfilling the satisfaction of their guests. Therefore, it is in the rapid growth of new industries both local brands and international brands, there has been creation of a big gap in the tour and travel industry as there is an emergence of great competition within the market. The emergence of competition has created a zest in creating sustainable loyal clientele which highly relies on the fact that customer satisfaction element be addressed in the hotels. 10 Customer satisfaction and service quality are the key element of attaining competitive advantage tour and travel industry which will attract customers and maintain them and as a result, there is great demand for customer satisfaction so as to achieve repeat purchase and attract new customers (Forozia et. al., 2013). The rapid growth of the tour and travel industry, coupled with increasing competition, necessitates the consideration of innovative value. Innovative value refers to the introduction of unique and novel experiences, services, or features that differentiate high-end tour operators from their competitors. This factor has been associated with increased customer satisfaction and loyalty. Despite these studies being carried out on factors affecting customer satisfaction, there are limited studies specifically focusing on high-end tours and travel agencies within the Kenyan context. Besides, majority of the studies seems to have focused on the developed context other than a developing country like Kenya. This research gap highlights the need for a focused investigation into the customer satisfaction drivers within the high-end tourism sector in Kenya. By addressing this gap, the study aims to provide valuable insights and contribute to the knowledge base surrounding customer satisfaction in a developing country context. The primary focus of this research revolves around examining the relationship between customer satisfaction and service provision in high-end Tours and Travel Agencies operating within Nairobi. The study aims to bridge the existing knowledge gap by investigating the factors that influence customer satisfaction specifically in the context of Tours and Travel Agencies in Nairobi, with a particular emphasis on the quality of services rendered. Through this investigation, the research endeavours to pinpoint the specific areas that necessitate improvement in order to enhance customer satisfaction and optimize service delivery within the high-end tours and travel industry in Nairobi. 1.3 Research Objectives The main objective of this study was to establish the factors influencing customer satisfaction with services offered by high-end tours and travel agencies in Nairobi County. 1.3.1 Specific Objectives i. To determine the extent to which promotional value influences customer satisfaction among high-end tour and travel agencies in Nairobi County. ii. To determine the extent to which functional value influences customer satisfaction among high-end tour and travel agencies in Nairobi County. 11 iii. To determine the extent to which emotional value influences customer satisfaction among high-end tour and travel agencies in Nairobi County. iv. To determine the extent to which innovative value influences customer satisfaction among high-end tour and travel agencies in Nairobi County. 1.4 Research Questions i. To what extent does promotional value influence customer satisfaction among high- end tour and travel agencies in Nairobi County? ii. To what extent does functional value influence customer satisfaction among high-end tour and travel agencies in Nairobi County? iii. To what extent does emotional value influence customer satisfaction among high-end tour and travel agencies in Nairobi County? iv. To what extent does innovative value influence customer satisfaction among high-end tour and travel agencies in Nairobi County? 1.5 Scope of the Study The conceptual scope of this study is to investigate the factors that contribute to customer satisfaction among high-end tours and travel agencies in Nairobi County, namely Abercrombie & Kent Ltd, African Horizons Travel Safaris, Bush and Beyond Ltd, and Pollmans Tours Safaris Ltd-Msa. The study aimed to identify and analyse the key elements that influence customers' satisfaction with the services provided by these travel agencies in Nairobi County. The methodological scope of the study involves employing quantitative methods, where data was collected through structured questionnaires administered to a sample of customers of the aforementioned agencies. This will allow for the collection of numerical data that can be analysed statistically to identify patterns and correlations related to customer satisfaction. The geographical scope of this study was limited to high-end tours and travel agencies operating within Nairobi, Kenya. The time scope for this study spans from September 2022 to May 2023, during which data collection, analysis, and report writing will take place. This timeframe allows for a comprehensive examination of the factors influencing customer satisfaction within the specified high-end tours and travel agencies in Nairobi County. 1.6 Significance of the Study This research holds significant implications for various stakeholders, including policy makers, industry players, and the advancement of theoretical knowledge. Specifically, it 12 holds many benefits to different stakeholders, including tours and travel agencies, government, academic scholars, and other relevant stakeholders. In terms of policy, the findings of this research will provide policymakers with valuable insights based on empirical evidence regarding the Tours and Travel industry in Nairobi. By comprehending the factors that exert influence on customer satisfaction and service provision, policymakers can formulate well-informed policies and regulations that foster a conducive business environment. These policies have the potential to enhance the quality of services offered by Tours and Travel Agencies, elevate customer experiences, and contribute to the overall growth and advancement of the tourism sector. In terms of industry, the findings of this study will also directly benefit industry players, specifically Tours and Travel Agencies operating in Nairobi. By gaining a profound understanding of the factors that significantly influence customer satisfaction, industry players can make