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1. Assessing the Role of Service Quality on
Customer Satisfaction in Ethio Telecom at South
Region: Case Hawassa City
A Thesis Submitted to School of Graduate Studies at
Dilla University in Partial Fulfillment of the
Requirements for the Degree in Master of Business
Administration.
By Cherinet Alemgena Kuri
Major Advisor: Dr.R.Venkateshwar Rao
Co. Advisor: Mr. Admasu Abera
Dilla University
School of Graduate Studies
Master of Business Administration (MBA)
January 2014
Dilla, Ethiopia

2. Dilla University
School of Graduate Studies
Approval Sheet of Thesis
As members of the Examining Board of the final MBA Open Defense, we certify that we have
read and evaluated the thesis prepared by Cherinet Alemgena Kuri entitled “Assessing the Role
of Service Quality on Customer Satisfaction in Ethio Telecom at South Region: Case Hawassa
City” and approved that it be accepted as fulfilling the thesis requirement for the degree of
Master of Business Administration with respect to originality and quality.
Name of Major Advisor Signature Date
Dr.R.Venkateshwar Rao …………………. ……………...
Name of Co-advisor Signature Date
Mr. Admasu Abera …………………. ……………...
Name of External Examiner Signature Date
Dr Berhanu Borji …………………. ……………...
Name of Internal Examiner Signature Date
Mr. Desalegn Urgesa …………………. ……………...
Name of Chairman Signature Date
Mr. Jato Benti …………………. ……………...

3. Declaration
I hereby declare that the thesis is entitled, Assessing the Role of Service Quality on Customer
Satisfaction in Ethio Telecom at South Region: Case Hawassa City and submitted to the
School of graduate studies, Dilla University for the award of the Degree of Master of Business
Administration. It is based on my original research work carried out by me myself under the
supervision and guidance of Major advisor Dr.R.Venkateshwar Rao and Co advisor Mr.Admasu
Abera. This work has not been submitted earlier in full or in a part. Brief quotations from this
thesis are allowable without special permission provided that accurate acknowledgement of
source is made. Requests for permission for extended quotation from or reproduction of this
manuscript in whole or in part may be granted by the head of the major department or the Head
of the School of Graduate Studies when in his or her judgment the proposed use of the material is
in the interests of scholarship. In all other instances, however, permission must be obtained from
the author.
Name: Cherinet Alemgena Kuri
Place: Dilla University, Dilla
Signature: ___________________
Date of Submission: February 2015

4. Certification
I hereby certify that this thesis entitled “Assessing the Role of Service Quality on Customer
Satisfaction in Ethio Telecom at South Region: Case Hawassa City” submitted to the School of
Graduate studies, Dilla University for the award of the Degree of Master of Business
Administration is an authentic work done by Cherinet Alemgena from July 2014 to December
2014 under my supervision and guidance. The subject on which the thesis has been prepared is
based on his original research work and it has not been submitted earlier in full or a part thereof
for the award of any of degree, diploma or any other similar titles in this or any other University
or institution.
Name: Dr.R.Venkateshwar Rao
Signature: --------------------------------------
Place:-Dilla University, Dilla
Date: --------------------------------------------

5. Acknowledgement
First of all I would like to praise almighty God who gave me endurance and strength in all my
life. Next, my special and sincere gratitude goes to my major Advisor Dr.R. Venkateshwar Rao
for his earnest and constructive comments throughout the analysis and preparation of the
manuscript.
My thanks also go to my co advisor Mr. Admasu Abera for his unreserved and timely support in
checking and giving constructive suggestion.
I would also like to thank all the people – the managers, the supervisors and staff of Ethio
Telecom, South Regional Office for their cooperation during data collection processes.
Finally, I would like to thank my lovely wife, Fiyameta Mamo and my family for their support
and encouragement.

6. Table of Contents
Aproval Sheet.................................................................................................................................................i
Declaration....................................................................................................................................................ii
Certification .................................................................................................................................................iii
Acknowledgements......................................................................................................................................iv
Table of contents..........................................................................................................................................vi
List of tables...............................................................................................................................................viii
List of Figures..............................................................................................................................................ix
Abbreviations (Acronyms)............................................................................................................................x
Abstract.......................................................................................................................................................xii
...........................................................................................................................................1
CHAPTER ONE
1. ....................................................................................................................................1
INTRODUCTION
1.1 Background of the study .....................................................................................................................1
1.1.1 History of Ethio telecom .............................................................................................................3
1.2 Statement of the problem....................................................................................................................4
1.3 Objectives ...........................................................................................................................................5
1.3.1 General objective: ........................................................................................................................5
1.3.2 Specific objectives .......................................................................................................................5
1.4 Research questions..............................................................................................................................5
1.5 Scope of the Study ..............................................................................................................................6
1.6 Limitations of the study ......................................................................................................................6
1.7 Significance of the Study ....................................................................................................................6
1.8 Organization of the thesis ...................................................................................................................6
..........................................................................................................................................8
CHAPTER TWO
2. .........................................................................................................................8
LITERATURE REVIEW
2.1 Understanding Quality Concept..........................................................................................................8
2.1.1 Product Quality ............................................................................................................................9
2.1.2 Service quality Concept .............................................................................................................10
2.2 Customer Satisfaction .......................................................................................................................12
2.2.1. Definition of Customer Satisfaction .........................................................................................12
2.2.2. Customer Satisfaction Measures...............................................................................................13

7. 2.2.3. Factors that Affect Customer Satisfaction ................................................................................14
2.3 Relationship between service quality and customer satisfaction ......................................................15
2.4 Customers‟ Expectations compared to Perceptions ..........................................................................16
2.5. The Development and Evolution of the SERVQUAL Model..........................................................17
2.6 Service Quality Models.....................................................................................................................19
2.7 Application of the SERVQUAL Model in Different Contexts.........................................................23
2.8 For this study.....................................................................................................................................25
....................................................................................................................................27
CHAPTER THREE
3. ....................................................................................................27
METHODOLOGY OF THE STUDY
3.1 Description of the study....................................................................................................................27
3.2 Research design ................................................................................................................................27
3.3 Types and sources of data ................................................................................................................28
3.4 Population of the study.....................................................................................................................28
3.5 Sampling design ................................................................................................................................29
3.6 Data collection methods...................................................................................................................31
3.6.1 Questionnaires............................................................................................................................31
3.6.2 Administering of questionnaires ................................................................................................31
3.6.3 Measurement..............................................................................................................................33
3.6.4 Reliability Coefficient................................................................................................................33
3.7 Method of data analysis....................................................................................................................35
.......................................................................................................................................36
CHAPTER FOUR
4. .............................................................................................................36
RESULTS AND DISCUSSION
4.1 Demographic characteristics of the respondents ...............................................................................37
4.2 Expectations and perceptions discussed............................................................................................42
4.3 SERVQUAL Results Discussions.....................................................................................................42
4.3.1 RL- Reliability.............................................................................................................................42
4.3.2 RS- Responsiveness ....................................................................................................................45
4.3.3 AS- Assurance.............................................................................................................................47
4.3.4 EM- Empathy..............................................................................................................................49
4.3.5 TA- Tangibility ...........................................................................................................................51
4.4 Overall Gap scores analysis ..............................................................................................................53
4.5 Description Statistics of dimensions .................................................................................................55
4.6 Overall importance of service quality dimension:.............................................................................56

8. ........................................................................................................................................58
CHAPTER FIVE
5. ...........................................................58
SUMMARY, CONCLUSIONS AND RECOMMENDATIONS
5.1 Conclusions.......................................................................................................................................58
5.2 Recommendations.............................................................................................................................59
REFERENCES ...........................................................................................................................................61

9. List of tables Pages
Table 3.1: Total Population ………..………………………………………….…………………29
Table 3.2: Sample size selection…………………………………………..……………………..31
Table 3.3: Reliability Coefficient (Cronbach`s Alpha)………………………...………………...34
Table 4.1: Summery of means of customer' expectations and gap scores……………...……..…41
Table 4.2: Gap score for the reliability dimensions………….…………………………………..42
Table 4.3: Gap score for the responsiveness dimensions…..........................................................46
Table 4.4: Gap score for the assurance dimensions…………...……………….………...………48
Table 4.5: Gap score for the empathy dimensions………………..….…………………………..50
Table 4.6: Gap score for the tangibility dimensions ………….…………………………….…...52
Table 4.7: Descriptive statistics for five dimensions………..…………………………...………54

10. List of Figures Pages
Figure 2.1: Model of service quality gaps ………………………………....................................21
Figure 4.1: Gender profile ……….………………………………………………………….......37
Figure 4.2: Age profile…… ………………………………………………………………….....38
Figure 4.3: Occupations profile…… ………………………………………………………...…38
Figure 4.4: Professionals qualification profile… …………………………………………….…39
Figure 4.5: Monthly income profile… ……………………………………………………….…39
Figure 4.6: Monthly expense profile… …………………………………………………………40
Figure 4.7: Reliability Dimension - Unweighted and Weighted Gap Score…………………..…45
Figure 4.8: Responsiveness Dimension - Unweighted and Weighted Gap Score……………….47
Figure 4.9: Assurance Dimension - Unweighted and Weighted Gap Score……………………..49
Figure 4.10: Empathy Dimension - Unweighted and Weighted Gap Score…………………..…51
Figure 4.11: Tangibility Dimension - Unweighted and Weighted Gap Score……………...........53
Figure 4.12: Overall importance of service quality dimension ……. ……..………………….…57

