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  • 1. SMM 210Assessing Quality and Customer Satisfaction with servicedelivery of mobile telecommunication networks in the UK. Dissertation Student Number: 0847416 MBA International Business
  • 2. Market Research on Service Quality and Customer Satisfaction 2010 ABSTRACTPurpose - There are a lot of service quality dimensions derived from the ServiceQuality models and frameworks. The aim of this dissertation is to find out thesignificance of these dimensions as perceived by the customers and compare it withthe level of service offered by the UK’s Mobile Service Providers.Review/Methodology – A review was conducted on the relevant models and the gapswere found using the Qualitative (Focus Group Interview) and Quantitative research(Questionnaire) methods.Findings – Five attributes of service quality are found to be deemed with highimportance by the customers and lacks attention from the Mobile Service Providers.Limitations/Implications – As this research has been conducted using limited timeand resources, the Mobile Networks could conduct research specific to their marketpotential and offered service level.Keywords – Service Quality, customer satisfaction, mobile telecommunicationnetworks, customer expectations and SERVQUALDeadline: Monday 16th August 20102|Page
  • 3. Market Research on Service Quality and Customer Satisfaction 2010 Table of contents 1. INTRODUCTION.............................................................................................5 1.1. Background of the study……………………………………………....5 1.2. Overview of Telecommunications Market……………………...…....6 1.3. The current state of telecommunication industry in the UK……….6 1.4. Problem Identification & Purpose of the Study……………………..8 1.5. Research Questions……………………………………………………9 1.6. Research Objectives…………………………………………………...9 1.7. Significance and Limitations of this dissertation……………………102. LITERATURE REVIEW.................................................................................11 2.1. Purpose of Literature review………………………………………….11 2.2. Customer Psychology………………………………………………….11 2.3. Role of Customer Satisfaction………………………………………...12 2.4. Measuring Customer Satisfaction…………………………………….13 2.5. Customer Satisfaction Indices (CSI) ……………………………………..13 2.6. Disconfirmation Models………………………………………………..15 2.7. Service Quality………………………………………………………….16 2.8. Relationship between Service Quality and Customer Satisfaction… 18 3|Page
  • 4. Market Research on Service Quality and Customer Satisfaction 2010 2.9. Service Quality Dimensions…………………………………………… 19 2.10. Service Quality Models………………………………………………… 19 2.11. SERVQUAL…………………………………………………………….2 0 2.12. Gronroos’ Model of SERVQUAL……………………………………..23 2.13. Addressing the Research Questions…………………………………...243. RESEARCH METHODOLOGY.................................................................26 3.1. Research Purpose ……………………………………………………...26 3.2. Research Philosophy…………………………………………………...26 3.3. Research Approach…………………………………………………… 27 3.4. Research Method ……………………………………………………… 27 3.5. Operationalisation of Concepts………………………………………….30 3.5.1. Minnesota Customer Satisfaction Index (MnCSI)…………..30 3.5.2. Defining Hypothesis…………………………………………....32 3.5.3. Disconfirmation Models……………………………………….33 3.5.4. Over-all Satisfaction…………………………………………...33 3.5.5. Procedures to test Hypotheses………………………………..344|Page
  • 5. Market Research on Service Quality and Customer Satisfaction 2010 3.6. Sample Selection and Data Collection………………………………..37 3.7. Reliability……………………………………………………………… 38 3.8. Validity………………………………………………………………… 394. DATA ANALYSIS AND DISCUSSION………………………………….41 4.1. Introduction……………………………………………………………41 4.2. Demographic profile…………………………………………………..41 4.3. Assessing Customer Satisfaction with the Service Quality…………41 4.3.1. Results of Minnesota Customer Satisfaction Index…………42 4.3.2. Results of Disconfirmation Models and Over-all Customer Satisfaction Measure……………………………...43 4.3.2.1. Irrespective of cellular network……………………...43 4.3.2.2. With respect to cellular networks…………………....47 4.4. Customer satisfaction with each service quality dimension………..575. SUMMARY AND CONCLUSION.............................................................656. BIBLIOGRAPHY........................................................................................69 1. INTRODUCTION1.1 Background to the study: During the last few years, the Telecom industry has experienced an enormousgrowth across the world and there has been a rapid growth in the wireless technology(Bharat Book Bureau, 2008). According to an industry market study, by 2013 the5|Page
  • 6. Market Research on Service Quality and Customer Satisfaction 2010telecommunications industry is anticipated to attain revenue of $2.7 trillion with anaverage growth rate of 10.3 percent an year (Bharat Book Bureau, 2008). In thepresent dynamic and interactive market place, the organisations are proposing variousstrategic methods to achieve effective Customer Satisfaction (CS) strategy decisionsand eventually increase the CS success rates to sustain long term relationship with theprofitable customers (Chien and Su, 2003; Gronroos, 1994). “Loyal customers arereported to have higher customer retention rates, commit a higher share of theircategory spending to the firm, and are more likely to recommend others to becomecustomers of the firm.” (Keiningham et al., 2007, p. 362). Hence the organisations arebecoming more customer centric, giving more importance to retaining old customer asthe business would end up spending an approximate of five times more in attractingnew customers than retaining the existing customers in terms of time, money andresources (Reichheld, 1996; Pizam and Ellis, 1999). As the growth of the organisation and its survival in the market is driven bycustomer loyalty and customer retention, each of these companies is continuallyimproving on their service quality standards to survive in this highly competitivemarket (Keiningham et al., 2007). Hence, in order to maintain these service qualitystandards, organisations frequently adopt new measures to check if the customers aresatisfied with the service quality provided. For e.g. by conducting customer surveysand analysing the acquired data statistically, which would help them make the rightdecision to increase customer satisfaction and eventually customer loyalty amongtheir customers (SPSS White Paper, 1996). Organisations adopt both quantitative andqualitative methodologies to evaluate CS and the data obtained from these measuresprovide constructive feedback to help the organisation know the satisfactory level ofits customers with its products, which would help the organisation to: i) take reliablesteps to improve the quality of service, ii) adding more value to its customers and iii)achieving high customer satisfaction rates (Amaratunga et al., 2002).1.2 Overview of the UK Telecommunications Market: Telecommunications is one of the best growing sectors of the UK economy.The competition developed strongly in 1984 after the privatisation of British Telecom6|Page