well-informed decisions to enhance their service provision. The research will provide invaluable insights into customer preferences, expectations, and experiences, empowering industry players to customize their offerings in alignment with the evolving needs of customers. This knowledge will enable them to stand out in a competitive market, foster customer loyalty, and drive business growth. Moreover, the study can serve as a benchmark for industry standards, encouraging a continuous pursuit of improvement in service quality and customer satisfaction. In terms of theory, this study makes a significant theoretical contribution to the existing body of knowledge in the field of customer satisfaction and service provision within the Tours and Travel industry. By specifically investigating the factors of promotional value, functional value, emotional value, and innovative value, the research enhances our understanding of how these variables exert influence on customer satisfaction. The findings have the potential to contribute to the development and refinement of theoretical frameworks and models that elucidate customer behaviour and satisfaction in the context of tourism and hospitality. Scholars and researchers can leverage these findings as a foundation for further exploration into the intricacies of customer satisfaction and service provision, ultimately advancing the theoretical knowledge in the field. 13 The study will also be useful to several beneficiaries. Tours and travel agencies will benefit from this study by gaining valuable insights into the factors that influence customer satisfaction in the high-end tours and travel industry. The study's findings will help agencies understand the customers' perception of their services and identify areas that need improvement. By improving their services, high-end tour agencies can enhance customer satisfaction and increase customer retention, leading to increased revenue and profitability. The study results will be decimated to all relevant stakeholders by sharing the print results. However, upon request, I can hold workshops to further explain and clarify any information. The government will benefit from this study by gaining insights into the tours and travel industry's performance in Nairobi County. The government can use the study's findings to develop policies and regulations that can improve the industry's performance and promote tourism in the county. Academic scholars will benefit from this study by adding to the existing knowledge on customer satisfaction in the tours and travel industry. The study's findings can contribute to future research and improve the understanding of the factors that influence customer satisfaction in the high-end tours and travel industry. Other relevant stakeholders such as investors, customers, and industry associations will also benefit from this study. Investors can use the study's findings to make informed decisions about investing in high-end tour agencies in Nairobi County. Customers can benefit from improved services, leading to enhanced satisfaction and a better travel experience. Industry associations can use the study's findings to develop programs and initiatives that can improve the quality of services provided by high-end tour agencies in Nairobi County. 1.7 Chapter Summary This chapter gives an overview of research on the factors affecting customer satisfaction in the tours and travel industry in Nairobi, Kenya. It highlights the significance of the study and introduces the concept of customer satisfaction and the tours and travel agencies in Nairobi. The problem statement as well as research objectives. The scope of the study is outlined, and the chapter concludes by highlighting the benefits that the research will provide to stakeholders in the tours and travel industry. 14 CHAPTER TWO LITERATURE REVIEW 2.1 Introduction This chapter examines the theoretical foundation of the study, along with a section on customer satisfaction. It also includes an empirical review, research gap, and summary of literature. It synthesizes past literature in relation to the research objectives and discusses several key empirical studies and other supporting research on the topic being studied. 2.2 Theoretical Framework The theoretical framework for the research study on the factors influencing customer satisfaction with services offered by tours and travel agencies in Nairobi, Kenya could be based on two theories: The Value-Percept Disparity theory and the Complex Adaptive theory. 2.2.1 The Value-Percept Disparity Theory The Value-Percept Disparity Theory is a psychological concept that can be applied to the concept of customer satisfaction and how it relates to on service quality and purchase intention (Mtotywa & Kekana, 2023). The Value-Percept Disparity theory was proposed by J. Richard Hackman and Greg Oldham in their 1976 paper "Motivation Through the Design of Work: Test of a Theory." Hackman and Oldham were organizational psychologists who conducted research on how to motivate employees in the workplace. Essentially, this theory suggests that people may have different perceptions of an object or event, and that these perceptions can be at odds with its objective value. In the context of customer satisfaction, this theory can help explain why different customers may have varying levels of satisfaction with the same product or service (Wrang, 2022). For instance, one customer may attach a high level of value to a particular feature of a product, while another customer may not consider that feature to be important. This can lead to different levels of satisfaction among customers, even if the product or service itself is of high quality. 