11. Abbreviations (Acronyms)
CAF Customer Application Form
CDMA Code Diversion Multiple Access
CDR Call Detail Record
CEO Chief Executive Officer
CPE Customer Premises Equipment
CUG Closed User Group
DDN Digital Data Network
ET Ethio Telecom
ETA Ethiopian Telecommunication Agency
ETC Ethiopian Telecommunications Corporation
EVDO Evolution Data Optimization
FW Fixed Wireless
GOTA Global Open Trenching Architecture
GPRS General Packet Radio Service
GSM Global Mobile Service
HSPA High Speed Packet Access
ICT Information Communication Technology
IP Internet Protocol
KPI Key Performance Indicator
MCIT Ministry of Communication & Information Technology
M2M Machine To Machine

12. NGN Next Generation Network
OCS Online Charging System
PMO Program Management Office
PBX Public Branch Exchange
SIM Subscriber Identity Module
SLA Service Label Agreement
SME Small and Medium Enterprises
SMS Short Message Service
SOHO Small Office Home Office
WCDMA Wide Code Diversion Multiple Access
ZTE Zhongxing Telecommunication Equipment
Z-SMART ZTE Billing System
2G Second Generation Network
3G Third Generation Network
4G Fourth Generation Network

13. Abstract
The primary purpose of this research is assessing the Role of Service Quality on Customer
Satisfaction in Ethio Telecom at South Region: Case Hawassa Cit. To achieve this objective both
primarily and secondary data were collected. The questionnaires were distributed to 380 fixed
line telephone customers in Hawassa city. As a way of trying to measure service quality,
researcher was developed a methodology known as SERVQUAL a perceived service quality
questionnaire survey methodology. SERVQUAL examines five dimensions of service quality:
Reliability, Responsiveness, Assurance, Empathy, and Tangibility. The collected data were
analyzed and interpreted by Statistical Package for the Social Sciences in version 20. From the
results obtained, the consumers perceive service quality as poor in all dimensions, indicating
their expectations was higher than their perceptions for fixed line telephone service at ethio
telecom. In this regard, consumers were not satisfied with any dimension of service quality. All
dimensions were showing a negative gap score. Ethio telecom need to make improvements in all
dimensions in order to close gap and that could lead to increased customer satisfaction. Thus the
paper, enlighten the Company to get insight about its services quality and level of customers’
satisfaction. Ethio teleocm need to improve its service quality provisions and helps customers to
get quality fixed line services from ethio it by amending the problem which was recommended in
this thesis.
Keywords-: Service Quality, Customer Satisfaction, SERVQUAL, fixed line telephone, Ethio
telecom

14. CHAPTER ONE
1. INTRODUCTION
1.1 Background of the study
In service marketing literature, service quality is generally defined as the overall assessment of a
service by the customers Eshghi et al (2008). Parasuraman et al (1985) define service quality as
“The discrepancy between consumers‟ perceptions of services offered by a particular firm and
their expectations about firms offering such services”. If what is perceived is below expectation,
consumer judges quality as low and if what is perceived is meets or exceeds expectation then
consumer sees quality to be high. Critical component of service quality identified are;
consumer‟s expectation which is seen as what they feel service provider should offer and this is
influenced by his/her personal needs, past experience, word-of-mouth and service provider‟s
communications Parasuraman et al (1985). However, this meaning of expectation is that of
service quality literature which is different from expectation in the customer satisfaction
literature which defines expectation as predictions made by consumer about what is likely to
happen during an impending transaction. Consumers‟ perception of performance is what he/she
experiences Parasuraman et al (1988). In addition, service quality is mainly focused on meeting
the customer‟s needs and also how good the service offered meets the customer‟s expectation of
it. It is however difficult according to previous studies to measure service quality because of its
intangible nature and also because it deals with expectations and perceptions of consumers which
is difficult as well to determine due to the complexity of human behavior.
According to Douglas & Connor (2003), Parasuraman et al (1985) and Ladhari (2008) the
intangible elements of a service (inseparability, heterogeneity and perishability) are the critical
determinants influencing service quality perceived by a consumer.
Various studies that focused on a link between satisfaction and quality argued for different views
in terms of relationship. Some think that quality leads to satisfaction McDougall & Levesque
(1996, 2000); Negi (2009) and others support that satisfaction leads to quality Cronin & Taylor
(1992). Some researcher propose that quality and satisfaction are determined by the same

15. attributes like Parasurman et al (1988) tried to relate customer satisfaction to service quality
since what SERVQUAL model struggles to measure is attitude. They see customer satisfaction
as transaction specific meaning consumers get satisfied with a specific aspect of service while
perceived service quality is a global judgment or attitude to a service. Negi (2009) clearly points
out that overall service quality is significantly associated with and contributes to the overall
satisfaction of mobile subscribers. Customer satisfaction is based on the level of service quality
delivered by the service providers Saravanan & Rao (2007) which is determined by the
consumer‟s cumulative experiences at all of the points of contact with company Cicerone et al
(2009). This shows that there is some link between service quality and customer satisfaction
which highlights that importance of customer satisfaction when defining of quality Wicks &
Roethlein (2009). These studies all confirm a relationship between service quality and customer
satisfaction but according to Asubonteng et al (1996). There is no agreement on the exact kind of
relationship between the two constructs and points of out that most researchers agree that service
quality and customer satisfaction have attributes that are measurable. Service organizations have
begun focusing on the customer perceptions of service quality because it helps in developing
strategies that lead to customer satisfaction Saravanan & Rao (2007). According, to Gummesson
(1994) there has been a shift from the focus on goods without much emphasis on services to a
focus on services though paying attention on the goods. This stresses the importance of service
marketing to most service industries. This is why retailing, like most services perceived service
quality has been of high interest to researchers Magi& Julander (1996).
After carefully analyzing various research studies conducted so far using the SERVQUAL
model, the researcher realize that many research works have been carried in different service
industries such as Retailer, education, restaurants, banking, health care, etc, but limited empirical
study has been conducted using the SERVQUAL model to assess service quality in
telecommunication. We consider ethio telecom as part of the service industry because they deal
with providing service to consumers. Magi & Julander (2009) carried a study on grocery stores
to find out the relationship between perceived service quality, customer satisfaction and
customer loyalty. From this study, it was proven that perceived service quality had a positive
relationship with customer satisfaction and we think this supports our argument of linking
service quality and customer satisfaction. They did not use the SERVQUAL model but rather the
performance only scale to assess service quality. Thus, the study was tried to measure service

16. quality and customer satisfaction using the SERVQUAL model from the consumer‟s perspective
in order to know their perceptions.
1.1.1 History of Ethio telecom
Ethio telecom is the oldest public telecommunication operator was established a century ago to
support the country financially and integrate all cities together. The company was under
government control during twentieth century, and was then brought under the control of the
Ministry of Post and Communications (1952). Latter separated from the postal administration, to
fall the Ministry of Transport and Communications In 1994.The first long-distance telephone
was established between Addis Ababa and Harare then begin to expand throughout the country.
After the end of Italy war Ethiopia established the Imperial Board of Telecommunications That
aimed to provide and expand the telecommunication services. The Imperial Telecommunication
Board, which became the Ethiopian Telecommunication Authority in 1981, was placed in charge
of both the operation and regulation of telecommunication services. In 1996, The Government
created a new separate regulatory body by Proclamation No. 49/1996, establishing the Ethiopian
Telecommunication Agency (ETA), which has the objective of promoting the development of
“high quality, efficient, reliable and affordable telecommunication services”. The same year, by
Regulation No. 10/1996, the Council of Ministers set up the Ethiopian Telecommunication
Corporation (ETC), to which all the rights and obligations of the former Ethiopian
Telecommunication Authority were transferred. Ethiopian Telecommunication Corporation
would operate as a public enterprise under the authority/supervision of the ETA (Ethiopian
telecommunication agency) with the principal duty of maintaining and expanding
telecommunication services in the country and providing domestic and international telephone,
telex, tele-fax and other communication services. ETC (Ethiopian Telecommunication
Corporation) was changed to ethio telecom (ET) by the regulation No.197/2010 in November
29/2010. This company aims to provide next generation network service based on the world
class standard of information technology service and to build competent next generation
network. Ethio-Telecom (ET) a monopoly provider on all telecom services including fixed,
mobile, internet and data communications.