  • 7. Market Research on Service Quality and Customer Satisfaction 2010(BT) and as of 2004, the UK had an approximate of 170 fixed telecommunicationsprovider and 59 mobile service providers (CWU research, 2004). The market for fixedtelephone network has been declining since the evolution of mobile / cellular phonenetworks and in 2003 due to flat call volumes and pricing competition, it fell by£400m (CWU research, 2004). Eventually, the consumers preferred the cellular phonenetworks as the mode of communication which was faster and easier than the fixedtelephones (CWU research, 2004). According to the UK Mobile Operator Subscriber Data, Statistics and MarketShare 2006 - 2008, there are five primary cellular network operators in the UK:Vodafone, Telefonica O2, T-Mobile, Orange and 3 UK and it was reported to have73.1 million cellular service subscribers in the last quarter of 2007, which representsalmost 9% of the total European mobile subscriber market and another statisticalreport from IE market research Corp reveals that the wireless market is anticipated toachieve 126% by 2010 and gradually the total subscribers would also reach 78 millionby 2010 (Telecoms Market Research, 2008).1.3 The current state of telecommunication industry in the UK: Today, the telecommunication industry has undergone a rapid transformationcreating a lot of new challenges for infrastructure and service providers. The rapidadvances in technology and increased market turbulences have added a lot of value tothe telecom industry (Lia and Whalley, 2002). Recently T-Mobile and Orange merged becoming a giant in the telecomindustry having 28.4 million customers and now they are the largest cellular serviceprovider in the UK with an approximate of 37% of the entire mobile market (BBCNews, 2009; The Register, 2010). The 3G network is up to 40 times faster in data than the 2g or the GSMnetworks. This high connection speed adds on more features such as sending Pictures,MMS (Multimedia Messaging Service) or video clips and also promotes high qualitysound (Robins, 2003).7|Page
  • 8. Market Research on Service Quality and Customer Satisfaction 2010 However this rapid growing mobile market is expected to face capacity-crunchi.e. due to the increasing existence of several MVNOs (Mobile Virtual NetworkOperators), the mobile data traffic has gradually increased 200% in 2009 andaccording to the reports of Ofcom, few service providers such as O2 are about to hitthat capacity (Xln Business Community, 2010). Hence, this capacity-crunch maybring down the quality of service delivery necessitating the network operators to takeprecautions in order to maintain their service delivery standards.The market share of mobile telecom industry in the UK as of September 2009:Fig 1.3a Market Share of Mobile telecom industry in the UK(Source: Guardian News, 2009) The Fig 1.3a indicates that, as of September 2009, T-Mobile / Orange had37% of market share being the highest, followed by O2 with 28%, Vodafone with23% and 3-mobile with the least at 5.8%.The total number of subscribers for the UK’s mobile telecom industry as onSeptember 2009:8|Page
  • 9. Market Research on Service Quality and Customer Satisfaction 2010Fig 1.3b Number of subscribers for the UK’s mobile telecom industry(Source: Guardian News, 2009) The Fig 1.3b indicates that, as of September 2009, T-Mobile / Orange had28.4 million customers being the highest followed by O2 having 21.5 millioncustomer, Vodafone with 17.7 million customers and 3-mobile having the least at 4.5million customers.1.4 Problem Identification & Purpose of the Study: Though majority of the customers for UK mobile telecommunication networksuse all of their mobile services like text, data and mobile internet services, they aredissatisfied with the service-availability and it’s quality; especially the networkcoverage is a crucial concern to all of its consumers. (Telecom paper, 2009) Due tothe existence of several MVNOs, customers switch to different service providersfrequently and they are also concerned about the self-regulatory schemes by theirnetwork providers (Telecom paper, 2009). Customers are known to have reported that there is no network clarity andcoverage. They are not being told if they would have network coverage in their areabefore they could sign a contract with the company and they are unhappy with theafter sales service that is being provided to them (Poulter, 2009). “A study on 5,000people revealed the telecom giants are nearly twice as bad at dealing with issues andcomplaints compared with their successors British Gas.” (Xln Business Community,2009). The customers don’t get reliability and assurance in the services they are beingoffered, as they have to go through a sequence of inconsistencies such as waiting inlong queues to speak to representative, incompetent employees who do not understand9|Page