15 When applied to the independent variables of promotional value, functional value, emotional value and innovative value, the theory suggests that customer satisfaction with tours and travel agencies in Nairobi will be higher when these values are perceived to be greater than the customer's expectations. For example, if a customer expects a tour agency to provide basic transportation and accommodation, but the agency provides additional services such as a guided tour or a spa package, the customer may perceive a higher promotional value and be more satisfied. Similarly, if a customer expects a tour agency to provide basic customer service, but the agency goes above and beyond with exceptional customer service, the customer may perceive a higher emotional value and be more satisfied. The theory also suggests that if a customer perceives the value of a product or service to be less than what they had expected, they will be less satisfied (Asha et al., 2023). For example, if a customer expects a tour agency to provide a luxury experience, but the agency fails to deliver on this expectation, the customer may perceive a lower functional value and be less satisfied. Additionally, the value-percept disparity theory can help businesses understand why customers may be dissatisfied with their products or services, even if the business believes that they are providing high-quality products or services at a fair price (Zhang et al., 2019). By understanding that customers may have different perceptions of value, businesses can take steps to align their products or services with their customers' expectations, leading to increased satisfaction. One of the key implications of this theory for customer satisfaction is that businesses need to be aware of the potential for discrepancies between their own perceptions of value and their customers' perceptions of value (Bing, et al., 2018). This means that businesses need to be attuned to the specific needs and preferences of their customers, and strive to provide products or services that align with those needs and preferences. This may require businesses to gather feedback from their customers, and to be responsive to that feedback in order to continuously improve their offerings. In the context of this study, the Value-Percept Disparity Theory underpins the examination of customer satisfaction in relation to promotional value, functional value, emotional value, and innovative value. By assessing the gaps between customers' expectations and their actual experiences regarding these value dimensions, the research aims to identify the factors that contribute to customer satisfaction or dissatisfaction. The theory provides a conceptual framework for understanding how variations in these value dimensions can impact the overall 16 satisfaction levels of customers (Zhang et al., 2019). Moreover, the Value-Percept Disparity Theory guides the interpretation of the study findings by emphasizing the importance of aligning customers' expectations with the actual service provision. It underscores the significance of understanding customers' value perceptions and managing those perceptions to enhance customer satisfaction. By incorporating this theory into the study, the research gains a theoretical basis for analysing the relationship between customer satisfaction and the value dimensions examined, offering valuable insights into the dynamics of customer satisfaction within the Tours and Travel industry. 2.2.2 Complex Adaptive Theory Complex adaptive theory, proposed by John Holland, highlights that complex systems such as biological organisms, economies, and societies, are best understood as collections of interconnected agents that adapt and evolve over time (Roundy et al., 2018). Holland seminal book, "Adaptation in Natural and Artificial Systems," first published in 1975 and provides a foundational framework for this theory. Holland's work has since had a major impact on the fields of complex systems, artificial intelligence, and evolutionary computation. According to this theory, the most productive state for a system is one in which there is maximum variety and creativity. Holland argued that complex systems are made up of agents that interact with each other, and that the behaviour of the system emerges from these interactions. He also proposed that the diversity of the agents in the system is a key factor in its adaptability and resilience. When a system has a wide variety of agents with different attributes, it is better able to respond to changing conditions and adapt to new environments (Shi et al., 2021). Complex adaptive systems are able to constantly adapt and evolve in response to changing conditions, which allows them to maintain a high level of flexibility and adaptability (Van Nuland et al., 2020). This ability to adapt and evolve is what allows complex adaptive systems to be productive and successful. Based on these properties it could be argued that complex adaptive systems are all around us. This theory is based on the idea that complex systems are made up of many different components that interact with each other in ways that can be difficult to predict (Akgün et al., 2020). In the context of customer satisfaction, complex adaptive theory can help explain why customers may have different levels of satisfaction with the same product or service. This is because customer satisfaction is a complex phenomenon that is influenced by many different factors, including the quality of 17 the product or service, the customer's expectations, and their individual experiences and biases. When applied to the dependent variable of customer satisfaction with services offered by tours and travel agencies in Nairobi, the theory suggests that customer satisfaction is the outcome of a complex system of interactions between various factors. According to the CAS theory, customer satisfaction is not determined by a single factor, but by a combination of various factors such as the quality of service, price, convenience, safety, and responsiveness of the tour and travel agency (Ali, Gardi, et al., 2021). The interactions between these factors are dynamic and can change over time, leading to different levels of customer satisfaction. Furthermore, the CAS theory emphasizes that customer satisfaction is a self-organizing process, meaning that it is influenced by the actions and feedback of customers themselves. This means that customers are not passive recipients of service but active participants in shaping their satisfaction. For example, customers who are more satisfied with the service offered by the tour and travel agency may provide positive feedback, which in turn can influence the behaviour of the tour and travel agency, leading to better service and higher customer satisfaction. Complex adaptive theory can also help explain why customer satisfaction may change over time (Van Nuland et al., 2020). This is because the factors that influence customer satisfaction are constantly changing, and the interactions between these factors