This document summarizes a study on the impact of service quality on brand equity in the Sri Lankan leasing market. It provides background on the leasing market and defines key concepts of service quality and brand equity that will be examined. The study aims to analyze the relationship between service quality dimensions (reliability, responsiveness, assurance, empathy, tangibility) and aspects of brand equity (brand loyalty, awareness, perceived quality, associations). Hypotheses are presented that service quality positively influences brand equity. The methodology discusses sampling customers from two leasing companies and using questionnaires and statistical analysis to test the hypotheses.

1. “THE IMPACT OF SERVICE QUALITY ON BRAND EQUITY OF LEASING
MARKET IN SRILANKA”
K.K.D.A.B.WEERAKOON
W.A.D.MADUSHANKA
H.J.B.U.JAGODA
G.D.L.C.PERERA
DEPARMENT OF MARKETING MANAGEMENT,
FACULTY OF BUSINESS MANAGEMENT,
SRILANKA INSTITUTE OF INFORMATION TECHNOLOGY,
SRI LANKA.
ABSTRACT
According to the changing customer needs and wants of leasing market the competitors of the
industry is being vigilant to provide a quality service to the customers with attractive package
of numerous products. The market is being highly competitive where it largely driven based
on personal visits and contacts by marketing officers. If the company fails to maintain proper
relationship and the after sales service, this would spoil the brand image of the company
(DARSHANI.R.K.N.D, 2013). Generally the leasing facility will drag towards long term where
the customer expect high service from the finance company as the service offered in the time
of getting into a lease agreement. This study analyzes the service quality effects on brand equity
in financial industry. Meant for the persistence LB finance leasing institute and Lanka Orix
Leasing institute were selected where exists fewer progress of leasing engagements and rarer
recognition for brand, relate to facility performance. Hence, both LB finance & LOLC faced
with a huge competition in the industry, in order to be stable in the leasing market. This study
directed at how Service Quality, contribute to achieve Brand equity. It further analyzes the
most influential factors affecting brand equity.
KEY WORDS: Service quality, Service quality Dimensions, Brand equity, Brand equity
Dimensions.

2. INTRODUCTION
The leasing market of Sri Lanka has been
competitive than the past years where the
financial companies has been striving hard to
win the customers by competing with other
commercial banks and leasing companies.
However in the perceptional view of
consumers, the commercial banks have more
recognitions than the finance companies due
to pitfall occurred in instability and
corruption of some of finance companies in
recent past. In order to rectify this situation
the government and the finance companies
have undertaken some of strategies to attract
more customers and build confidence and
trust towards the company. To assist this, the
companies have focus to improve and
maintain their service quality in a satisfactory
level than the rivals in the market.
Due to execution of many leasing companies
in the market, service quality ascendency
ever than before in making or bargaining
customer his/her selection. Therefore he
financial companies have to work hard to
differentiate themselves from rivals in the
market by offering high quality in service. In
facilitating the differentiation strategies the
selected companies are adopting lot of
personal contacts in developing business,
marketing and after sales services, value
added services and etc. to attract more
customers toward themselves.
As the leasing market operates more on direct
contacts empathy and reliability are highly
important in increasing the customer base
where customer expects accurate and
optimistic information from the employees of
finance companies. But it is more important
to analysis will the service quality is really
important in selection brand name by the
customer in leasing industry.
Problem statement
The problem for the research is being
identified as the shrinking brand equity of the
leasing industry due to accelerated new
entrants and exposure of the existing players
in the market. These circumstances has
crafted the importance of carrying out a
comprehensive brand equity analysis based
on service quality of leasing companies
prevail in the market by each and every
player in the market in assisting their
sustainability of the industry for a foreseeable
period of time.
Literature Review
Brief view to the leasing market of Finance
Companies
The leasing market was emerged in early 80’s
in Sri Lanka and was developed significantly
over the time. There were 78 finance leasing
establishments registered under the Finance
Leasing Act, No. 56 of 2000 (FLA) by end
2008, and this number reduced to 77 in 2013,
consisting of 13 licensed commercial
banks(LCB), 48 licensed finance
companies,9 specialized leasing
companies(SLC) and 7 Specialized licensed
banks (SLBs). (CentralBankofSriLanka,
2014)
Service Quality
The definition of service quality will be very
to the person to person, but how ever but
typically involve determining whether
perceived service delivery meets, exceeds or
fails to meet customer expectations (Cronin.J
& Taylor.S, 1994)
(Zeithaml.V, et al., 1993) Define service
quality as the degree and direction of
discrepancy between the consumer’s
perceptions and expectations, or the extent to