17. Ethio telecoms, at southern region there are 800,000 customers of fixed line telephone service
currently. At Hawassa city there are 7685 subscriber for fixed line telephone service. (https://
www.ethiotelecom.et , retrieved on the date of July 2014)
1.2 Statement of the problem
Customer satisfaction is based on the level of service quality delivered by the service providers
Saravanan & Rao (2007). This shows that there is some link between service quality and
customer satisfaction which highlights that importance of customer satisfaction when defining of
quality Wicks & Roethlein (2009). Fixed line telephone is among the telecom services given by
ethio telecom at regional level. Customers are also frequently complaining about Over tariff
payment, short bill payment period, delay on re connection, interruption on installation,
suspension on location change, postponement on name or owner change, delay on maintenance,
accessibility, lack of confidentiality and poor network coverage are those problems which create
customer dissatisfaction. These problems are also repeatedly observed in the study area of
Hawassa city. And this initiated the researcher to conduct the study to assess the role of service
quality on customer satisfaction in Hawassa city. After carefully analyzing various research
studies conducted so far using thed SERVQUAL model, the study realize that many research
works have been carried in different service industries such as Retailer, education, restaurants,
banking, health care, etc, but limited empirical study has been conducted using the SERVQUAL
model to assess service quality in telecommunication. These studies all confirm a relationship
between service quality and customer satisfaction but according to Asubonteng et al (1996) there
is no agreement on the exact kind of relationship between the two constructs and points of out
that most researchers agree that service quality and customer satisfaction have attributes that are
measurable. Magi& Julander (2009) carried a study on grocery stores to find out the relationship
between perceived service quality, customer satisfaction and customer loyalty. From this study,
it was proven that perceived service quality had a positive relationship with customer satisfaction
and the researcher think this supports the study argument of linking service quality and customer
satisfaction. They did not use the SERVQUAL model but rather the performance only scale to
assess service quality. The researcher could get only one research conducted in the effect of
quality services on the customer satisfaction and loyalty at Holland Car PLC and MOENCO
using Kano model by Kindye Essa (2011) in Ethiopia, and it is not enough to generalize the

18. effect of quality service on customer satisfaction using this model. Thus the researcher was try
to measure the role of service quality on customer satisfaction using the SERVQUAL model
from the consumer‟s perspective in order to know their perceptions in ethio telecom at Hawassa
city for fixed line telephone .
1.3 Objectives
1.3.1 General objective:
The general objective of this study is to investigate the role service quality on customer
satisfaction in ethio telecom for fixed line telephone at south region specifically at Hawassa city.
1.3.2 Specific objectives:
 To assess fixed line telephone service quality in Ethio telecom.
 To measure the customer satisfaction with service quality dimension.
 To identify the dimensions of service quality that are important to customer of
fixed line at Hawassa city.
1.4 Research questions
The main purpose of this study is service to assess the role of service quality on customer
satisfaction using the SERVQUAL model in etho telecom. The study was interested in the
dimensions of service quality from the consumer‟s perspective through assessing their
expectations and perceptions of service quality. Thus the researcher likes to answer the following
questions in the study.
 How consumers perceive fixed line telephone service quality in Ethio telecom?
 Are customers satisfied with fixed line telephone service quality offered by ethio
telecom?
 Which dimensions of service quality are important to fixed line telephone customers at
Hawassa city?

19. 1.5 Scope of the Study
It is known that ethio telecom as a Company provides various services and operates throughout
the country. Thus, the scope of this study is confined to measuring the role of service quality on
customer satisfaction, geographically at south region specifically in Hawassa city, from July
2014 up to December 2014 for fixed line telephone customers.
1.6 Limitation of the Study
The main limitation of these studies is constraints of resource, money and time. The finance and
material resource needed for large sample size for these studies is inadequate. It also not likely
the researcher would have time and access to every shop of ethio telecom to distribute
questionnaire.
1.7 Significance of the Study
This study was assessing the role of service quality on customer satisfaction. Many researchers
they did not conducted the study on telecom fixed line telephone service. The researcher initiated
to conduct the role of fixed line telephone service quality on customer satisfaction. Therefore, the
results of the study may help the Company to get insight about its important services quality
dimension and customers‟ satisfaction. Additions to this, the customers are also the beneficiary
of the study result. Finally, the study may also serve as an input for those who are interested to
do other researches in related topics.
1.8 Organization of the thesis
This thesis comprises of five different chapters:
Chapter one: This Chapter Deals with introduction and it encompasses background of the
study, statement of the problem, objectives of the study, research questions, significance of the
study, scope and limitation of the study were dealt under this section.
Chapter two: This chapter was exclusively devoted to the review of related literature;
theoretical and empirical studies also conceptual framework was incorporated on the need to
identify critical growth factors.

20. Chapter three: This chapter was deal with methodology of the study; it comprises description
of the study, research design, types and sources of data, population of the study, sampling design,
data collection methods and method of data analysis.
Chapter four: This chapter was discusses the data collected from the field that would enable us
answer our research questions. The data collected was mainly based on respondents‟
expectations and perceptions of the various items under the SERVQUAL model. Also, some
demographic description of the respondents was collected. A general description of the
consumers‟ expectations and perceptions of the various dimensions was done using descriptive
statistics. Also, gap score analysis was carried based on the difference between the expectations
and perceptions (P – E) in order to assess service quality and customer satisfaction.
Chapter five: The last chapter was presents the conclusions to be drawn from the findings and
the recommendations to be made to address the problems uncovered and all the reference
materials to be used in the study are listed under bibliography.

21. CHAPTER TWO
2. LITERATURE REVIEW
In this chapter, the study review relevant literature connected to our topic. The study discusses
all the concepts that are important to this study, such are service quality, customer satisfaction,
customer‟s expectations and perceptions are discussed. Also, a proper explanation of the
SERVQUAL model is outlined in this chapter. The various dimensions (tangibles, reliability,
responsiveness, assurance, empathy) of the SERVQUAL model are discussed. Models
measuring service quality and customer satisfaction are discussed as well. The study tries to
bring out the relationship between service quality and customer satisfaction. The main reason for
covering this chapter is to enhance on understanding of the main theories involved in this study
and to answer research questions.
2.1 Understanding Quality Concept
According to Hardie & Walsh (1993) and Sower and Fair (2005) quality has many different
definitions and there is no universally acceptable definition of quality. They claim it is because
of the elusive nature of the concept from different perspectives and orientations and the measures
applied in a particular context by the person defining it. In our study, quality must be well
defined in the context of grocery stores and must focus on various dimensions of both product
and service. This therefore means the definition of quality varies between manufacturing and
services industries and between academicians and practitioners. These variations are caused by
the intangible nature of its components since it makes it very difficult to evaluate quality which
cannot be assessed physical implying other ways must be outlined in order to measure this
quality. Quality has been considered as being an attribute of an entity (as in property and
character), a peculiar and essential character of a product or a person (as in nature and capacity),
a degree of excellence (as in grade) and as a social status (as in rank and aristocracy) and in order
to control and improve its dimensions it must first be defined and measured Ghylin et al (2008).

22. According to Ghylin et al (2008) since company managers believe that the power of quality
guarantees high profits in business, companies try to understand how to keep the quality level
high at every point within production, manufacturing, and even providing services. Thus, they
see the product-based, user-based and manufacturing based approaches have been the most
popular in reported research. They was apply the user-based approach because they are interested
in finding out what dimensions of service quality in grocery stores are customers satisfied with
and how they perceive this service quality.
From the above discussion, they can highlight two forms of quality; product quality and service
quality which are have to be discussed in order to clearly get their differences.
2.1.1 Product Quality
Garvin (1987) suggested eight dimensions of product quality which are very important to
consumers since they lay much emphasis on quality when buying among many similar products
and they include; Performance- primary operating characteristics of a product, Features- „bells
and whistles‟ of a product, Reliability- probability of a product failing within a specified period
of time; Durability- measure of a product life; Conformance-degree that a product‟s design
matches established standards; Serviceability- speed and competency of repair; Aesthetics-
subjective measure of how a product looks, feels, sounds, smells or tastes; Perceived quality-
subjective measure of how the product measures up against a similar product. In the case of
grocery stores, these factors play a very important role in knowing how consumers perceive
service quality and therefore support in the measurement of service quality.
Technical quality refers to what the customer receives as a result of his/her interaction with the
service firm and functional quality refers to how the technical components are delivered to the
customer Gronroos (1984).
The importance of focusing on both technical and functional aspects of quality are being
developed because there is no longer a clear distinction between a service and product since both
include each other in their process according to Wicks & Roethlein (2009). However, they were
focusing on both the functional dimension of quality and the technical aspect as well. However,
the technical or physical aspect of quality for any service is hard to evaluate by the customer

23. according to Asubonteng et al (1996) but regard our study which focuses on grocery stores,
technical quality is important since these stores deal with tangibles which are a core component
in the retailing activity. This therefore means that, in order to know how consumers perceive
service quality in grocery stores, we must focus on both the technical and functional aspects of
quality.
Wicks & Roethlein (2009) highlight that the definition of quality is evolving, but that the
common factor throughout the evolution process is a focus on both the technical and functional
aspects of quality and that in order to become world-class, organizations need a user-based
definition that is more important to the customer, and a process-based definition that is more
important to the manufacturer or service provider.
For this study, the definition of quality used is the user-based definition because quality is
eventually evaluated by human and it is the most appropriate method to examine dimensions of
quality according to Ghylin et al (2008). This definition of quality considers quality as subjective
meaning it is determined by the customer through his/her perceptions. This is also supported by
the view of Muffatto & Panizzolo (1995) who believe that the most accepted definition of quality
is, defining quality as the extent to which a product and/or service meets and/or exceeds
customer‟s expectation.
2.1.2 Service quality Concept
Service quality is considered an important tool for a firm‟s struggle to differentiate itself from its
competitors Ladhari (2008). The relevance of service quality to companies is emphasized here
especially the fact that it offers a competitive advantage to companies that strive to improve it
and hence bring customer satisfaction. Service quality has received a great deal of attention from
both academicians and practitioners Negi (2009) and services marketing literature service quality
is defined as the overall assessment of a service by the customer Eshghi et al (2008). Ghylin et al
(2008) points out that, by defining service quality, companies were able to deliver services with
higher quality level presumably resulting in increased customer satisfaction. Understanding
service quality must involve acknowledging the characteristics of service which are intangibility,
heterogeneity and inseparability Parasuraman et al (1985). In that way, service quality was easily
measured.