can lead to complex patterns of behaviour. For example, a change in the quality of a product or service, or a change in customer expectations, can have cascading effects on customer satisfaction. One of the key implications of complex adaptive theory for customer satisfaction is that businesses need to be aware of the complex and dynamic nature of customer satisfaction (Wang & Liu, 2021). This means that businesses need to be attuned to the many different factors that can influence customer satisfaction, and strive to continuously improve their products or services in order to meet the changing needs and expectations of their customers. In the context of this study, the Complex Adaptive Theory underpins the examination of customer satisfaction and service provision in Tours and Travel Agencies operating in Nairobi. It recognizes that these agencies are dynamic entities influenced by multiple factors, including customer preferences, market conditions, and competitive forces. The theory acknowledges that the success of these agencies relies on their ability to adapt and respond to 18 changes in the environment while maintaining a balance between stability and flexibility. By adopting the lens of Complex Adaptive Theory, the research explores how Tours and Travel Agencies can adapt their service provision to meet customer expectations and enhance customer satisfaction. It recognizes that customer preferences and expectations are constantly evolving, and agencies must be responsive and adaptive to these changes. The theory highlights the importance of continuous learning, innovation, and flexibility in delivering high-quality services that align with customer needs. 2.3 Empirical Review This section conducts an empirical review of the existing literature on customer satisfaction and the factors that influence it, specifically focusing on promotional value, functional value, emotional value, and innovative value. 2.3.1. Promotional Value and Customer Satisfaction The concept of promotional value refers to the extent to which a product or service is marketed or advertised in a way that creates a positive impression on the customer (Rifdah et al., 2019). A company can use attractive and engaging advertising to promote its products or services, which can lead to a positive impression of the company and its offerings (Adil & Sadiq, 2019). Conversely, unappealing or unengaging advertising can result in lower levels of customer satisfaction. Kashyap and Bojanic (2019) carried out a study in Eastern Europe using online surveys from the popular travel website TripAdvisor to investigate the relationships between travellers’ opinion of value, quality and price, and their influence on travellers’ ratings of similar hotels and revisit intentions in two segments: business and leisure travellers. The findings implied that value plays a pivotal role in a travellers’ decision planning. Most interesting findings are resulted from the regression of the quality variables, price value, and overall rating on revisit intention. For the business section, only overall value and comparative rating were significantly associated. On the contrary, for the leisure sector, while none of the quality variables were significant, the perceived price, overall value, and comparative rating were all considerably related with the revisit intentions. Langga et al. (2020) carried a study in Indonesia to investigate the influence of intensive distribution and sales promotion towards customer-based brand equity, repurchase intention, and WOM (word-of-mouth). They found something important is as follows. First, incentives 19 distribution had a significant and positive influence on brand equity and repurchase intention. Secondly, sales promotion had a substantial and positive impact on WOM, but it did not influence brand equity. Last but not least, brand equity had a significant influence on repurchase intention and WOM. Thakur and Sing (2012) examined the relationship between brand satisfaction and loyalty among those selected for study in India central brand Cosmetics Company was study. The study examines five benefits of branding, improve. Functional, Social, Symbolic and Appearance data from 150 men and 150 women clients experience these brands was selected products regularly. The results showed significant results 3 and 2 insignificant results. The logo can build customer satisfaction. A study carried by Lee and Wong's (2021) in South Korea s indicated that customer value in the ecosystem has a great impact on word of mouth, and positive word of mouth normally signifies loyalty. Joo and Marakhimov (2018) also claimed that when customers participate as the primary members of the business ecosystem they are able to interact and impact other members within the business ecosystem through word of mouth and boycotts. Word of mouth communication happens within the business ecosystem where customers do recommendations to each other and as well as conduct discussions with the different firms in the ecosystem about their experiences with the product/services (Joo & Marakhimov, 2018). This shows that customers have to trust the firms in the ecosystem in order to spread positive word of mouth and recommend the firms to other customers. Moreover, favourable word of mouth strengthens the business ecosystem by encouraging new customers/members to participate and also promotes the revenues, reputation, and customer loyalty of the main company and other firms within the ecosystem (Joo & Marakhimov, 2018). The impact of promotional value on customer satisfaction is significant, both globally and in Kenya. Dutta et al. (2017) suggest that promotional offers such as discounts, coupons, or special deals can increase customer satisfaction as they make a product or service feel more valuable or affordable. However, it is crucial to note that promotional value is not the sole factor that influences customer satisfaction (Bowie & Chang, 2005). Other factors such as service quality, level of customer service, and purchasing convenience also play a role in customer satisfaction, both globally and in Kenya (Masrurul, 2019). 