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Literacher Review

1) The document discusses key concepts related to service quality, customer satisfaction, and customer loyalty. It reviews various definitions and models of these concepts proposed by other researchers. 2) In particular, it examines models of service quality proposed by Gronroos and Parasuraman that distinguish between technical/core and functional/relational aspects of quality. 3) It also reviews literature indicating that customer satisfaction is influenced by service quality and in turn influences customer loyalty through increased repurchases, recommendations, and scope of the customer relationship with the provider.

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Esha Pandya
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285 views5 pages

Literacher Review

1) The document discusses key concepts related to service quality, customer satisfaction, and customer loyalty. It reviews various definitions and models of these concepts proposed by other researchers. 2) In particular, it examines models of service quality proposed by Gronroos and Parasuraman that distinguish between technical/core and functional/relational aspects of quality. 3) It also reviews literature indicating that customer satisfaction is influenced by service quality and in turn influences customer loyalty through increased repurchases, recommendations, and scope of the customer relationship with the provider.

Uploaded by

Esha Pandya
Copyright
© Attribution Non-Commercial (BY-NC)
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as DOC, PDF, TXT or read online on Scribd
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3.1 Service quality


Asubonteng et al. (1996) has defined service quality as: The difference between customers expectations for service performance prior to the service encounter and their perception of service received. Gefan (2002) defined service quality as: Subjective comparison that customers make between quality of service that they want to receive and what they actually get. Oliver (1993) reported that service quality is a casual antecedent of customer satisfaction, due to the fact that service quality is viewed at transactional level and satisfaction is viewed to be an attitude. Dabholkar et al. (1996) and Zeithaml et al. (1996) reported that the service quality divisions are related to overall service quality and or customer satisfaction. Fornell et al., (1996) expressed that satisfaction is a consequence of service quality. Hurley and Estelami (1998) argued that there is causal relationship between service quality and satisfaction, and that the perceptions of service quality affect the feelings of satisfaction. There are various classifications of the components of service quality in marketing science. Gronroos (1984) stated that in service environments, customer satisfaction will be built on a combination of two kinds of quality aspects; technical and functional. Technical quality is related to what customer gets (transaction satisfaction); functional quality is related to how the customer gets the result of the interaction (relationship satisfaction). Lewis (1987) suggested that service quality can be classified as essential and subsidiary. Essential refers to the service offered and subsidiary includes factors such as accessibility, convenience of location, availability, timing and flexibility, as well as interactions with the service provider and other customers. The classification can also be the core (contractual) of the service, and the relational (customer- employee relationship) of the service. The core or the outcome quality, which refers to what is delivered and the relational or process quality, which refers to how it is delivered are the basic elements for most services. (Grnroos, 1985; McDougall and Levesque, 1992; Parasuraman et al., 1991b; Dabholkar et al., 1996).

7 McDougall and Levesque (2000) in their direct approach investigation on four service firms (dentist clinic, automobile shop, restaurant, and haircut salon) demonstrated that both core and relational service quality classes have significant impact on customer satisfaction. Heskett et al. (1997) conducted studies on several service firms, such as airline, restaurants, etc and reported that service quality, solely defined as relational quality, has consistent effect on satisfaction and is regarded as key factor in delivering customer satisfaction. Parasuraman et al. (1988) identified five dimensions of service quality (SERVQUAL) that must be present in any service delivery. SERVQUAL helps to identify clearly the impact of quality dimensions on the development of customer perceptions and the resulting customer satisfaction. SERVQUAL include: Reliability - the ability to perform the promised services dependably and accurately. Responsiveness - the willingness to help customers and provide prompt service. Assurance - the knowledge and courtesy of employees as well as their ability to convey trust and confidence. Empathy - the provision of caring, individualized attention to customers, and Tangibles - the appearance of physical facilities, equipment, personnel and communication materials.

The model conceptualizes service quality as a gap between customer's expectations (E) and the perception of the service providers' performance (P). According to Parasuraman et al. (1985), service quality should be measured by subtracting customer's perception scores from customer expectation scores (Q = P - E). The greater the positive score mark means the greater the positive amount of service quality or the greater the negative score mark, the greater the negative amount of the service quality. SERVQUAL is widely recognized and used, and it is regarded as applicable to a number of industries, including the banking industry (Yavas, Bilgin, Shemuell, 1997).