24. In this study, service quality can be defined as the difference between customer‟s expectation for
service performance prior to the service encounter and their perception of the service received.
Customer‟s expectation serves as a foundation for evaluating service quality because, quality is
high when performance exceeds expectation and quality is low when performance does not meet
their expectation Asubonteng (1996). Expectation is viewed in service quality literature as
desires or wants of consumer i.e., what they feel a service provider should offer rather than
would offer Parasuraman et al (1988). Perceived service is the outcome of the consumer‟s view
of the service dimensions, which are both technical and functional in nature Gronroos (1984).
The customer‟s total perception of a service is based on his/her perception of the outcome and
the process; the outcome is either value added or quality and the process is the role undertaken
by the customer Edvardsson, (1998).
Parasuraman et al (1988) define perceived quality as a form of attitude, related but not equal to
satisfaction, and results from a consumption of expectations with perceptions of performance.
Therefore, having a better understanding of consumers‟ attitudes was helping know how they
perceive service quality in ethio telecom.
Negi (2009) suggests that customer-perceived service quality has been given increased attention
in recent years, due to its specific contribution to business competitiveness and developing
satisfied customers. This makes service quality a very important construct to understand by firms
by knowing how to measure it and making necessary improvements in its dimensions where
appropriate especially in areas where gaps between expectations and perceptions are wide.
In the context of ethio telecom, I am not only interested in learning more about the factors
associated to service quality perceived by customers and how service quality is measured but
also provide a direction for improvement of service quality in order to bring customer
satisfaction. Douglas & Connor (2003) emphasis that the consumer who has developed
heightened perception of quality has become more demanding and less tolerant of assumed
shortfalls in service or product quality and identify the intangible elements (inseparability,
heterogeneity and perishability) of a service as the critical determinants of service quality
perceived by a customer. It is very vital to note here that, service quality is not only assessed as
the end results but also on how it is delivered during service process and its ultimate effect on
consumer‟s perceptions Douglas & Connor (2003).

25. In ethio telecom, there is a need to understand customer‟s expectation regarding service quality.
Different researchers have developed models in order to get a better understanding of service
quality.
2.2 Customer Satisfaction
2.2.1. Definition of Customer Satisfaction
Customer satisfaction is conceptualized as been transaction-specific meaning it is based on the
customer‟s experience on a particular service encounter Cronin & Taylor (1992) and also some
think customer satisfaction is cumulative based on the overall evaluation of service experience
Jones & Suh( 2000). These highlight the fact that customer satisfaction is based on experience
with service provider and also the outcome of service.
Customer satisfaction is considered an attitude, Yi (1990). In the case of ethio telecom, there is
some relationship between the customer and the service provider and customer satisfaction will
be based on the evaluation of several interactions between both parties.
Giese & Cote (2000) clearly state that there is not generic definition of customer satisfaction and
after carrying a study on various definitions on satisfaction they came up with the following
definition, “customer satisfaction is identified by a response (cognitive or affective) that pertains
to a particular focus (i.e. a purchase experience and/or the associated product) and occurs at a
certain time (i.e. post-purchase, post-consumption)”. From this definition, is it clear that the
consumer‟s satisfaction is determined for his/her perceived experience in the ethio telecom and
this is supported by Cicerone et al(2009) and Sureshchander et al (2002) who believe customers‟
level of satisfaction is determined by their cumulative experiences at all of their points of contact
with a supplier organization.
Fornell (1992) clearly defines customer satisfaction as an overall post-purchase evaluation by the
consumer and this is similar to that of Tse & Wilton (1988) who defined customer satisfaction as
the consumer‟s response to the evaluation of the perceived discrepancy between prior
expectations and the actual performance of the product or service as perceived after its
consumption. These definitions consider satisfaction as a post-purchase response and in the ethio
telecom, perceived experience is important in evaluating customer satisfaction.

26. According to Wicks & Roethlein (2009) customer satisfaction can be formed through an
affective evaluation process and this affective evaluation is done following the purchase
experience by the consumer.
Organizations that consistently satisfy their customers enjoy higher retention levels and greater
profitability due to increased customers‟ loyalty, Wicks & Roethlein (2009). This is why it is
vital to keep consumers satisfied and this can be done in different ways and one way is by trying
to know their expectations and perceptions of services offered by service providers. In this way,
service quality could be assessed and thereby evaluating customer satisfaction.
In our study, we use customers to evaluate service quality by considering several important
quality attributes in ethio telecom and i think companies must take improvement actions on the
attributes that have a lower satisfaction level. This means customer satisfactions were considered
on specific dimensions of service quality in order to identify which aspects customers are
satisfied with.
2.2.2. Customer Satisfaction Measures
Customer satisfaction measurement involves the collection of data that provides information
about how satisfied or dissatisfied customers are with a service. This information can be
collected and analyzed in many different ways. Many organizations regularly check the levels of
customer satisfaction to monitor performance over time and measure the impact of service
improvement.
Henley center headlight vision Anon (2007) states the research carried out in the UK with public
sector organizations suggests that there are five themes that are likely to be relevant to all
organizations in measuring customer satisfaction.
Delivery of the service (how problems were handled, reliability, outcome etc…)
Timeliness (waiting times, number of times contacted)
Information (accuracy, enough information, kept informed)
Professionalism (competent staff, fair treatment)
Staff attitude (friendly, polite, sympathetic)

27. 2.2.3. Factors that Affect Customer Satisfaction
Satisfaction which is vaguely defined as fulfilling the needs for which a good or service was
made (Merriam websters Dictionary), is viewed differently in various industries, over various
demographic backgrounds, as well as for individuals and institutions Center for the study of
Social Policy (2007). Moreover, it has a totally different approach when it comes to services and
products Center for the study of Social Police (2007). All along we have been trying to
understand quality of services, quality of products, and satisfaction both in the arena of comfort
and in terms of utility that is, the product or service fulfilling the actual purpose for which it was
made and bought. This is however very important but the fore mentioned intricacies about
satisfaction cannot be under looked.
Sahim et al (2006) in an effort to find out whether customers were satisfied with the food
services in the military hospital in Turkey realized that specific demographic characteristics were
not of significance in determining the satisfaction of the patients but the appearance and taste of
food. Their emphasis on demographic characteristics gives the reader the impression that they
thought it was going to be an important factor.
Another study in Jiangsu province, China seeking to find out the differences in food preferences
between students of different socio-demographic backgrounds and characteristics stated in their
literature that societal and cultural factors as well as environmental and indigenous factors shape
children‟s food choices, Shi et al (2005). This makes them appreciate food quality differently and
often because they are not used to it, or they do not like it at all or because of some traditional
beliefs associated with the different demographic characteristics. It is however a little
contradiction but it is a depiction of the complexities in the concept of satisfaction that some
researchers seek to explain.
Bailey et al (1983) identified 38 factors that affected the satisfaction of consumers of computers
which are customized for computer users some of which were quality of the product, flexibility,
reliability, priorities determination, security and expectations. In online education structure,
transparency and communication potentials influence the satisfaction of students and enhance the
learning process Karen (2001).

28. It has however been identified that human needs, quality of services and products, the user
friendly nature of product and services, and comfort assurance Bailey et al ( 1983); Karen (2001)
are some of the important determinants of customer satisfaction. Even though different
customers will require different levels and combinations of these variables, they generally are
important factors that affect customer satisfaction.
Matzler et al (2002) went a step forward to classify factors that affect customers‟ satisfaction into
three factor structures;
1. Basic factors: these are the minimum requirements that are required in a product to prevent
the customer from being dissatisfied. They do not necessarily cause satisfaction but lead to
dissatisfaction if absent. These are those factors that lead to the fulfillment of the basic
requirement for which the product is produced. These constitute the basic attributes of the
product or service. They thus have a low impact on satisfaction even though they are a
prerequisite for satisfaction. In a nutshell competence and accessibility
2. Performance factors: these are the factors that lead to satisfaction if fulfilled and can lead to
dissatisfaction if not fulfilled. These include reliability and friendliness.
3. Excitement factors: these are factors that increase customers‟ satisfaction if fulfilled but does
not cause dissatisfaction if not fulfilled which include project management.
2.3 Relationship between service quality and customer satisfaction
According to Sureshchandar et al (2002) customer satisfaction should be seen as a multi-
dimensional construct just as service quality meaning it can occur at multi levels in an
organization and that it should be operationalized along the same factors on which service
quality is operationalized.
Parasuraman et al (1985) suggested that when perceived service quality is high, then it will lead
to increase in customer satisfaction. He supports that fact that service quality leads to customer
satisfaction and this is in line with Saravana & Rao (2007) and Lee et al (2000) who
acknowledge that customer satisfaction is based upon the level of service quality provided by the
service provider.