20 In Kenya, the overall value for money may be a crucial factor in customer satisfaction. Chege (2021) indicates that Kenyan customers may be particularly sensitive to the cost of products or services and may be more likely to be satisfied if they feel they are getting good value for their money. Companies that offer promotions or discounts that make their products or services more affordable may, therefore, see higher levels of customer satisfaction in Kenya. 2.3.2 Functional Value and Customer Satisfaction Functional value refers to the extent to which a product or service meets the customer's functional needs and requirements (Ahn & Back, 2019). Customers may be highly satisfied with a new product if it has all the features and functionality that they are looking for (Iyer et al., 2018). Conversely, if the product has limitations or problems that prevent it from meeting the customer's needs, the customer may be less satisfied with their purchase. Osman and Sentosa (2013) conducted a research in order to demonstrate the relationship of service quality, satisfaction and trust on loyalty in the rural tourism market in Malaysia. Their research found that service quality has a positive relationship and significant on customer loyalty. Wachyuni (2019)) suggested that direct effect of the quality of service to the intention of buying behaviour is significant; the indirect effect of satisfaction with the tourist satisfaction is a strong driving for repurchase intention in the context of service quality. Then Malik et al. (2018) who investigate on the telecommunications sector in Pakistan found results that service quality has a positive effect on satisfaction. An understanding of the various dimensions that influence loyalty will help managers to develop appropriate program of action in providing better service and build customer loyalty. A study carried out by Haghkhah et al. (2016) in Malaysia found that quality of destinations as measured by accessibility, accommodation and place had a significant relationship on tourist satisfaction and directly influence their intention to come back on tourist destinations. Several studies show that service quality of destination give effect to the satisfaction of tourists (Ali & Ahliyya, 2018), and the effect on behavioural intentions (Gallarza et al., 2018). Research in managing service quality, conducted by Masrurul (2019) found that the service quality had direct influence on the satisfaction and also directly affects behavioural intentions, then service quality would had higher value on behavioural intention through tourist satisfaction. This indicates that service quality perceived higher customers will have an impact on the intentions of customer behaviour when customers get satisfaction with the service of the company. Some research also suggests that service quality of the hotel will 21 have an impact on satisfaction (Bi et al., 2020; Noor & Ali, 2018) and the intentions of customer behaviour (Lambaga et al., 2023) and service quality had indirect influence on behavioural intentions through tourist satisfaction (Choy & Kamoche, 2021). Kyoshaba (2021) conducted a research using the ECSI to measure the antecedents of customer satisfaction and its impact on loyalty in Uganda. The results of confirmatory factor analysis showed that brand image is a determinant of satisfaction while the customer perceived value indicates the level of brand loyalty. Furthermore, Anwar and Gulzar (2011) in his research indicate that there is a positive influence between perceived value to customer satisfaction, word of mouth communication and repurchase intention. Thus, customer perceived value as an important step for a company to gain a competitive advantage, and has an important role in enhancing the company competitiveness as well as a strong predictor in explaining satisfaction and loyalty. Research conducted by Fang et al. (2020) in measuring antecedents of tourist’s satisfaction visiting China found that the expectations of tourists, destination image, service quality and perceived value are all factors that make up the tourist satisfaction. Further explained that the perceived customer satisfaction has a positive effect on loyalty while negatively effect on tourist complaints. Research by Forozia, (2013) in a three-star hotel in Malaysia found that guest satisfaction is directly influenced by service quality, perceived value and expectations of guests, and service quality had the highest influence on satisfaction. This study proves that guest satisfaction is the main factor driving the success of the hospitality business. From these two studies, it appears that there is still debate about the factors that determine tourist satisfaction. Service quality contributes in improving the company image (Nazariah et al., 2022), increasing the perceived value (Ahn & Back, 2019) increase tourist satisfaction (Hwang & Lee, 2018) and loyalty is the result of the satisfaction felt by the consumer (Hride et al., 2021). Therefore, customer satisfaction is the main concern for the managers of businesses in the tourism and hospitality by delivering quality products and the best service, which is expected to increase consumer loyalty to the company in the future. In the Kenyan context, functional value is a crucial factor in customer satisfaction as customers in Kenya place a high value on products or services that effectively meet their needs and solve their problems (Mohammed et al., 2017). Companies that consistently deliver functional value to their customers may, therefore, see higher levels of satisfaction in Kenya. 22 Travel agencies that provide high levels of functional value are more likely to have satisfied customers, which can lead to repeat business and positive word-of-mouth marketing (Bunghez, 2020). Gaurav et al. (2018) suggest that it is necessary for tours and travel agencies to provide high levels of functional value to ensure customer satisfaction. This can be achieved by offering quality accommodations, efficient transportation, good customer service, and well-planned itineraries. By providing high levels of functional value, travel agencies can increase customer satisfaction and ultimately drive their business. However, low levels of functional value can lead to dissatisfied customers, negative word-of-mouth marketing, and lost business for travel agencies (Gaurav et al., 2018). 