3. which a service meets or exceeds customer
expectations. The quality of a service
depends on that service consistently
conforming to customers’ expectations
(Winter, 1996).
. Tangibles (Parasuraman, et al., 1985)
defined tangibility as the appearance of
physical facilities, equipment, personnel, and
written materials. (Ananth.A., et al., 2011)
Referred to tangibility in their study of
private sector leasing institutions as modern
looking equipment, physical facility,
employees are well dressed and materials are
visually appealing
2. Reliability involves the ability to perform
the promised service dependably and
accurately. Reliability depends on handling
customers' services problems; performing
services right the first time; provide services
at the promised time and maintaining error-
free record. Furthermore, they stated
reliability as the most important factor in
conventional service (Parasuraman.A, et al.,
1988). Reliability also consists of accurate
order fulfillment; accurate record; accurate
quote; accurate in billing; accurate
calculation of commissions; keep services
promise. He also mentioned that reliability is
the most important factor in banking services
(Yang.Z & Fang.X, 2004).
3. Responsiveness defined as the willingness
or readiness of employees to provide service.
It involves timeliness of services
(Parasuraman.A, et al., 1988). It is also
involves understanding needs and wants of
the customers, convenient operating hours,
individual attention given by the staff,
attention to problems and customers‟ safety
in their transaction (Kumar, et al., 2009).
4. Assurance (Parasuraman.A, et al.,
1985)defined assurance as knowledge and
courtesy of employees and their ability to
inspire trust and confidence. This assurance
includes competence, courtesy, credibility
and security.
5. Empathy involves the provision of caring,
individualized attention to customers. This
empathy includes access, communication,
and understanding the customer.
Parasuraman et al. (1985) defined empathy as
the caring and individual attention the firm
provides its customers. It involves giving
customers individual attention and
employees who understand the needs of their
customers and convenience business hours.
(Ananth.A., et al., 2011) Referred to empathy
in their study on private sector financial
institutes as giving individual attention;
convenient operating hours; giving personal
attention; best interest in heart and
understand customer’s specific needs.
Brand Equity
(Aaker.D, 1991) has defines brand equity as
“…a set of brand assets and liabilities linked
to brand, its name and symbol, that add or
subtract from the value provided by a product
or service provided to a firm and/or to that
firm’s customer”. For assets or liabilities to
support brand equity, they must be linked to
the name and /or symbol of the brand. If the
brand’s name or symbol should change, some
or all of the assets or liabilities could be
affected and even lost. However, some might
be shifted to a new name and symbol.
(Keller.K, 1993) Defines brand equity in
terms of “the marketing effects uniquely
attributable to the brand”. Biel (1999)
explains that brand equity can be thought of
as the additional cash flow achieved by
associating a brand with the underlying
goods or services. (Aaker.D, 1996) Also
explains that the price premium should be the
best measurement of brand equity and best
indicate the strength of the brand. Beyond the
physical assets related to the manufacture or
provision of the product, brand equity