29. According to Negi (2009) the idea of linking service quality and customer satisfaction has
existed for a long time. He carried a study to investigate the relevance of customer-perceived
service quality in determining customer overall satisfaction in the context of mobile services
(telecommunication) and he found out that reliability and network quality (an additional factor)
are the key factors in evaluating overall service quality but also highlighted that tangibles,
empathy and assurance should not be neglected when evaluating perceived service quality and
customer satisfaction. This study was based only on a specific service industry (mobile service)
and we think it is very important to identify and evaluate those factors which contribute
significantly to determination of customer-perceived service quality and overall satisfaction.
Fen & Lian (2005) found that both service quality and customer satisfaction have a positive
effect on customer‟s re-patronage intentions showing that both service quality and customer
satisfaction have a crucial role to play in the success and survival of any business in the
competitive market. This study proved a close link between service quality and customer
satisfaction.
Su et al (2002) carried a study to find out the link between service quality and customer
satisfaction, from their study, they came up with the conclusion that, there exist a great
dependency between both constructs and that an increase in one is likely to lead to an increase in
another. Also, they pointed out that service quality is more abstract than customer satisfaction
because, customer satisfaction reflects the customer‟s feelings about many encounters and
experiences with service firm while service quality may be affected by perceptions of value
(benefit relative to cost) or by the experiences of others that may not be as good.
2.4 Customers’ Expectations compared to Perceptions
Gronroos (1982) and Parasuraman et al (1985) have proposed that customer‟s perception of
service quality is based on the comparison of their expectations (what they feel service providers
should offer) with their perceptions of the performance of the service provider.
Parasuraman et al (1988) point out that expectation is viewed differently in both satisfaction
literature and service quality literature. In satisfaction literature, expectations are considered as
„predictions‟ by customers about what is likely to happen during a particular transaction while in
service quality literature, they are viewed as desires or wants of consumers, that is, what they

30. feels a service provider „should‟ offer rather than „would‟ offer. For this study, define
expectations as desires or wants of customers because this allows us to know exactly what
service providers show offer and this is based on based past experience and information received
Douglas & Connor (2003). It is important to understand and measure customer‟s expectations in
order to identify any gaps in delivering services with quality that could ensure satisfaction Negi
(2009).
Perceptions of customers are based solely on what they receive from the service encounter
Douglas & Connor (2003).
Parasuraman et al (1985) identified 10 determinants used in evaluating service quality;
reliability, responsiveness, competence, access, courtesy, communication, credibility, security,
understanding the customer, and tangibles. Most of these determinants of service quality require
the consumer to have had some experience in order to evaluate their level of service quality
ranging from ideal quality to completely unacceptable quality. They further linked service
quality to satisfaction by pointing out that when expected service is greater than perceive service,
perceived quality is less than satisfactory and will tend towards totally unacceptable quality;
when expected service equals perceived service, perceived quality is satisfactory; when expected
service is less than perceived service, perceived quality is more than satisfactory and were tend
towards ideal quality Parasuraman et al (1985).
2.5. The Development and Evolution of the SERVQUAL Model
Parasuraman et al (1985) identified 97 attributes which were found to have an impact on service
quality. These 97 attributes were the criteria that are important in assessing customer‟s
expectations and perceptions on delivered service Kumar et al (2009). These attributes were
categorized into ten dimensions Parasuraman et al (1985) and later subjected the proposed 97
item instruments for assessing service quality through two stages in order to purify the
instruments and select those with significant influences. The first purification stage came up with
ten dimensions for assessing service quality which were; tangibles, reliability, responsiveness,
communication, credibility, security, competence, courtesy, understanding, knowing, customers,
and access. They went into the second purification stage and in this stage they concentrated on
condensing scale dimensionality and reliability. They further reduced the ten dimensions to five
which were;

31. Tangibility: physical facilities, equipment, and appearance of personnel
Reliability: ability to perform the promised service dependably and accurately
Responsiveness: willingness to help customers and provide prompt service
Assurance: knowledge and courtesy of employees and their ability to inspire trust and
confidence
Empathy: caring individualized attention the firm provides to its customers
Assurance and empathy involve some of the dimensions that have been done away with like
communication, credibility, security, competence, courtesy, understanding/knowing customers
and access. This is because these variables did not remain distinct after the two stages of scale
purification, Parasuraman et al (1988). These original five dimensions are subject to 22
statements derived from Parasuraman et al (1988). This scale was further tested for reliability
with the use of five independent samples in five different service industries. These are the same
as the ones used in the purification stages. The variables proved to be very reliable and displayed
very low levels of correlation between each other in the five independent samples. This qualified
them as independent or linear factors that can be used to assess service quality Parasuraman et al
(1988). Further a validity test was carried out on this scale and using the same samples.
Normally reliability is a first criterion for validity. To be able to determine content validity they
analyzed the thoroughness with which the construct to be scaled were explicated and then the
extent to which the scales items represent the construct domain. However the procedures used in
developing the SERVQUAL satisfied these conditions assuring the content validity Parasuraman
et al (1988). In order to assess the scale validity they did an empirical assessment by examining
the convergent validity. This was by looking at the association of the SERVQUAL scores and
the question that was asked to respondents to provide to provide an overall quality rating for the
companies they were evaluating which was valid Parasuraman et al (1988). Primarily the
SERVQUAL model was developed for service and retail businesses and its objective is to know
how customers of a business rate the services offered to them Parasuraman et al (1988). This is
very crucial for growth and profitability. Parasuraman et al (1988)., propose that this model be
used on a company three to four times a year to measure the quality of its service over different
times, to know the discrepancies between perceived and actual services so as to know what

32. reaction is possible. They also recommend that the model should be used in conjuncture with
other models like in a retail business another model could be used to rate the perception of
service quality by the employees, and try to find out from these employees what they recommend
to improve on the quality of their services. They equally require that in applying the model we
should try to measure the relative importance of each dimension. This can be considered as
weighted SERVQUAL model Cronin & Taylor (1992). The SERVQUAL model is important in
grouping customers of a company into different quality ranks by determining their SERVQUAL
score which is of course very important to know how to target the various ranks. Parasuraman et
al (1988). This is very crucial for growth and profitability. The Propose that this model be used
on a company three to four times a year to measure the quality of its service over different times,
to know the discrepancies between perceived and actual services so as to know what reaction is
possible. They also recommend that the model should be used in conjuncture with other models
like in a retail business another model could be used to rate the perception of service quality by
the employees, and try to find out from these employees what they recommend to improve on the
quality of their services. They equally require that in applying the model we should try to
measure the relative importance of each dimension. This can be considered as weighted
SERVQUAL model Cronin & Taylor (1992). The SERVQUAL model is important in grouping
customers of a company into different quality ranks by determining their SERVQUAL score
which is of course very important to know how to target the various ranks.
2.6 Service Quality Models
As stated earlier service quality has been defined differently by different people and there is no
consensus as to what the actual definition is. We have adopted the definition by Parasuraman et
al (1988), which defines service quality as the discrepancy between a customers‟ expectation of a
service and the customers‟ perception of the service offering. Measuring service quality has been
one of the most recurrent topics in management developed a conceptual model of service quality
where they identified five gaps that could impact the consumer‟s evaluation of service quality in
four different industries (retail banking, credit card, securities brokerage and product repair and
maintenance). These gaps were;

33. Gap 1: Consumer expectation - management perception gap
Service firms may not always understand what features a service must have in order to meet
consumer needs and what levels of performance on those features are needed to bring deliver
high quality service. This results to affecting the way consumers evaluate service quality.
Gap 2: Management perception - service quality specification gap
This gap arises when the company identifies want the consumers want but the means to deliver
to expectation does not exist. Some factors that affect this gap could be resource constraints,
market conditions and management indifference. These could affect service quality perception of
the consumer.
Gap 3: Service quality specifications – service delivery gap
Companies could have guidelines for performing service well and treating consumers correctly
but these do not mean high service quality performance is assured. Employees play an important
role in assuring good service quality perception and their performance cannot be standardized.
This affects the delivery of service which has an impact on the way consumers perceive service
quality.
Gap 4: Service delivery – external communications gap
External communications can affect not only consumer expectations of service but also
consumer perceptions of the delivered service. Companies can neglect to inform consumers of
special efforts to assure quality that are not visible to them and this could influence service
quality perceptions by consumers.
Gap 5: Expected Service – perceived service gap
From their study, it showed that the key to ensuring good service quality is meeting or exceeding
what consumers expect from the service and that judgment of high and low service quality
depend on how consumers perceive the actual performance in the context of what they expected.

34. Figure 2.1 Model of service quality gaps
Source: Parasuraman et al (1985), Curry (1999 and Luk (2002).

35. Parasuraman et al (1988), later developed the SERVQUAL model which is a multi-item scale
developed to assess customer perceptions of service quality in service and retail businesses. The
scale decomposes the notion of service quality into five constructs as follows: Tangibles,
Reliability, Responsiveness, Assurance and empathy. It bases on capturing the gap between
customers‟ expectations and experience which could be negative or positive if the expectation is
higher than experience or expectation is less than or equal to experience respectively.
The SERVPERF model developed by Cronin & Taylor (1992) was derived from the
SERVQUAL model by dropping the expectations and measuring service quality perceptions just
by evaluating the customer‟s the overall feeling towards the service. In their study, they
identified four important equations:
SERVQUAL =Performance – Expectations
Weighted SERVQUAL = importance x (performance – expectations)
SERVPERF = performance
Weighted SERFPERF = importance x (performance)
Implicitly the SERVPERF model assesses customers experience based on the same attributes as
the SERVQUAL and conforms more closely on the implications of satisfaction and attitude
literature, Cronin et al (1992).
Later, Teas (1993) developed the evaluated performance model (EP) in order to overcome some
of the problems associated with the gap in conceptualization of service quality Parasuraman et al
(1988). This model measures the gap between perceived performance and the ideal amount of a
feature not customers expectation. He argues that an examination indicates that the P-E
(perception – expectation) framework is of questionable validity because of conceptual and
definitional problems involving the conceptual definition of expectations, theoretical justification
of the expectations component of the P-E framework, and measurement validity of the
expectation. He then revised expectation measures specified in the published service quality
literature to ideal amounts of the service attributes.

