Era Of Globalization Marketers Marketing Essay

Published Date: 23 Mar 2015

2.1 INTRODUCTION

In this era of globalization, marketers' researchers have realized that a strategy for the survival and success of service firms is the delivery of a high standard quality services that meet and exceed customer expectations. This means that customers are becoming increasingly powerful as determinants of the service quality they wish to experience. The role of service quality plays heavily in creating a satisfied and repetitive customer. In other words, delivering superior quality service has been recognized as the most powerful weapon that many leading organizations possess. Important conceptual framework and models of service quality have been set up and researchers have started to take them into consideration in order to satisfy customer and to benefit from customer loyalty. Therefore effective investment in high service quality results in long-term increases in customer loyalty, and this in turn leads to cost savings and improved profitability and market share (Zeithaml, Parasuraman,&Berry, 1990).

2.2 DEFINITION OF SERVICES

Gronroos (1990) stated that, "A service is an activity or series of activities of more or less intangible nature that normally, but not necessarily, take place in interactions between the customer and the service employees and/ or physical resources of goods and / or systems of the service provider, which are provided as solutions to customers problems".

Moreover Richard Lekhander (1997) stated that, "good service is often viewed as being nice to the customer. This takes the form of being accommodating, never saying no, promising anything they ask and always being courteous".

Firstly, service is a performance. It happens through the interaction between consumers and service providers (Deighton, 1992; Gronroos, 1990; Ramaswamy, 1990; Sasser, Olsen & Wyckoff, 1978; Zeithaml & Bitner, 1996). Secondly, other factors such as physical resources or environments play an important medium role in the process of service production and consumption (American Marketing Association, 1960; Collier, 1994; Gronnroos, 1990). Thirdly service is needed by consumers to provide certain functions such as problem-solving (Ramaswamy, 1996) These three point place lead to the termination that, " a service, combined with goods products, is experienced and evaluated by customers who have particular goals and motivations for consuming the service" (Young, 2000).

2.3 STAKES INVOLVED IN MANAGING SERVICE QUALTIY

In an ever expanding and rapidly changing environment, companies cannot maintain attitudes characterized by attracting customers or expanding in new markets. According to De Madariaga and Valor (2007), "The key success factor to survive in mature markets relies on sustaining long-term relationships with stakeholders". The challenge all marketers face today is in finding ways of increasing customer loyalty and retention. Bhardwaj (2007) stated that, "Transforming indifferent customers into loyal ones and establishing a long term relationship with customers is critical for organizational success".

2.3.1 Relationship Marketing

Mishra &Liy (2008) stated that, "relationship marketing refers to "All marketing activities directed toward establishing, developing, and maintaining successful relationship exchanges". After a comprehensive review of definitions of relationship marketing, Harker (1999) proposes the following description: An organization engaged in proactively creating, developing, and maintaining committed, interactive, and profitable exchanges with selected customers over time is engaged in relationship marketing. Grönroos (1990) stated that, "The purpose of relationship marketing is to identify and establish, maintain, and enhance relationships with customers and other stakeholders, at a profit, so that the objectives of all parties involved are met and that this is done by a mutual exchange and fulfillment of promises".

Hunt, Arnett, and Madhavaram (2005) suggest that, successful relationship marketing results from certain aspects of cooperative relationships that characterize successful relational exchanges. On the other hand Arnett and Badrinarayanan (2005) declare that, "Relationship marketing is the competence of a firm's ability to identify, develop, and manage cooperative relationships with key customers characterized by trust, relationship commitment, and communication".

2.3.2 Customer Retention

According to Payne (2000), customer retention is the percentage of customer from the beginning of a period and who will still remain customers at the end of the period. Blattberg et al. (2001) stated that, "Customer retention is taking place when a customer keeps on buying the same market offering over a long period of time." Moreover Hoyer and MacInnis (2001) also said that customer retention is considered as practicing work in order to satisfy customers with the intention to build long term relationship with them. Payne (2000) also said that when measuring the customer retention, it is considered as crucial step to improve customer loyalty and the profitability of a service business.