  • 10. Market Research on Service Quality and Customer Satisfaction 2010the correct issue that is being faced and bear with their rude behaviour at times (XlnBusiness Community, 2009). These situations create a bad impression in thecustomer’s mind and lead them to change the service provider. Also, this word ofmouth communication can spoil the image or reputation of the company. Hence the main research aim of this study would be: To measure and criticallyanalyse the level of customer satisfaction with regards to service delivery amongdifferent mobile service providers (Mobile Telecommunication Networks) within theUK.1.5 Research Questions:How the customers’ satisfaction with the service quality is described in the UK’sMTNs with and without respect to the customer’s service providers?Which attributes of service quality do the customers perceive to be of moreimportance that lacks attention from the service providers in the UK?1.6 Research Objectives:To find out the level of customers’ satisfaction with the service quality offered tothem by the UK’s MTNs with and without respect to which network customerssubscribe to.To find out which dimensions of service quality are the customerssatisfied/dissatisfied with in the UK’s MTNs.To identify the Service Quality dimensions that the customers perceive to be of highimportance in the UK’s MTNs.1.7 Significance and Limitations of this dissertation:10 | P a g e
  • 11. Market Research on Service Quality and Customer Satisfaction 2010 This study is significant in various ways to business consultants and businesspartners. The results and findings of this study would be helpful to the management ofUK’s cellular service providers, as it provides a reliable scientific measure to evaluatecustomer satisfaction level with the services delivered by them. It will reveal thedimensions of service quality which are considered more important from thecustomer’s perspective, which would provide them with a priceless empirical supportto make right strategic decisions in the required areas of operations and over-all itwould act as reliable guide to improve their service delivery standards and createcustomer-value. This dissertation would provide enormous valuable information tobusiness partners such as share-holders and investors which would help them provideuseful suggestions to their respective mobile service providers to improve theirservice delivery standards. The dissertation enables the customers to analyze theratings of the various dimensions with respect to the service providers so that bringingin awareness among customers.The limitations of this dissertation are that, the research would not have access toevery locality in the UK and as the research is mostly done in the city of London. ButLondon, being a cosmopolitan city, gives us a gist of UK and a right place to conductthe research. It doesn’t allow us to conduct the analysis on large samples, which is aprerequisite to have more reliability on surveys (Saunders et al., 2007). But, as theMTNs are a public service and have millions of users, the samples are obtained from amuch diversified respondents to obtain the best possible results.11 | P a g e
  • 12. Market Research on Service Quality and Customer Satisfaction 2010 2. LITERATURE REVIEW2.1 Purpose of Literature review: The literature review aims at critically exploring the existing knowledge andtheories that are relevant to the research objectives, so that we can develop and refinethe key areas of our research (Saunders et al, 2007). To generate and refine theresearch ideas the ‘Relevance Tree’ technique is used in this review of literature i.e. abroad concept is studied from the view of various authors via which a new sub-concept is developed and as we proceed deep into the subject new ideas areformulated (Saunders et al, 2007). The customer satisfaction is measured through theservice quality dimensions defined for that particular product or service. Thesedimensions are based on different models created by academics which I criticallyanalyse in the literature and adopt those that best suit the aim of this dissertation.2.2 Customer Psychology: A ‘Customer’ is usually the final user of any product where the purpose of itbeing made gets fulfilled (Hayes, 1997). Understanding the psychology of customersplays a very important role in determining their satisfaction over a product or service.This includes designing a product according to the needs of the customer. Thesatisfaction of a customer starts well before manufacturing the product rather than themoment after sale. During the service encounters the customers’ values, perceptions,beliefs and expectations motivate them to choose one service provider rather thananother (Lynch, 1992; Pizam and Ellis, 1999). At any point of sale, there are four options available for the customer tochoose: Purchase – where the customer is convinced to buy a product or service,Rejection – where the customer rejects the offer, Postponement – where the customeris partly convinced and postpones the offer to think at a later date and substitution –12 | P a g e
  • 13. Market Research on Service Quality and Customer Satisfaction 2010where the customer compares the product with other contemporary offers. Henceinfluencing the customer’s choice to purchase a product is very crucial (Lynch, 1992;Pizam and Ellis, 1999). Therefore, it is very essential for us to know the customerexpectations and their requirements, to understand customer’s view and perspectiveabout the quality of services and products they need (Pizam and Ellis, 1999).2.3 Role of Customer Satisfaction: Customer Satisfaction (CS) is said to be the customer’s post-purchaseevaluation of services or a product. When the CS level of an organisation is high,even the market share and profits of the organisation grow higher leading thecompany to a stronger competitive position in the market place (Turkyilmaz andOzkan, 2007). The customer satisfaction is built on the varied experiences, positiveand negative that the customer has come across at different points of time (Satari,2007). The impact of customer care in service quality system would maximize profitsand help the organisations grow by providing customer satisfaction and building greatcustomer experiences. Customer care is therefore a key to gain the competitiveadvantage among the competitors (Lynch, 1992). “Satisfaction of customers also happens to be the cheapest means ofpromotion and therefore, customer satisfaction is recognized as of great importance toall commercial firms because of its influence on repeat purchases and word-of mouthrecommendations.” (Pizam and Ellis, 1999, p. 326). Hence, it becomes important forthe organisation to offer customers a good experience that exceeds their expectationand if the customers have bad experiences, then the reputation of the companyreduces rapidly due to word-of-mouth communication. Satisfaction of customers over a telecommunication product can be twodimensional: i) It can be component specific – i.e. service specific, over the MMSservices, 3G services, speed etc. and ii) It can be product specific – satisfaction on theoverall performance and responsiveness of the mobile service provider (Cronin and13 | P a g e