2.3.3 Emotional Value and Customer Satisfaction According to Song and Lim (2022), emotional value pertains to the ability of a product or service to elicit positive emotions from the customer, such as happiness, excitement, or satisfaction. Customers who have positive experiences with a product or service are likely to have higher satisfaction levels compared to those who have negative experiences. In the tourism or retail industry, creating emotional value is particularly important in creating memorable experiences for customers (Kim et al., 2020). Companies that are able to deliver emotional value to their customers in addition to functional value may be more likely to see high levels of satisfaction (Fang et al., 2020). Sabet (2022) evaluated the influence of personality traits on satisfaction in an imaginary bar and hotel setting in Sydney, Australia shows that extraversion significantly and directly leads to pleasure which has a direct effect on satisfaction. Akter, D’Ambra and Hani (2013), confirms that personality traits have both negative and positive influence on customer satisfaction and loyalty. The investigation found customers who are sociable and have emotional stability, placing less emphasis on quality service leading to satisfaction than less sociable and emotionally unstable persons Lambaga et al. (2023) posit that attitude and behaviour of consumers towards a firm's products or service can be linked to their personality traits. Lin, furthermore, explained the trait theory as people having the same set of traits show it differently, differentiating one individual from to another. A combination of the various traits is due to the individual differences, which makes an individual unique. Park et al. (2018) assert that personality 23 allude to psychological qualities that contributes to a person undergoing a distinctive pattern of feeling, thinking, and behaviour. As highlighted by Dutta et al. (2017), customers are searching for experiences that offer memorable and meaningful moments. By providing products with an emotional touch, businesses in the tours industry can create more satisfied customers who are more likely to return and recommend their services to others (Song & Lim, 2022). Additionally, creating emotionally valuable products can also foster loyalty from existing customers by establishing an enjoyable connection between them and the business they are interacting with - this could lead to repeat purchases or longer-term relationships (Bing, et al., 2018). Ultimately, understanding how emotion influences customer satisfaction in the tours industry is essential for any business seeking success in this field today. 2.3.4 Innovative Value and Customer Satisfaction Innovative value is an important factor in determining customer satisfaction, as it refers to how well a product or service meets the customer's needs in a new or creative way (Díaz & Duque, 2021). Innovative products that solve customers' problems in a unique way can lead to high levels of satisfaction, while less innovative offerings may result in lower levels of satisfaction (Yuniari & Giantari, 2020). However, innovative value is not the only factor that can impact customer satisfaction. Naini et al. (2022) suggest that different markets may have varying levels of interest in and appreciation for innovation, and what is considered innovative to one customer may not be as important to another. In the context of Kenya, cultural values and expectations may also play a role in how customers perceive innovative value (Choy & Kamoche, 2021). Certain cultural values may place a greater emphasis on tradition or the past, while others may be more open to new and innovative ideas. As such, companies operating in Kenya should be cognizant of these cultural dynamics when striving to deliver innovative value to their customers. Díaz and Duque (2021) investigated the service quality in hotels. Their research particularly, determined the critical relational attributes in the face-to-face service encounters that were most influential in the formation of a service relationship from the business traveller’s perspective. Five critical relational attributes were chosen and tested in a high interpersonal service context; namely, a hotel reception encounter. The results from multiple regression 24 analysis revealed that the hotel guests perceived personalization, social bonding, reliability, and familiarization to be the most influential in the relationship formation process in that order of significance. What the customers want at all times is ethical service in which their needs as vital stakeholders are exceeded if at all possible (Nicolaides, 2016). A study conducted by William et. al. (2016) in South Africa explains that customers develop a certain set of expectations based on a variety of inputs and consider their previous experiences with services in general and with each specific kind of service they have encountered. Customers also develop expectations when they hear about services from others. If you hear that your friend was delighted with her stay at a particular hotel, you are more likely to expect that same level of service if you stay there. Customers also form expectations based on service provider’s advertisement and promotions. According to Gakii et al. (2022), understanding the importance of innovative value and its relationship to customer satisfaction is critical for businesses looking to succeed in the Kenyan market. By introducing new and creative solutions that address customers' needs in a unique way, companies may be able to improve customer satisfaction levels and gain a competitive advantage. 