4. involves the value of a brand as defined
generally in economic or financial terms.
Brand Loyalty
Loyalty is an important concept in marketing
strategy and as Aaker said the brand loyalty
is the center core of brand equity. Loyalty
caused costumers spent less time for seeking
information. In 1992, Solomon showed that
loyalty-based buying decisions might turn
into a habit and this may be resulted from
current brand equity. The loyal customers
would have benefit for an organization in the
reducing costs and implementing its works
(Rundle and Bennet, 2001). Moreover,
loyalty can get a chance to company to react
against threats such as competition because
as consumers become loyal to a brand they
become less sensitive to a price increase
because of the product's ability to satisfy their
needs (Graham et al, 1994).
2- Brand awareness
Brand awareness is recalled brand
memorization power in customer’s mind.
There are four types of brand awareness: A)
High mental awareness, B) Brand reminding,
C) Brand recognition, D) Unawareness
(Bumm and Gon Kim, 2005).
The role of brand awareness depends on the
level of awareness achieved. In the higher
awareness level buying the possibility of
considering brand and the effect of awareness
on buying decision are increased (Rundle and
Bennet, 2001).
3- Perceived quality
Perceived quality is the customer’s judgment
about a product’s overall quality or
superiority of one goods or service in
comparison with customer’s tendency to its
substitutions (Simon and Sullivan, 1993). For
understanding perceived quality, recognizing
and measuring main dimensions will be
useful. But perceived quality is a world
structure and a summary. The brand is linked
with customer’s perceived quality; a
perception which is only shows overall
quality and is not necessarily in concern with
its trivial characteristics. High quality could
be a base for developing the domain of brand
(Farquhar, et al., 1991).
4- Brand Associations
Brand associations are central to brand
equity. In conceptualizing brand equity,
(Keller, 1993) depicts attitudes as the most
abstract and highest level of brand
association.
Since consumers who are more experienced
with a brand develop deeper knowledge
structures related to multiple dimensions
(Alba, et al., 1987), we believe that
experienced consumers are likely to hold
favorable and strong perception of quality of
that brand, compared to less experienced
consumers.

5. HYPOTHESIS OF THE STUDY
H1: There is a significant relationship between service quality and brand equity of the
finance companies.
H1a: There is a relationship between reliability and brand equity
H1b: There is a relationship between responsiveness and brand equity
H1c: There is a relationship between assurance and brand equity
H1d: There is a relationship between empathy and brand equity
H1e: There is a relationship between tangibility and brand equity
H01: There is no such relationship between service quality and brand equity of the
finance companies.
H01a: There is no such relationship between reliability and brand equity
H01b: There is no such relationship between responsiveness and brand equity
H01c: There is no such relationship between assurance and brand equity
H01d: There is no such relationship between empathy and brand equity
H01e: There is no such relationship between tangibility and brand equity

6. CONCEPTUAL FRAMEWORK
Independent variable Dependent variable
Methodology
Sampling Method
A sample is a subset of population. The limited time, impracticability of collecting data from
the total population led to select sampling methods. Therefore sample methods were used to
collect data from the population and the Convenience sampling, a process of selecting subjects
or units for examination and analysis that is based on accessibility, ease, speed, and low cost,
has been selected for the sampling dissertation of the research. There for sample target of the
survey is 150 customers of entire collection of companies where from each 75 customers and
38 RFC’s were taken into consideration as the sample for the research to bench mark through
the key players (LOLC & LB finance) which use to predetermined measures from all firms.
Data collection Method
The primary data has been collected by giving the questionnaire to the customers of selected
financial companies. The questionnaire was given to the pre identified branches located in the
district of Colombo of each selected financial companies. It has been further supplemented
through the interviews with the knowledgeable persons in this field. Documentary sources like
annual reports, magazines and articles issued by the government authorities of Sri Lanka,
Financial companies, research companies and relevant authorities have also been used during
the course of present study. The questionnaire for LOLC & LB finance leasing customers
consist of 45 questions which are related to the variables of the study.
Service quality
 Reliability
 Responsiveness
 Assurance
 Empathy
 Tangibility
Brand Equity
 Brand loyalty
 Brand awareness
 Perceived quality
 Brand associations

7. Data analysis Tools
Quantitative method was used to analyze the data. Under the quantitative method the Likert
Scale was included in the questionnaires. The Likert scale (frequently known as a “agree
disagree” scale) was first published by psychologist Rensis Likert in 1932. The technique
presents respondents with a series of attitude dimensions for each of which they are asked
whether and how strongly, they agree or disagree, using one of a number of positions on a five
point scale. In here five point Likert- scales were used to score the responses as strongly
disagree (1), Disagree (2), Moderate (3), Agree (4) and strongly agree (5). Statistical Package
for Social Sciences (SPSS 20) was used to analyze the data collected through Likert scales.
Regression analysis was used to measure the strength of the association between each
independent variable and the dependent variable.
Data analysis
The Regression Model
Statistical assumption