  • 14. Market Research on Service Quality and Customer Satisfaction 2010Taylor, 1992). These dimensions require us to measure the satisfaction level of thecustomers in different particular components as well as on the whole.2.4 Measuring Customer Satisfaction: In order to take managerial decisions, the CS needs to be measured in anorganisation and this Customer Satisfaction Measurement (CSM) is used to determinethe customer satisfaction level based on the valuable feedback from the customers andidentifying the customer expectations (Crosby, 1991). The service quality can beachieved only by knowing the customer’s total needs or customer expectations andwith the help of this data, the service standards and processes may be altered toachieve customer satisfaction (Crosby, 1991). After in depth research on CSM, nine distinct theories were developed suchas: Expectancy disconfirmation (Parasuraman et al, 1988), Assimilation contrast,Comparison level (Gronroos, 2001), Value precept (Zeithaml, 1988), Cognitivedissonance, Equity, Generalised negativity, Contrast and Attribution (Kauppinen etal., 2007). Most of these theories were based on cognitive psychology, but they weredeveloped with no empirical research. However, among these, only two of them werewidely accepted i.e. the expectancy disconfirmation theory and customer satisfactionindices (Pizam and Ellis, 1999) because all the theories mentioned above use thesetwo models as a common base (Parasuraman et al, 1988; Gronroos, 2001; Zeithaml,1988; Kauppinen et al., 2007). Therefore, we would review the customer satisfactionindices and disconfirmation models which would form the crux of this study.2.5 Customer Satisfaction Indices (CSI): This model focuses more on customer’s overall satisfaction with a product orthe services offered to them till date and it is based on a cumulative view ofsatisfaction (Turkyilmaz and Ozkan, 2007). “The CSI model is a structural modelbased on the assumptions that customer satisfaction is caused by some factors such asperceived quality (PQ), perceived value (PV), expectations of customers, and image14 | P a g e
  • 15. Market Research on Service Quality and Customer Satisfaction 2010of a firm.” (Turkyilmaz and Ozkan, 2007, p. 673). It is equally important tounderstand the customer perceived value and their expectations to attain high degreeof customer satisfaction. The Swedish Customer Satisfaction Barometer (SCSB) is reported to be thefirst national customer satisfaction index (NCSI) which was developed in 1989, thenthe model was followed by the Germans, they named it as German CustomerBarometer (Fornell, 1992). The Americans adapted this model in 1993, it was developed by Claes Fornell,who was the founder of SCSB and they named it as the American CustomerSatisfaction Index (ACSI). The ACSI is a cause and effect model using the responsesfrom the respondents to form a ‘Multi-Equation Econometric’ model. The responseswere collected according to different variables in a 0-100 scale (Turkyilmaz andOzkan, 2007; Fornell, 1992). The European Organisation for Quality (EOQ) andEuropean Foundation for Quality Management (EFQM) jointly developed theEuropean Customer Satisfaction Index (ECSI) in 1999. Then gradually many othercountries followed the CSI model (Turkyilmaz and Ozkan, 2007). The ECSI modelincluded the ‘Corporate Image’ as a component on top of the ASCI model. But, theseindices do not measure the CS levels for specific components and overall CS together(Turkyilmaz and Ozkan, 2007). The Workforce Centre developed the Minnesota Customer Satisfaction Index(MnCSI). The MnCSI model is specifically used to evaluate over-all customersatisfaction with service delivery of the MTNs on a single scale (PositivelyMinnesota, 2007). This model uses the variables of disconfirmation models: bothdesire disconfirmation as well as expectation disconfirmation and it combines threequestions which includes the disconfirmation models also (As discussed earlierdisconfirmation models are the second CSM tool which was widely accepted) It alsogets more stable when there are three questions instead of one. In addition, it iscomparatively flexible and best suited for any number of responses (PositivelyMinnesota, 2007).15 | P a g e
  • 16. Market Research on Service Quality and Customer Satisfaction 20102.6 Disconfirmation Models: According to Parasuraman et al. (1988), customer expectations are one of themost important factors of CS, as they play a major role of ascertaining customersatisfaction. Even the SERVQUAL model uses the disconfirmation model as its baseand it is basically used for conceptualizing service quality (Parasuraman et al., 1988).The disconfirmation model was tested and confirmed in a lot of studies conductedacross the world and there are two different types of disconfirmation models - Desire-Disconfirmation model and Expectancy disconfirmation model (Pizam and Ellis,1999; Parasuraman et al., 1988). The expectancy disconfirmation model states thatquality is assessed by comparing perceived and expected performance i.e. to examineif the customer expectations were met during the service delivery process (Oliver andDeSarbo, 1988; Kang and James, 2004). According to Oliver (1980), the expectancy disconfirmation model has gottwo internal attributes, which are known as positive disconfirmation and negativedisconfirmation. If the performance of the product or service exceeds the customerexpectations and when the customer is highly satisfied with the product or servicedelivered, then it is called as value disconfirmation. However, if the customer’sexpectations are met and he/she is satisfied with the product or services offered, thenit is positive disconfirmation and finally if the product or service perceived is belowhis/her expectations, then it is called negative disconfirmation (Oliver, 1980). Thistheory focuses more on the antecedents of satisfaction, which occurs at the initialstages of the service-delivery process (Oliver, 1980; Oliver and DeSarbo, 1988; Kangand James, 2004). Recently Khalifa and Liu (2002) built a theory that embedded both desire aswell as expectancy disconfirmation theory. They have proved that both these factorsimpact the over-all customer satisfaction, as they both are of cognitive standards andit is hard to evaluate which one of these factors explains CS better.16 | P a g e