2.4 Research Gap The existing literature reveals several notable research gaps that are both contextual and conceptual in nature, indicating the need for further investigation. One such research gap can be observed in the study conducted by Gaurav et al. (2018) on factors influencing customer satisfaction at Tours and Travel Agencies in India. Although this study shed light on the importance of responsiveness and effective issue resolution in customer satisfaction, it was limited to the Indian context. Consequently, there is a clear research gap that necessitates conducting a similar study in Kenya to address the challenges specific to the tours and travel industry in the country. Moreover, Lambaga et al. (2023) focused primarily on techniques to increase customer happiness, trust, fairness perception, and corporate aspects, while neglecting a comprehensive exploration of the underlying factors that directly impact consumer satisfaction. In addition, studies such as Nguya et al. (2021) conducted in Kenya emphasized the significance of tour guides' abilities, performance, and knowledge in enhancing visitors' satisfaction with tour guiding services, but failed to incorporate the dimensions of promotional value, functional value, emotional value, and innovative value. These findings highlight another research gap that needs to be addressed. Hence, this study 25 aims to fill these research gaps by examining the specific impact of these variables on customer satisfaction. By addressing these gaps, future studies can contribute to the development of effective strategies and interventions to enhance consumer satisfaction and overall customer experiences in tourism contexts. It is important to note that the studies mentioned are from different regions and focus on different factors affecting customer satisfaction, thereby underscoring the need for this study to examine the specific dimensions of promotional value, functional value, emotional value, and innovative value within the Kenyan context. Table 2.1: Summary of Research Gap Author Title of study Findings Research Gap How the current study addressed the gap Gaurav et al. (2018) Factors Influencing Customer Satisfaction at Tours and Travel Agencies in India Customers appreciate it when the tour and travel agency is responsive to their needs and concerns, and is able to address any issues that they may have in a timely and effective manner. The study focuses only on India, which is geographically and demographically different from Kenya. The study focused on factors Influencing Customer Satisfaction at Tours and Travel Agencies but for Nairobi. Cheng et al. (2016) Building customer satisfaction with tour leaders: the roles of customer trust, justice perception, and cooperation in group package tours In the tour leader- customer satisfaction connection, consumer trust is more important. Furthermore, consumer collaboration moderates the impacts of customer trust and fairness perception on customer happiness to some extent. The study only focused on ways to build customer satisfaction, such as trust, justice perception, and corporation, while avoiding to include the actual factors influencing customer satisfaction. The study analyzed the factors that influence customer satisfaction such as promotional value, functional value, emotional value, and innovative value Mohammed et al. (2017) Relationship Between Strategic Planning Practices and Performance of Tour Firms In The Tourism Sector in Kenya: A Survey Of Selected Tour Firms in Nairobi, Kenya When it comes to goal planning in tour firms, it is essential that tour companies create reasonable targets. When it comes to resource identification, tour companies should prioritize providing exceptional service quality. The study also suggests that The study only focused on strategic planning practices and not on individual factors or customer satisfaction. The study analyzed the factors that influence customer satisfaction 26 assessment be an ongoing process. Lambaga et al., (2023) Consumer Behavior Among Domestic Tourists: A Case Study of Travel Agencies in Nairobi, Kenya. Tourism consumer buying behaviors are the activities, attitudes, and decisions involved in selecting, purchasing, and consuming any tourist products or services, as well as their post-purchase emotions. The study only looked at techniques to increase customer happiness, such as trust, fairness perception, and corporate, and avoided looking at the real issues that influence consumer satisfaction. The study analyzed the factors that influence customer satisfaction such as promotional value, functional value, emotional value, and innovative value Nguya et al. (2021) Influence of Tour Guide Service Quality on Customer Satisfaction in Narok County, Kenya The findings showed that tour guide service quality can have a positive impact on customer satisfaction by creating positive perceptions of the tour, increasing customer loyalty, and encouraging repeat business. The study focused on all tour companies both high-end and budget-friendly ones. This study focused only on the high- end tour companies and how customers view their services. Leelakulthanit and Hongcharu (2011) Factors that Impact Customer Satisfaction: Evidence from the Thailand Mobile Cellular Network Industry Retaining current customers is one of the most important critical success criteria in Thailand's mature mobile cellular network sector. The study focused on the Thailand Mobile Cellular Network Industry which is different from the Tours industry. Moreover, it was done in Thailand which is geographical different from Nairobi, Kenya This study analyzed specific factors such as promotional value, functional value, emotional value, and innovative value but in the tours industry in Nairobi Kitur (2017) Relationship Between Organizational Agility and Firm Performance Amongst Tours and Travel Companies In Nairobi, Kenya The management of tours and travel firms need to foster integration by rotating IT managers and provides oversite to the managers who supervise other operations. The study only focuses on the innovation aspect of tours and travel agencies in Kenya This study looked into the other aspects such as promotional value, functional value, and emotional value Mlay (2017) Strategic Entrepreneurial Orientation and Performance of Selected Tour Firms in Nairobi Kenya Firms should also invest heavily in training their employees in order to equip them with the necessary skills and knowledge. The study focused only on Strategic Entrepreneurial Orientation and Performance of Tour Firms This study analyzed specific factors such as promotional value, functional value, emotional value, and innovative value but in the tours industry in Nairobi Soe(2019) Analysis of Factors Influencing Customer Satisfaction And Customer Loyalty at The firm should put greater emphasis on price setting and constantly check rival pricing. Furthermore, The study mainly focused on Myanmar, an Asian country. Also, the study focuses on This study analyzed specific factors such as promotional value, functional value, emotional 27 Truemoney Myanmar in order to compete effectively in this business, the organization should concentrate fresh product development and product or service