36. Brady & Cronin (2001) proposed a multidimensional and hierarchical construct, in which service
quality is explained by three primary dimensions; interaction quality, physical environment
quality and outcome quality.
Saravanan & Rao (2007) outlined six critical factors that customer-perceived service quality is
measured from after extensively reviewing literature and they include;
(1) Human aspects of service delivery (reliability, responsiveness, assurance, empathy)
(2) Core service (content, features)
(3) Social responsibility (improving corporate image)
(4) Systematization of service delivery (processes, procedures, systems and technology)
(5) Tangibles of service (equipments, machinery, signage, employee appearance)
(6) Service marketing
From their study, they found out that these factors all lead to improved perceived service quality,
customer satisfaction and loyalty from the customer‟s perspective.
Mittal and Lassar‟s SERVQUAL-P model reduces the original five dimensions down to four;
Reliability, Responsiveness, Personalization and Tangibles. Importantly, SERVQUAL-P
includes the Personalization dimension, which refers to the social content of interaction between
service employees and their customers Bougoure & Lee ( 2009)
2.7 Application of the SERVQUAL Model in Different Contexts
Kumar et al (2009) used the SERVQUAL model in a research to determine the relative
importance of critical factors in delivering service quality of banks in Malaysia Kumar et al
(2009). In this article they modified the SERVQUAL model and considered six dimensions;
tangibility, reliability, responsiveness, assurance empathy and convenience and these consist of
26 statements. They considered convenience because it is an important determinant of
satisfaction for banking customers in Malaysia and contributes very highly in the customers‟
appreciation of the quality of services offered by the bank Kumar et al (2009). The respondents
are asked questions based on the 26 statements and they seek to know about their expectations

37. and experience. They carried this study on banking customers regardless neither of which bank
you use nor how you do your transactions, could be domestically, internationally among others.
After they carried out their study they realized that there are four critical factors; tangibility,
reliability, convenience and competence. These variables had significant differences between
expectations and perceptions with tangibility having the smallest gap and convenience has the
largest gap. They end up with the recommendation that banks need to be more competent in
delivering their services and fulfilling the assurance of customers and providing the banking
services more conveniently Kumar et al (2009).
Curry et al (2002) in an attempt to assess the quality of physiotherapy services used the
SERVQUAL model and three physiotherapy services in Dundee, Scotland. They considered the
ten original criteria for evaluation and combined them into five; tangibles, reliability,
responsiveness, assurance (including competence, courtesy, credibility, and security) and
empathy (including access, communication, and understanding). The quality gap is measured
with these five dimensions with the application of an adaptable 22 item survey instruments. The
survey involves questions relating to customers‟ expectations and perceptions. They sought to
measure five gaps developed by Parasuraman et al (1985).
They found out that the services were highly appreciated by customers even though they realized
that the perception gaps were slightly negative and the services could be improved. Their studies
proved that assurance and empathy were very important in their research. In spite of the
criticisms of the SERVQUAL model they confirm its potential applicability in measuring service
quality in the public sector to determine consumer priorities and measure performance.
Badri et al (2003) made an assessment and application of the SERVQUAL model in measuring
service quality in information technology center. For their research gap they used a larger sample
which also differs from other studies that addressed the dimensionality problem of the IT center-
adapted SERVQUAL instruments. The second gap was to identify the gaps in service quality in
the IT centers in the three institutions of higher education in the United Arab Emirates. Their
findings showed that there was an inadequacy of dimensions for a perfect fit. On the other hand,
based on their feedback, respondents felt that SERVQUAL is a useful indicator for IT center
service quality in institutions of higher education. SERVQUAL identified gaps in service quality

38. for the three institutions. Empirical results of SERVQUAL scores for the IT centers in the three
institutions are also presented.
Negi (2009) used the model to determine customer satisfaction through perceived quality in the
Telecommunication industry and found out that reliability, empathy and network quality proved
to significantly effective in contributing to overall service quality and overall customer
satisfaction with mobile services.
Akan (1995) used the SERVQUAL model in the four stars hotels and found out that competence
and courtesy combined with assurance where most important attributes influencing the
perception of quality.
In a nutshell, we try to apply this instrument in the context of grocery stores and find if its
dimensions do measure service quality and customer satisfaction, hence are adequate for a
perfect measure of the constructs. This was also enabling the study to identify gaps in service
quality and find out what dimensions consumers are satisfied with. In a nutshell, the study was
apply this instrument in the context of ethio telecom and find if its dimensions do measure
service quality and customer satisfaction, hence are adequate for a perfect measure of the
constructs.
2.8 For this study
In spite of the criticisms in the applicability of the SERVQUAL model by some researchers
Buttle (1994); Cronin & Taylor (1992) for this study it is good in assessing the role of service
quality on customer satisfaction in ethio telecom for fixed line telephone, even though it has its
weaknesses due to the abstract and elusive nature of service quality concept which is resultant
from the fact that services are intangible, heterogeneous and inseparable from production and
consumption Parasuraman et al ( 1988). Buttle (1994) and Cronin & Taylor (1992) however
support the fact that this model is good for retailers to understand the service expectations and
perceptions of customers and make improvements because of its good reliability and validity.
The researcher believes that customer satisfaction and service quality can be measured along the
same dimensions as proposed by Parasuraman et al (1988).

39. Thus for this study, the researcher was adapted a SERVQUAL model with five dimensions:
Tangibles, Reliability, Responsiveness, Assurance, empathy. The service quality gap is going to
be measured with these five dimensions with the application of an adaptable 22 item survey
instruments statements (see appendix 1).

40. CHAPTER THREE
3. METHODOLOGY OF THE STUDY
This chapter was deal with methodology of the study; it comprise description of the study,
research design, types and sources of data, population of the study, sampling design, data
collection methods and method of data analysis.
3.1 Description of study area
Hawassa is located in the southern nation‟s nationalities and peoples Region on the shores of
Lake Hawassa in the Great Rift Valley; 273 km south of Addis Ababa via Debre Zeit.
Hawassa is served as the Capital of the southern Nations Nationalities & peoples Region and the
Sidama zone.
The city has total area of 157.2 sq.km Deviated in to Eight (8) sub cities and each sub cities
divided in to 32 Kebeles. According to the result of Housing and Population Census of May,
2008, The Hawassa city administration has a Population of 259,803 people, out of which
133,637 are male and 126,166 are female.
Ethio telecom has nine regional offices throughout the country. Out of this south region is the
one, and the largest geographical coverage. Under southern region, there are 33 shops. Hawassa
shop is the one in which I was conducted my study. The shop offered various products like
mobile, internet and fixed telephone. Source, https://www.ethiotelecom.et. Thus, my study was
conducted on the role of service quality on customer satisfaction in Hawassa city, for fixed line
telephone.
3.2 Research design
A research design provides a framework for the collection and analysis of data. A choice of
research design reflects decisions about the priority being given to the following; expressing
causal connections between variables, generalizing to larger groups of individuals than those
actually forming part of the investigation, understanding behavior and meaning of that behavior

41. in its specific social context and having a temporal (i.e. over time) appreciation of social
phenomena and their interconnections Bryman & Bell (2007).
The researcher used descriptive research design. This design it enables us to be able to identify
and categorize our variables which ease our design of questionnaires such that they can capture
all the data we need from the respondents. The study was approach the respondents to find out
their perceptions of service quality based on the dimensions of the SERVQUAL model.
3.3 Types and sources of data
The research methods which are used in this study are both quantitative and qualitative data.
Both primary and secondary data are used to collect the required information. Structured
questionnaires are distributed to collect the primary data, while secondary sources like past
studies and archives were accessed from various databases like company policy, procedure and
process regarding to the provision of quality service.
3.4 Population of the study
The population of this study was consisted of fixed line telephone customers in Hawassa city. A
list of the population formally registered in south region ethio telecom Fixed access network
section until July 2014. Accordingly, the formally registered total population of the study is
7685.
There are four categories of fixed line telephone users: residential customers, government
organizations, private organizations and non-governmental organizations (NGOs) sample strata
looks like table below:

42. Table 3.1 Total Population
Category
Residential
customers
Government
organization
Private
organization NGO
Total
population (N) 4127 2300 873 385 7685
Source: Ethio telecom, south region Fixed network access (July 2014)
3.5 Sampling Design
Stratified random sampling was employed to collect information from different sizes of the ethio
telecom customers. This technique was preferred because it is used to assist in minimizing bias
when dealing with the population those which are heterogeneous in nature. With this technique,
the sampling frame can be organized into relatively strata before selecting elements for the
sample. According to Janet (2006), this technique increases the probability that the final sample
will be representative in terms of the stratified groups. The strata‟s are sectors including four
categories of users: residential customers, government organizations, private organizations and
non-governmental organizations (NGOs).
According to Catherine Dawson (2009), the right sample size in a study is dependent on the
nature of the population and the purpose of the study. In addition to the purpose of the study and
population size, three criteria usually was need to be specified to determine the appropriate
sample size: the level of precision, the level of confidence or risk, and the degree of variability in
the attributes being measured (Miaoulis and Michener, 1976) Even though there are no general
rules, the sample size usually relies on the population to be sampled. In this study to select