  • 17. Market Research on Service Quality and Customer Satisfaction 20102.7 Service Quality: Service Quality means the service that meets all the customers’ expectationand satisfies their needs and requirements or it is defined as “a consumer’s judgmentabout an entity’s overall excellence or superiority.” (Kang and James, 2004, p. 267)This term is purely customer oriented. Hence excellence in service requires anunderstanding of customer needs and expectation (Edvardsson, 1998). As there was an enormous growth in mobile telecommunications market in thelast few years, the customers are more conscious about the quality of services beingoffered to them (Kumar and Lim, 2008). According to Kumar and Lim (2008), theservice quality in MTNs can be perceived through the technical as well as thefunctional attributes of mobile services in which the technical attributes include thepricing/tariff plan, the network quality & data services and the functional attributesinclude the customer service quality and the billing system. “Overall perceptions ofservice quality are formed by a consumer’s evaluation of multiple qualitydimensions.” (Kumar and Lim, 2008, p. 569). Hence in order to enhance thecustomer’s perceived value and their satisfaction level, it is important for theorganisations to create positive perceptions of service quality among its customers(Kumar and Lim, 2008). Service quality enhances the organisation’s operational efficiency as well asimproving the retention rate of its firm (Edvardsson, 1998). The customers assess theproduct quality in various tangible ways such as its colour, style and feel. But in mostof the cases only few of these tangibles exist and meet the customers’ expectation(Parasuraman et al., 1985). According to Parasuraman et al. (1985), as the services being intangible innature, most of it cannot be measured and their heterogeneous nature makes themvary from time to time and customer to customer. Hence because of these natures, itbecomes hard to evaluate the service quality of an organisation.17 | P a g e
  • 18. Market Research on Service Quality and Customer Satisfaction 2010 Gronroos (2001) introduced the concept of Consumer Perceived Quality(CPQ), which evaluates to what extent the service delivered, meets the customer’sexpectation. It compares the consumer’s expectations and the customer’s perceptionof service received. According to this theory, over-all satisfaction of the customerwith the organisation is based on every encounter or experience he had with thatorganisation. Hence they claim that service quality and customer satisfaction aredistinct conceptually but they are closely related constructs (Kang and James, 2004;Sureshchandar et al., 2002). A recent study has proved that “the CPQ influencesprofitability directly as well as indirectly through market share.” (Crosby, 1991, p. 6).Hence it is equally important to take CPQ under consideration for this research. According to Parasuraman et al. (1988), the long term and global evaluation ofa service is related to the service quality perceived by the customers and the customersatisfaction can be obtained by evaluating specific service transactions and they havealso clearly pointed out that the customer experience with the provided service,influence the perceptions of service quality. Hence, it could be said that both servicequality and CS are closely related terms.2.8 Relationship between Service Quality and Customer Satisfaction: The relationship between service quality and customer satisfaction has gaineda lot of attention in the last few years and they are considered to be the two corecomponents that frame a crux of the marketing theories (Sureshchandar et al, 2002).In the current competitive market, the companies can sustain its competitiveadvantage by providing service quality of higher standards, which would result insatisfied customers (Sureshchandar et al, 2002). Customers are one of the important assets of an organisation as they are theonly ones who keep the business running. As it was already discussed earlier thatretaining existing customers is more essential than generating new ones, it isimportant to have service quality in every stroke to build a long term relationship withthe customers, which adds more value to the consumers as well as the company(Nguyen et al, 2007). Based on the quality of service delivered, is the consumer’s18 | P a g e
  • 19. Market Research on Service Quality and Customer Satisfaction 2010commitment to renew/continue our service consistently in the future (Nguyen et al,2007).Figure 2.8: Five critical factors of customer perceived service qualitySource: (Sureshchandar et al., 2002) The figure 2.8 indicates the five critical factors of customer perceived servicequality, in which the core services refer to the content of the services i.e. the differentfeatures offered in a service. The human element of services refers to the empathy,assurance, reliability and responsiveness i.e. includes the factors that affect the humanbehaviour. Standardisation of services refers to the systematizing and simplifying thesystems, processes and the procedures. The tangibles refer to the physical facilitiesavailable, equipments and the appearance of their workers and finally the socialresponsibility refers to encouraging ethical behaviour in every aspect, which wouldimprove the image of the company and also promote customer loyalty and overallcustomer satisfaction (Sureshchandar et al., 2002).19 | P a g e