quality. financial services. value, and innovative value but in the tours industry in Nairobi Masrurul (2019) Impact of Service Quality on Customer Satisfaction in Bangladesh Tourism Industry: An Empirical Study customer satisfaction is greatly affected by the services offered by tours and travel agencies These services play a crucial role in determining the overall satisfaction and experience of customers when it comes to planning and booking their trips. One potential research gap is the impact of cultural sensitivity on service quality and customer satisfaction. Bangladesh is a country with a rich culture and customs, and tourists may have different expectations and preferences regarding the level of cultural sensitivity they receive from service providers in the tourism industry. This study focused on Nairobi which is culturally different from Bangladesh. (Source: Researcher, 2023) 2.5 Conceptual Framework In this conceptual framework, the independent variables, namely promotional value, functional value, emotional value, and innovative value (Dutta et al., 2017; Khan & Mohsin, 2017), are considered as factors that influence the customer's experience with a tours and travel company. These variables have the potential to affect the customer's satisfaction with the company's products and services. The dependent variable in this study is customer satisfaction (Aimee, 2019), which represents the overall outcome being measured. The figure below highlights the relationship between the different variables of this study based on the three research questions/objectives. 28 Figure 2.1: Conceptual Framework Independent Variables Dependent Variable Source: (Azhar et al., 2018) Promotional Value  Price discounts  Offering giveaways  Vouchers/ coupons Functional Value  Efficient and reliable transportation  Range of activities and excursions.  Emotional Value  Experience  Enjoyment  Repeat customers.  Positive reviews.  Positive recommendations Innovative Value  Variety of products and services  Service technology 29 2.6 Operationalization of Study Variables Table 2.2 Operational Variables Variable Operational definition How it is measured Source Independent Variables Promotional value  Price discounts  Offering giveaways  Vouchers/ coupons Ordinal 5-point Likert Scale Leelakulthanit and Hongcharu (2011) Functional value  Efficient and reliable transportation  Range of activities and excursions.  Flexible bookings and cancellation  Ordinal 5-point Likert Scale Slack et al. (2020) Emotional value  Experience  Enjoyment Ordinal 5-point Likert Scale Arslanagic- Kalajdzic et al. (2020) Innovative value  Variety of products and services  Service technology Ordinal 5-point Likert Scale Leelakulthanit & Hongcharu (2011) Dependent Variable Customer satisfaction  Repeat customers.  Positive reviews.  Positive recommendations Quantitative Kotler & Keller (2012) 30 (Source: Researcher, 2023) 2.7 Chapter Summary This chapter reviews the literature on customer satisfaction with tours and travel agencies in Nairobi, Kenya. The theoretical framework includes the value-percept disparity theory and complex adaptive theory, which are used to understand factors influencing customer satisfaction. Empirical research on promotional, functional, emotional, and innovative values is examined. Gaps in existing research are identified, and a conceptual framework is presented to illustrate the relationships between independent and dependent variables. The study's objectives are clarified, and the operationalization of study variables is explained. The section outlines how the study variables will be defined and measured using a survey questionnaire. 31 CHAPTER THREE RESEARCH METHODOLOGY 3.1 Introduction This chapter explains the research methodology of the study. It described the research design utilized for the current study, the target population, sample size and design, data collection techniques, data validity and reliability, and how the data was analysed and presented. Lastly, the ethical considerations used will also be discussed. 3.2 Research Philosophy The research philosophy guiding this study is positivism, which asserts that the world can be studied objectively, and knowledge can be acquired through the scientific method. Positivism is a research paradigm that emphasizes the use of empirical evidence, experimentation, and quantitative methods to understand and explain phenomena (Wilson, 2014). Within this philosophical framework, the study assumes that customer satisfaction with services offered by tours and travel agencies in Nairobi can be measured and studied objectively. By adopting a positivist research philosophy, this study aligns with the belief that only factual knowledge is reliable and trustworthy (Bajpai, 2011). The researcher is primarily concerned with facts rather than subjective impressions or interpretations. The findings generated through positivistic research are observable and can be statistically quantified, providing a solid foundation for drawing conclusions. The positivist philosophy is key in this study because is limits the researcher’s role to data collection and interpretation through an objective lens, ensuring that the research findings are observable, quantifiable, and conducive to rigorous analysis. 3.3 The Research Design The research adopted descriptive research design. A descriptive study design aims to collect data that characterizes existing phenomena in a particular group. It determines and characterizes the variables' features while allowing for data collection and objective conclusions (Schindler, 2022). This study used high-end customers given they are the ones using the services of tour agencies such as Abercrombie & Kent Ltd, African Horizons Travel Safaris, Bush and Beyond Ltd, and Pollmans Tours Safaris Ltd-Msa. Since the study's 32 goal was to characterize the study variables. Descriptive research design was adopted for the study. By outlining the factors of interest, this design provides more insight into the research problem. Descriptive research design describes the conditions the way it is and assist in answering questions such who, what, where, and when (Narver & Slater, 2000). 3.4 Population of the Study A population is the complete group of individuals that a researcher intends to investigate and draw conclusions about in a research study (Biber, 200