43. sample size, a list of the population formally registered in south region ethio telecom Fixed
access network section until July 2014.
Accordingly, the formally registered total population of the study is 7685. Finally, a sample size
determination equation by Yamane (1967:886) was used to arrive at a sample size of 380
customers with a 95 percent confidence level and 5 percent level of precision since it was
relevant to studies.
The equation was showed below:
= =380 respondents
Where, n=sample size
N=Population Size
e =the level of precision or sampling error
After having the sample size for the whole population, further calculation was needed to decide
the number of customers to be taken from each stratum using proportional allocation. Thus, the
customers were grouped into four strata and to choose respondents from their respective strata.
After determining the number of respondent within a stratum, simple random sampling was used
to select them.
The reliability and efficiency of stratified random samples depends upon the allocation of sample
size to strata. In this study proportional allocation was used so that each stratum contributes to
the sample a number that is proportional to its size in the population. Thus, to determine the
sample size by strata from each stratum the following formula was used.
k Where, nk= the sample size for kth strata
Nk= percentage of total sample size to be selected (Nk
 
2
1 e
N
N
n



44. 1st
=4127/7685= 54%, Nk 2nd
=2300/7685=30%,
Nk3rd
=873/7685=11% and Nk 4th
=385/7685=5%),
n=the total sample size =380
The sample size was selected here is considered as representative of residential customers,
government organizations, private organizations and non-governmental organizations (NGOs) as
follows:
Table 3.2 Sample size selection
Category
Residential
customers
Government
organization
Private
organization NGO
Total
population (N) 4127 2300 873 385 7685
Nk=kth/N 0.54 0.30 0.11 0.05 100%
Nk=n*Nk 380*0.54=205 380*0.3=114 380*0.11=42 380*0.05=19 380
Source: Ethio telecom, south region Fixed network access (July 2014)
3.6 Data Collection methods
As a way of trying to measure service quality, researchers have developed a methodology
known as SERVQUAL – a perceived service quality questionnaire survey methodology. It
examines five dimensions of service quality: Reliability, Responsiveness Assurance; Empathy,
and Tangible. These questionnaires were having two sections:
The first part intended to acquire the demographic profile of the respondents, and the other
section comprised a dimension of service quality and customer satisfaction measurement (P-E).

45. 3.6.1 The Questionnaire
We used the SERVQUAL 5 dimensions (Tangibles, Reliability, Responsiveness, Assurance, and
Empathy) which are subdivided into 22 statements, which were directed to measuring service
quality in ethio telecom in our case. As stipulated by the SERVQUAL model, the statements are
divided into two parts, the first part seeks to measure the expectations of customers and the
second part seeks to measure their perceptions. There is also a demographic part that provides
general information about respondents on age, gender, education, average, monthly income and
average monthly expenditures. This is to enable us get a better understanding of the type
respondents and relate it to how they perceive service quality in ethio telecom. We used the
SERVQUAL model as the basis for the structured questionnaire because it provides information
on our research questions in which we are trying to know how consumers perceive service
quality in ethio telecom by assessing the difference between the expectation and perception of
services experienced by consumers in the company. This was know over perceived service
quality by customers and identity what items of the SERVQUAL dimensions consumers are
satisfied with.
3.6.2 Administering of questionnaires
As mentioned earlier in this study, the study using a convenience sampling technique. It was a
little challenging experience but it was fun all the same. We had 380 questionnaires to administer
and it took us 2 weeks to administer these 380 questionnaires and fortunately we received 380
questionnaires that were complete. This is because of the researcher are the employee of the
company and they distributed the questioner during the bill payment period, when the customer
came to the company to settle their bill. The researcher located in front of the sales person at
Hawassa shop, of ethio telecom to collected the questioner.

46. 3.6.3 Measurement
The SERVQUAL model is used to assess consumers‟ expectations and perceptions regarding
service quality in ethio telecom. Both expectations and perceptions are measured using a 7-point
scale to rate their level of agreement or disagreement (1strongly disagree and 7- strongly agree),
on which the higher numbers indicate higher level of expectation or perceptions.
Perceptions are based on the actual service they receive in ethio telecom while expectations are
based on past experiences and information received about the company service. Service quality
scores are the difference between the perception and expectation scores (P-E) with a possible
range of values from -6 to +6 (-6 stands for very dissatisfied and +6 means very satisfied). The
quality score measures the service gap or the degree to which expectations exceed perceptions.
The more positive the P-E scores, the higher the level of service quality leading to a higher level
of customer satisfaction. Satisfaction and service quality are both treated together as functions of
a customer‟s perceptions and expectations. In most cases, when expectation and perception are
equal, service quality is satisfactory.
3.6.4 Reliability Coefficient
Cronbach‟s alpha reliability coefficient normally ranges between 0 and 1. However, there is
actually no lower limit to the coefficient. The closer Cronbach‟s alpha coefficient is to 1.0 the
greater the internal consistency of the items in the scale. George and Mallery (2003) provide the
following rules of thumb: “_ > .9 – Excellent, _ > .8 – Good, _ > .7 – Acceptable, _ > .6 –
Questionable, _ > .5 – Poor and _ < .5 – Unacceptable”

47. Table 3.3: Reliability Coefficient (Cronbach`s Alpha)
Source: from customer perception questionnaire test result by SPSS (August 2014)
Dimensions Number of Item Cron bach's Alpha
for Dimension
Cronbach's
Alpha if Item
Deleted
Items
Reliability 5 0.816 .830 RL1
.837 RL2
.827 RL3
.800 RL4
.784 RL5
Responsiveness 5 0.806 .795 RS1
.813 RS2
.807 RS3
.802 RS4
.814 RS5
Assurance 4 0.816 .824 AS1
.819 AS2
.814 AS3
.806 AS4
Empathy 5 0.814 .834 EM1
.816 EM2
.806 EM3
.799 EM4
.815 EM5
Tangibles 4 0.827 .833 TA1
.822 TA2
.830 TA3
.822 TA4
Total Cronbach's Alpha 23 0.82 .82

48. As per table 3.3, the reliability coefficients of all five dimensions on table 5 have good internal
consistency of the items in the scale, Reliability (0.816), Responsiveness (0.806), Assurance
(0.816), Empathy (0.814) and Tangibles (0.827). The total cronbach alpha shows good reliability
coefficient, 0.82, this is an indication that the items of the five dimensions of SERVQUAL
model are accepted for analysis and true measure of the role of service quality on customer
satisfaction in ethio telecom for fixed line telephone.
3.7 Methods of data analysis
The analysis of qualitative and quantitative data collected from sample respondents using
structured questioner were noticed in descriptive statistics analysis. The analysis of quantitative
data collected from sample customers were computed from the result of Statistical Package for
Social Sciences (SPSS) software of version 20. To describe the sample characteristics in the data
analysis report, respondent‟s profile such as age, gender; educational background and income
were analyzed in the form of table, and bar chart ( in percentage and frequency) . Survey on
customers expectation and perception were described in Gap 5 score analysis (P-E), finally, the
researcher was interpreted each service quality dimensions based on the gap score analysis.

49. CHAPTER FOUR
4. RESULTS AND DISCUSSION
This chapter presents characteristics of the studied population, analysis and interpretation of the
data collected. Out of sample size of 380 fixed line telephones service customers at Hawassa
city. All of respondents were responded full data. Before going directly to discussion of the
result, it would be better to introduce the respondents, because having an understanding about the
respondents may help to estimate the accuracy of the information provided by them. In addition,
it may give an idea about how many respondents abled to answer the questions forwarded with
the acceptable degree of reliability and it helps for all other decisions related to customers.
The objective of the analysis of primary data collected from survey as presented in the previous
chapter is to answer our research questions which include finding out how consumers perceive
service quality in ethio telecom and whether they are satisfied with service quality in ethio
telecom. This will enable us attain the objectives of our study which are mainly describing
empirical phenomena which are service quality and customer satisfaction.
Data analysis for this study was done in two steps, the preliminary analysis and the main
analysis. For preliminary analysis which involves mainly descriptive statistics to summarize
data, the demographic characteristics of the respondents were outlined in order to simplify the
understanding of the data.
The main analysis involved factor analysis whose purpose to find out if the SERVQUAL is
applicable in the context of ethio telecom and the gap score analysis whereby descriptive
statistics were applied to summarize means of perceptions and expectations of consumers. We
calculate the perception minus expectation scores for each item and dimension in order to
identify the service quality gaps.