  • 20. Market Research on Service Quality and Customer Satisfaction 20102.9 Service Quality Dimensions: According to Johnston (1995), it is crucial to identify the determinants ofservice quality before we proceed with the service research. Hence this becomes acentral concern, as it is necessary to find out the determinants of service quality todefine measures and control customer perceived service quality. In 1980s, Parasuraman et al. (1985, 1988, 1994) developed the SERVQUALmodel to determine what service quality meant to the consumers, followed by themeasures they developed strategies to meet customer’s expectations. It is consideredto be the most popular instrument, which is widely used by many researchers andpractitioners to measure service quality (Sureshchandar et al., 2002).2.10 Service Quality Models: Many models were developed to capture the quality of service at differentpoints of time to suit different business objectives (Nitin et al, 2005). The earliest oneswere that of Gronroos’, (1984) ‘Technical and Functional Quality Model’ where theperceived quality was compared with the Expected Service with reference to theFunctional and Technical dimensions. The next popular model was Parasuraman etal.’s (1985) GAP model. This model analysed the gaps between the customers’expected and perceived service forming a base for the SERVQUAL model withseveral dimensions like Tangibles, Reliability etc. However, the SERVQUAL modelhas been subjected to a lot of criticisms and there have been many scholars who hadtried to modify or restructure this model conceptually (Kang and James, 2004). Thenext model designed by Haywood (1998) called as ‘Attribute ServQual Model’incorporated 3 attributes: ‘Physical facilities and process’, ‘People’s Behaviour’ and‘Professional Judgement’ into the SERVQUAL components. Haywood (1998) alsosaid that all the three attributes needs to have a balance and if not leads to fall inquality. The ‘Synthesized ServQual Model’ by Brogwicz et al. (1990) explained theimportance of the customer’s perception of the brand and image before even the20 | P a g e
  • 21. Market Research on Service Quality and Customer Satisfaction 2010product launched. This model added up the ‘Company Image’ component and itselements to the SERVQUAL model. Meanwhile, Cronin and Taylor (1992) developed ‘SERVPERF’, the‘Performance Only Model’ which states that the consumers’ perceptions on the brandactually predict the service quality and the perception index is a worthy indicator ofthe Service Quality. It also criticises that the SERVQUAL model mixes satisfactionwith perception. But the perception cannot always be a proper service qualityindicator because perceptions do change with time, and the organisation that provideunmatched service excellence always lead even when started with comparativelylesser brand awareness and marketing system. The Mattson’s (1992) ‘Ideal ValueModel’ calculates the Service Quality in comparison with the Ideal Industry Standardrather than the Customers’ perceptions. This model may strive to provide the bestservice in line with the technological capability but the innovation may not befocussed on the customer’s requirements. The ‘IT Alignment Model’ (Berkley andGupta, 1994) introduced Information Technology for improving the service quality.Meanwhile, Dabholkar (1996) introduced the ‘Attribute and Overall Affect Model’which examines the technology used self service options to minimize labour costs.The PCP Attribute (Philip and Hazzlet, 1997) egg prioritized the dimensions asPivotal, Core and Peripheral. Oh (1999) depicted the importance of Customer Value.Frost and Kumar (2000) proposed the ‘Internal Service Quality’ dimensions based onthe GAP model for the Internal Customers of the organisation. In the ‘Internal ServiceQuality DEA model’ (Soteriou and Starvinide, 2000), the Data Envelope Analysismaps the depreciation in service quality from the client base to branches. Santos’(2003) ‘e-Service Quality’ is developed on the antecedents of service quality using e-commerce.2.11 SERVQUAL: SERVQUAL is a multiple item scale developed to measure the Service qualityand this instrument illuminates the different dimensions of customer’s perception andhelps assessing the service quality (Parasuraman et al., 1985, 1988).21 | P a g e
  • 22. Market Research on Service Quality and Customer Satisfaction 2010It has illuminated five dimensions via which customers perceive and assess servicequality of the organisation and each dimension has a sub-set called ‘items’ via whichthe dimensions are being measured (Parasuraman et al., 1988). The five dimensionsare: 1. Tangibles: This includes the physical facilities available, equipments and the appearance of their workers. 2. Assurance: This includes the courteous nature and the product knowledge of the employees and also if they are confident and trust worthy. 3. Responsiveness: Providing quick service and their willingness to help the customers. 4. Empathy: Caring for the customers with more individualised attention. 5. Reliability: Providing accurate service and performing the promised commitments (Parasuraman et al., 1988). The required data is collected via structured questionnaire or surveys from asample of customers in which many questions are formulated based on the key servicequality dimensions (Parasuraman et al., 1988, 1994). Before reviewing other modelsbased on SERVQUAL, it is better to look into the advantages and disadvantages ofSERVQUAL.Advantages and Disadvantages of SERVQUAL: SERVQUAL has overlooked at some of the important factors of servicequality such as the social responsibility of the organisation, core service andstandardisation of service delivery and there is also a general agreement towards the22 items scale, that they are reasonably good predictors of service quality(Sureshchandar et al., 2002). Most of the research models till date have usedSERVQUAL as its base for development (Sureshchandar et al., 2002). The SERVQUAL model has also been severely criticized in many cases. Thecontents of the service quality dimensions obtained from the SERVQUAL model hasnot been accepted by everyone, as service quality is generally viewed as a multi-dimensional construct and it focuses mainly on the service delivery aspects and there22 | P a g e