3.2 Customer satisfaction


Homburg and Bruhn, (1998) have defined customer satisfaction in the following way:

Customer satisfaction is an experience-based assessment made by the customer of how far his own expectations about the individual characteristics or the overall functionality of the services obtained from the provider have been fulfilled Customer satisfaction, as a construct, has been fundamental to marketing for over three decades. As early as 1960, Keith (1960) defined marketing as: Satisfying the needs and desires of the consumer. Several studies have shown that it costs about five times to gain a new customer as it does to keep an existing customer (Naumann, 1995) and this results into more interest in customer relationships. Thus, several companies are adopting customer satisfaction as their operational goal with a carefully designed framework. Hill and Alexander (2000) wrote in their book that companies now have big investment in database marketing, relationship management and customer planning to move closer to their customers. Jones and Sasser (1995) wrote that achieving customer satisfaction is the main goal for most service firms today. Increasing customer satisfaction has been shown to directly affect companies market share, which leads to improved profits, positive recommendation, lower marketing expenditures (Reichheld, 1996; Heskett et al., 1997), and greatly impact the corporate image and survival (Pizam and Ellis, 1999). According to Ovenden, (1995), satisfied customer is more likely to return and stay with an organization than a dissatisfied customer who can decide to go elsewhere.

3.3 Customer loyalty


The notion of the customer loyalty has developed over the years (Caruana, 2002). Research into customer loyalty has focused primarily on product-related or brand loyalty, whereas loyalty to service organizations has remained underexposed (Bloemer, et al., 1998, p 276). The concept of brand (customer) loyalty also extends to service organizations that typically provide somewhat more intangible products. Service loyalty can be defined as: Service loyalty refers the degree to which a customer exhibits repeat purchasing behavior from a service provider, possesses a positive attitudinal disposition toward the provider, and considers using only this provider when a need for this service arises (Gremler and Brown, 1996, cited in Caruana, 2002, p 813).

3.3.1 Loyalty and its antecedents in retail banking


Service loyalty is perhaps one of the most important factors in services marketing. Indeed, loyal customers that indulge in repeat purchases are the foundation of any business. In an era of

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competitive pressure many firms are focusing their efforts on maintaining a loyal customer base (Caruana, 2002). Due to strong competition, the financial services sector has faced radical changes during the past ten years. Several strategies have been attempted to retain customers. To increase customer loyalty, many banks have introduced innovative products and services but the notable thing is that others easily follow those innovations and customers perceive very little difference in the services offered by retail banks (Bloemer et al., 1998; Levesque and McDougall, 1996). It has also been argued that a more feasible approach for banks is to focus on less tangible and less easy-to-imitate factors of customer loyalty such as service quality and satisfaction (Bloemer et al., 1998). There have been a large number of studies that focused on satisfaction issues but limited research had been done to find out the relationship between satisfaction, service quality and loyalty in retail banking sector. Generally, service loyalty begins only after a certain level of customer satisfaction has been achieved. Some researchers (e.g. Bloemer et al., 1998; Levesque and McDougall, 1996) considered satisfaction as an antecedent of service loyalty. Caruana (2002) argued that overall satisfaction with an experience does lead to customer loyalty. McDougall and Levesque (2000) introduce core service quality and relational quality as well as perceived value as the drivers of customer satisfaction and their proposed model was as follows:

Figure 2: Proposed drivers of customer satisfaction and future intentions Source: [McDougall and Levesque, (2000)]

Coyne (1989) stated that customer satisfaction has measurable impact on customer loyalty in that when satisfaction reaches a certain level; on the high side, loyalty increases dramatically; at the same time, when satisfaction falls to a certain point, loyalty reduces equally dramatically.

10 Yi (1990) expressed the impact of customer satisfaction on customer loyalty by stating that customer satisfaction influences purchase intentions as well as post-purchase attitude. In other word, satisfaction is related to behavioral loyalty, which includes continuing purchases from the same company, word of mouth recommendation and increased scope of relationship. According to Lovelock et al., (2001), high levels of satisfaction lead to high levels of attitudinal loyalty. Attitudinal loyalty involves different feelings, which create a customers overall attachment to a product, service, or company.
Keeping in mind the argument provided by the earlier researchers, in this study, customer satisfaction has been considered as the key antecedent for loyalty.

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