50. 4.1 Demographic characteristics of the respondents
The participants‟ demographic profile was assessed in terms of gender, age, Occupations,
education level, Monthly income and Expenditure.
Source: From Demographic questionnaire analysis result by SPSS (September 2014)
As per figure 4.1, the demographic profile of the respondents is described as follows; males were
56.6% while females were 43.4% slightly lower than males. This farther implies that there was a
good representation of gender in the sample and the majority of fixed line telephone subscribers
were the male.
Male Female Total
Gender
215 Frequency
165 Frequency
380 Frequency
56.6 %
43.4 %
100 %
Figure 4.1: Gender (DM1)
Frequency Percent

51. Source: From Demographic questionnaire analysis result by SPSS (September 2014)
As per figure 4.2, majority of the respondents‟ age were from 20-40, 75.3%, this indicated that
most of them are young adult age and economically active group. Those Followed by from 40-
50, 24.7%. Thus most of the users of fixed line telephone were economically active groups.
Source: From Demographic questionnaire analysis result by SPSS (September 2014)
20-40 40-50 Total
Age
Frequency,286
Freq,94
Frequency,380
75.3 %
24.7 %
100 %
Figure 4.2: Age (DM2)
Frequency Percent
12 Grade
completed
Diploma Bachelor Degree Master Degree Total
Academic or professional qualification
Freq,47 Freq,48
Freq,238
Fre,47
Freq,380
12.4 % 12.6 %
62.6 %
12.4 %
100 %
Figure 4.3: Occupation (DM3)
Frequency Percent

52. As per figure 4.3,majority of fixed line service users were civil servants, 62.4% followed by
private employee 12.9% lastly students and business man/woman were covered 24.7%. This
indicated the students were mostly they didn`t the customer of fixed line telephone.
Source: From Demographic questionnaire analysis result by SPSS (September 2014)
As per figure 4.4, Bachelor degree undergraduate customers forming 62.6%,this indicate middle
income group in Ethiopian context ,followed by Diploma, 12.6% and other levels formed 24.8%.
Source: From Demographic questionnaire analysis result by SPSS (September 2014)
12 Grade
completed
Diploma Bachelor
Degree
Master Degree Total
Academic or professional qualification
Fre,47 Fre,48
Freq,238
Freq 47
Freq,380
12.4 % 12.6 5%
62.6 %
12.4 %
100 %
Figure 4.4: Professional Qualification (DM4)
Frequency Percent
Below 100 birr 100-500 birr Total
Monthly consumption or expense for fixed line telephone
Freq,239
Freq,141
Freq,380
62.9 % 37.1 %
100 %
Figure 4.5: Monthly income (DM5)
Frequency Percent

53. As per figure 4.5, most of the respondents 74.5% were gets income above 3000.00 birr, this
indicate middle income group and most of Bachelor degree employee earning group in context
of Ethiopia and 25.5 % were gets from 2000.00-3000.00 birr.
Source: From Demographic questionnaire analysis result by SPSS (September 2014)
As per figure 4.6, most of the respondents‟ i.e., 62.9% they spend below 100 birr for fixed line
telephone service, followed by 37.1 % who spend between 100 to 500 birr. This indicated most
of the user of the service is residential, those who spend low expenditure for the service.
Below 100 birr 100-500 birr Total
Monthly consumption or expense for fixed line telephone
Freq,239
Freq,141
Freq,380
62.9 %
37.1 %
100 %
Figure 4.6: Monthly Expense (DM6)
Frequency Percent

54. Table 4.1: Summery of means of customer' expectations and gap scores
Dimensions Items (cods) Expectations
score
Perception
score
GAP Score (P-E)
Reliability RL1 6.1656 4.0331 -2.1325
RL2 6.8278 5.053 -1.7748
RL3 5.9801 4.947 -1.0331
RL4 5.9603 4.0199 -1.9404
RL5 6.0199 5.1457 -0.8742
Average of RL -1.551
Responsiveness RS1 5.5695 4.404 -1.1655
RS2 5.6093 4.7285 -0.8808
RS3 6.3046 4.6556 -1.649
RS4 6.2914 4.3311 -1.9603
RS5 6.8013 4.8212 -1.9801
Average of RS -1.5271
Assurance AS1 6.8874 4.1987 -2.6887
AS2 6.2185 4.9603 -1.2582
AS3 6.1258 4.4304 -1.6954
AS4 6.5364 4.4702 -2.0662
Average of AS -1.9271
Empathy EM1 5.1325 4.4034 -0.7291
EM2 6.3046 4.6556 -1.649
EM3 6.2914 5.3311 -0.9603
EM4 5.8013 4.8212 -0.9801
EM5 5.8874 4.1987 -1.6887
Average of EM -1.2014
Tangibles TA1 5.2185 3.9603 -1.2582
TA2 5.1258 4.4304 -0.6954
TA3 5.5364 4.4702 -1.0662
TA4 5.1325 4.4034 -0.7291
Average of TA -0.9372
Overall average gap score for all 5 dimensions= ‐1.4287
Source: From Costumers questionnaire analysis result by SPSS (October 2014)

55. 4.2 Expectations and perceptions discussed
Expectations and perceptions were both measured by the 7-point likert scale whereby the higher
numbers indicate higher level of expectation or perception. In general, consumer expectation
exceeded the perceived level of service shown by the perception scores. This resulted in a
negative gap score (Perception – Expectation). According to Parasuraman et al., (1988, p.30) it is
however common for consumer‟s expectation to exceed the actual service perceived and this
signifies that there is always need for improvement.
The gap scores are the difference between the perception and expectation scores with a range of
values from -6 to +6 and these gap scores measure service quality and customer satisfaction. The
more perceptions are close to expectations, the higher the perceived level of quality. As per
table 4.1 of above, all expectation of service quality dimension were higher than perceptions.
This resulted in negative gap score. The customer of ethio telecom weren‟t got what they expect
from fixed line telephone service. In other words ethio telecom they did not delivered the quality
service for fixed telephone by all dimensions. This crated customer dissatisfaction. Customer
were highly expected on assurance dimension, but get less perceived and the gap score shows the
highest negative of Assurance (-1.9271) and followed by Reliability (-1.551), Responsiveness
(-1.5271), empathy (-1.2014) and Tangibility (-0.9372) respectively. The overall average gap
score were showed as ‐1.4287 for all five dimensions. It indicated that there was a poor service
quality of fixed line telephone and customer dissatisfaction against the service. Customers
expected more, but they perceived less from ethio telecom fixed line service. This was showed
by a negative gap score as per table 4 above.
4.3 SERVQUAL Results Discussions
4.3.1 RL- Reliability
The Reliability dimension of the SERVQUAL instrument is comprised of questions 7-11, which
assess ethio telecom fixed line service quality on the reliability aspects (Ethio telecom provides
timely installation, reconnection, location change, owner change and maintenance on fixed
telephone service, Ethio telecom performing telephone service right the first time, handle yours
complain in consistent especially on bill clarity, Ethio telecom maintains your network on error
free records and truthful or keeping to promises in fixed line telephone network to you. ) When

56. looking at each of the five factors making up the reliability dimension of customer satisfaction,
the expectations of ethio telecom customer on fixed line telephone exceed their perceptions in all
five areas: this indicated ethio telecom they did not proved timely installation, reconnection,
location change, owner change and maintenance on fixed telephone service (gap score , P-E = -
2.1325) , performing telephone service right the first time (gap score : P-E = -1.7748), Ethio
telecom is handle yours complain in consistent especially on bill clarity (gap score P-E = -
1.0331), providing service at the promised time (gap score , P-E = -1.9404), and insistence on
error free records (gap score ,P-E = -0.8742).
The average unweighted gap score (P-E) for the reliability dimension of customer satisfaction is
-1.551. When applied the reliability weight score of 36 to the gap score the gap score jumps to -
55.836. In both cases, the survey results shows that the perception of the customers on fixed line
telephone fall below their expectations of the reliability aspects in ethio telecom.
A summary of the survey results for the reliability dimension of service quality on fixed line
telephone are summarized in the table 4.2 that appear below.

57. Table 4.2: Gap score for the reliability dimensions
Reliability
Dimensions
Expectations( E) Perception (P) GAP
Score
(P-E)
Average
SERVQUAL P
score for
Reliability
RL1 6.1656 4.0331 -2.1325
4.6397
RL2 6.8278 5.053 -1.7748
RL3 5.9801 4.947 -1.0331
RL4 5.9603 4.0199 -1.9404
RL5 6.0199 5.1457 -0.8742
Dimension
weight
36
Average un
weighted
reliability Gap
score
-1.551
Weighted
reliability gap
score
-55.836
Source: From Costumers questionnaire analysis result by SPSS (October 2014)
The summary of reliability dimension for unweighted and weighted Gap score were showed in
Figure 4.7 bellows:

58. Figure 4.7: Reliability Dimension - Unweight and Weighted Gap Score
Source: From Costumers questionnaire analysis result by SPSS (October 2014)
As per Figure 4.7, the reliability dimensions weight is 36, average unweight reliability gap score
is -1.551 and weighted reliability gap score is -55.836. The results show that the perception of
the customers on fixed line telephone fall below to their expectations of the reliability aspects in
ethio telecom.
4.3.2 RS- Responsiveness
The Responsiveness dimension of the SERVQUAL instrument is comprised of questions 12-16,
which assess ethio telecom fixed line service quality on the responsiveness aspects (Tells to you
exactly when service will be performed ,Ethio telecom is prompts service and attends yours
needs or problems on fixed line telephone, employees have willing to help customers in
emergence situation, employees at help desk are approachable and easy to contact to customer
request and employees of call center like 994 have ability to communicate clearly with you. )
When looking at each of the five factors making up the responsiveness dimension, the average
expectations of ethio telecom fixed line telephone customer exceed their perceptions in all five
areas; this indicated ethio telecom tells to you exactly when service will be performed (gap score
1 2 3
Dimension weight 36
Average unweighted reliablity
Gap score
-1.551
Weighted reilablity gap score -55.836
-80
-60
-40
-20
0
20
40
60
Reliability
Dimension