  • 23. Market Research on Service Quality and Customer Satisfaction 2010are many additional factors also to be considered for e.g. Considering only thefunctional attributes to predict customer’s behaviour may have low predictivevalidity, the semantic differences are not being withstanded in each dimension, etc.(Kang and James, 2004; Sureshchandar et al., 2002). The criticisms also include “theuse of difference scores, dimensionality, applicability and the lack of validity of themodel, especially with respect to the dependence or independence of the five mainvariables” (Kang and James, 2004, p. 267). Hence considering all these criticisms thatSERVQUAL is renowned for its widespread use by other researchers and scholarsand it also has got lot of disadvantages it is advisable to look into other models basedon SERVQUAL. In 1992, Cronin and Taylor developed the Performance only model, whichthey called it SERVPERF. It states that service quality can only be assessed byperceptions and it is not necessary to measure expectations (Cronin and Taylor, 1992).The author views service quality as a link between purchase intentions and customersatisfaction and they challenged the SERVQUAL framework by Parasuraman et al.(1985), that perceptions are the only predictors of service quality where asSERVQUAL model confuses consumer satisfaction with attitude of the consumers(Cronin and Taylor, 1992). Similarly, Brogowicz et al. (1990) argued that there are many chances for theservice quality gap to occur well before the customer experiences the service, as thecustomer may learn through various ways such as word-of-mouth communication andadvertisements. It integrates the traditional managerial framework to the servicequality which comprises of three factors: image, traditional marketing activities andexternal influences and the model was called synthesized model of service quality(Brogowicz et al., 1990). Another study by Haywood-Farmer (1988) suggests that the attributes has tobe separated into three groups: professional judgement, processes & facilities andconsumer’s behaviour and each of the attributes comprises of various factors. It alsostates that all the three groups must be given equal importance, in case if any one ofthe attribute is given more importance than others, then it may lead to a disaster(Haywood-Farmer, 1988).23 | P a g e
  • 24. Market Research on Service Quality and Customer Satisfaction 2010 Similarly, Parasuraman et al. (1985) had stated that service quality cannot beassessed only with service outcomes but even the service delivery process needs to beevaluated, the SERVQUAL is composed of only functional dimension of servicequality and they lack technical dimension and corporate image. Both these dimensionsare inter correlated. The attributes of functional quality refers to the American perspective ofservice quality but however according to the European perspective, the service qualityneeds two more attributes in addition, which are technical quality and the corporateimage (Kang and James, 2004). The Gronroos SERVQUAL model includes all thethree attributes i.e. necessary from the European perspective. Moreover, theGronroos’ ServQual model was used in an empirical research in thetelecommunications field, which had proved that Gronroos model is more appropriateto represent service quality in telecommunications industry (Kang and James, 2004).2.12 Gronroos’ Model of SERVQUAL: It is a multi dimensional model. According to this model there are two servicequality dimensions, firstly the technical aspect (what kind of service is provided) andthe functional aspect (how is the service being provided).They introduced thecorporate image concept, as one of the other important element in the perceivedservice-quality model, as the customers would bring their perceptions and pastexperiences with the firm in each encounter with the organisation (Kang and James,2004). If a positive image about the firm is created in the mind of a customer, thenthey wouldn’t bother much about the minor mistakes that happens and in case there isa negative image about the firm, then the mistakes would be magnified in their mind(Gronroos, 1994; Kang and James, 2004). In the mobile telecommunications industry the customers look for both – Howthey are being served (functional dimension) as well as the nature of services andservice outcomes which constitute the technical dimension (Kang and James, 2004).24 | P a g e
  • 25. Market Research on Service Quality and Customer Satisfaction 2010Hence these three dimensions (technical dimension, functional dimension andcorporate image) are considered the most important.2.13 Addressing the Research Questions As discussed earlier in the ‘current state of telecommunication industry in theUK’ and ‘Problem Identification’ in the introduction (section 1.3 and 1.4), thenetwork operators are likely to face capacity crunch which induces network coverageand clarity issues. This in turn shall reduce the service quality standards to a new low.Moreover, even the reliability, assurance and responsiveness factors are not addressedwith proper concern increasing the customer’s switching intention. At this juncture it is important to know the service quality dimensions valuedmore by the customers and to give more attention towards those in order to achievepositive customer service experience. These problems led to the main researchobjectives specified. Based on the reviewed literature the research objectives can beobtained using the following theoretical models which has been justified in thischapter:i) The MnCSI model, Disconfirmation models (both desire and expectation) andover-all satisfaction measure is used to assess and describe the level of customers’satisfaction with the service quality offered to them by the UK’s MTNs with andwithout respect to which network customers subscribe to.ii) The expectation disconfirmation model is used in order to find which dimensionsof service quality the customers are satisfied or dissatisfied with in the UK’s MTNs.iii) The Gronroos’ Servqual model is used to identify the service quality dimensionsthat the customers perceive to be of high importance in the UK’s MTNs. The research question one: ‘How the customers’ satisfaction with the servicequality is described in the UK’s MTNs with and without respect to the customer’sservice providers?’ is answered by critically analysing the results obtained from thefirst research objective and the research question two: ‘Which attributes of servicequality do the customers perceive to be of more importance and lacks attention from25 | P a g e
  • 26. Market Research on Service Quality and Customer Satisfaction 2010the service providers in the UK?’ is answered by critically analysing the resultsobtained from objectives two and three.26 | P a g e
  • 27. Market Research on Service Quality and Customer Satisfaction 2010 3. RESEARCH METHODOLOGY3.1 Research Purpose: According to Saunders et al. (2007), research is a systematic or a step by stepprocedure to increase the knowledge of a new or an existing subject. The purpose of27 | P a g e
  • 28. Market Research on Service Quality and Customer Satisfaction 2010this research is to key out the main service quality dimensions/attributes as perceivedby the customers and find out how satisfied they are with these attributes and also toexplore the reasons for their the intention to change their service providers (Saunderset al., 2007).3.2 Research Philosophy: Research philosophy brings up different philosophical assumptions and beliefs thatwould support this research and help us selecting the appropriate research strategy andphenomenon. It has two core traditions: ‘Positivism’ and ‘phenomenological approach’(Saunders et al., 2007). Positivism deals with the fundamental laws perceived by us andtheir scientific explanations. ‘Phenomenological’ helps in trying to understand aparticular phenomenon (Saunders et al., 2007). The three main characteristics ofpositivism are: • The explanations and knowledge attained in this method are similar to that of natural science. • The ‘hypothetico deductive methodology’ which is followed by positivism is same as natural science. • It treats its’ subject matter (i.e. mobile telecom networks in UK, in this study) just like how a natural scientist would treat the world (of natural forces/things) (Saunders et al., 2007).Hence, it implies that positivism deals with observable social reality. So, this research isbuilt on this approach as it involves customer perceptions and identifying relationshipsthrough different theoretical frameworks.3.3 Research Approach: According to Saunders et al., (2007), there are two broad methods of reasoning:deductive approach and inductive approach. The deductive approach is based on the top-down approach mode where a theory is developed and subjected to more observationafter hypothesis as shown in the fig 4.3. It works from more general to specific reasoning(Saunders et al., 2007). Conversely, the inductive approach is based on the bottom-upapproach model i.e. the theory is developed based on the data collected during research.28 | P a g e
  • 29. Market Research on Service Quality and Customer Satisfaction 2010However, the deductive approach is also said to have degrees of uncertainty (Saunders etal., 2007) and moreover, as this research is based on theoretical considerations, ourresearch employs the deductive approach.Fig 3.3: Deductive Approach THEORY HYPOTHESIS OBSERVATION CONFIRMATION3.4 Research Method: There are two different groups of research methods: ‘quantitative’ and‘qualitative’. In quantitative analysis, we obtain statistical data that represents theconcepts empirically. This data is further measured using the quantitative statisticalmethods which links the data to concepts (Neuman, 2006). On the other hand,qualitative analysis explains the social phenomena which involve interviews andobservations from real life situations (Saunders et al., 2007) and the data here includeswritten/spoken words, physical objects, sounds or visual images measuredsimultaneously while collecting the data (Neuman, 2006). This research uses both quantitative as well as qualitative methods to getaccurate results. The quantitative measurement uses the following models as justifiedin the literature review: Gronroos’ SERVQUAL model (Gronroos, 1994) to evaluateCS with the Service Quality dimensions (functional dimensions, Technical dimensionand Corporate Image); ‘Disconfirmation models’ to analyse and evaluate customer’sdesires and expectations both with and without respect to their service provider(Oliver 1980; Parasuraman et al., 1988) and the MnCSI model to evaluate the over-allcustomer satisfaction with service delivery of the UK’s MTNs with and without29 | P a g e
  • 30. Market Research on Service Quality and Customer Satisfaction 2010respect to which Mobile Telecom Network customers subscribe to (PositivelyMinnesota, 2007). According to Neuman (2006, pg. 412), “Researchers often combine focus groupwith quantitative research, and the procedure has its own specific strengths andweaknesses”. The strengths are: the lively setting that allows respondents to expresstheir opinions or ideas freely and interpretation of ideas is facilitated (Neuman, 2006).This helps in bridging rich ideas and data in a continuing and interactive manner viawhich we could have a better understanding of the subject in a bigger view and thesestrengths overwrites the weaknesses which are: ‘polarization effect’ and limitation inthe number of topics discussed in a session (Neuman, 2006). Hence focus groupinterview is the chosen Qualitative method as the research also includes quantitativemeasurement. The focus group interview uses the Delphi technique to refine theresearch ideas. This process involves employing a group of people who can contributesome more value to the research idea (Saunders et al., 2007). The members of thegroup were initially briefed about the research idea and were asked to suggest otherimportant elements to measure the service quality. According to respondents, amongthese attributes they consider the balance between quality and cost as the mostimportant. It was then derived as another dimension to the Gronroos SERVQUALmodel called as ‘Value for Money (VFM)’. This focus group interview lasted for 60minutes and the details of which is described in Appendix-A. All the Service Quality Dimensions and its items (variables) used are listed intable 3.4. Each dimension is represented with indicators as shown in the table below.For e.g., Tangibles is TN, Reliability is RE, etc. A set of 3 items were added for everydimension based on its properties except VFM which has 2 items. The items/variablesunder each dimension are defined in the Appendix-H.Table 3.4: Service Quality dimensions and its comprising items No. of Service Quality Dimensions No. of Service Quality Dimensions Items Items 3 TANGIBLES (TN) 3 ASSURANCE (AR) 3 RELIABILITY (RE) 3 TECHNICAL QUALITY (TQ)30 | P a g e