2.3.3 Customer Loyalty

According to Oliver (1999) customer loyalty as a high commitment to re buy a product or service that has been preferred by a customer in the future although there are situational influence and marketing effort to cause this switching behavior. Satisfying customers is not enough nowadays; customer has to be extremely satisfied (Bowen and Chen, 2001). This may due to the fact that customer satisfaction must lead to customer loyalty. Bansal and Gupta (2001) proposes that, to build customer loyalty is no longer a choice for business instead it is the only approach to stay competitive. Mcllroy and Barnett (2000) said that a crucial concept that has to be taken into consideration when establishing a customer loyalty program is customer satisfaction. However Storbacka and Lentinen (2001), argued customer loyalty cannot be necessarily guaranteed by customer satisfaction. Customers may switch to another provider because the competitor offers more variety and opportunities in their service (Storbacka and Lentinen, 2001).

2.3.4 Word of Mouth Communication

According to Brown et al. (2005), word of mouth is considered as the interpersonal communication or any information's exchange about a target object from one customer to another. Murray (1991); Silverman (2001), believe that is a powerful means to persuade customers. Furthermore Bone (1995); Herr et al. (1991), estimate that word of mouth is likely more efficient in influencing customers' choice when adopting a product or when choosing a brand than the communication sources. Villanueva et al. (2008) also agrees that for companies, the customers' acquiring from word of mouth lead to a twice contribution on the long term value than when acquiring customers through marketing.

2.4 CUSTOMER SATISFACTION.

According to Kotler (2003), satisfaction is defined as a person's feelings of pleasure or disappointment resulting from comparing a product's perceived performance in relation to his or her expectations. Perreault et al. (2000), said that customer satisfaction is considered as the extent to which a business can fulfill the needs, desire and expectation of its customers. On the other hand satisfaction is viewed as the customers' overall attitude towards the service provider or it is the customers' emotion reacting to the difference between what customers expect and what they perceived concerning the fulfillment of the needs, goals and desires. (Hansemark and Albinsson 2004).

Motley, (2003), agreed to the fact of matching customers' expectation to the service provider performance. He also figured out that a business' mission is to satisfy its customers who favor the respective organization through time. Furthermore he pointed out that organization can attain this aim by being able to distinguish what satisfies and dissatisfied their clients. According to Kotler et al (2002), "customer gets dissatisfied if performance is below expectation and vice versa". The customers are highly delighted when the performance of the firm goes beyond expectation.

Hoyer and MacInnis (2001) states that, "Satisfaction can be associated with feelings of acceptance, happiness, relief, excitement, and delight". Moreover there are many factors that influence customer satisfaction. These factors include friendly employees, courteous employees, knowledgeable employees, helpful employees, accuracy of billing, billing timeliness, competitive pricing, service quality, good value, billing clarity and quick service, Hokanson (1995).

Fornell (1992) argued that customer satisfaction is considered as a key success factor for these organizations operating mature and competitive markets. Fornell, 1992; Reichheld & Sasser, (1990) note that in these markets, company growth is attained at the expense of competing organization, and the retaining of customers is crucial for companies operating in these markets.

2.5 WHAT IS SERVICE QUALITY?

Through time, numerous quality concepts have been developed, starting by Shewhart (cited in Williams and Buswells, 2003) with conformance to requirements. Then, Deming (1986) defined quality as the predictable degree of uniformity and dependability at low cost while Juran and Godfrey (1999) proposed, "fitness for purpose". Afterwards, Feigenbaum (1991) came with the total quality control throughout the organization. Crosby (1979) equated quality to conformance to requirements until Peters (1987) offered the concept of customer exception of excellence, which revealed to be fundamental in assessing quality

According to Lewis, (1989), service quality is believed to be a critical dimension of competition. Hung et al. (2003) said that, to provide excellent service and high customer satisfactions is considered as a crucial issue and challenge that the service industry face nowadays.Service Moreover Zahari et al., (2008) consider that, whether it is in the private and public sector or in the business and service industries, quality is viewed as a vital issue for them. Lewise and Mitchell, (1990); (Dotchin and Oakland, (1994a); Asubonteng et al., (1996): Wisniewiski and Donnelly, (1996); Seilier, (2004); Zahari et al. (2008) state that, "Service quality is the extent to which a service meets or exceeds customer needs and expectations".

According to Leonard and Sasser, (1982; Cronin and Taylor. (1992); Gammie, (1992); Hallowell, (1996); Chang and Chen, (1998); Gummesson, (1998); Lasser et al., (2000); Newman, (2001); Sureshchander et al.,( 2002); Seth and Deshmukh,( 2005), during the past two decades, service quality has become an important area of close attention for practitioners, managers and researchers as the result of its strong impact on business performance, lower costs, return of investment, customer satisfaction, customer loyalty and gaining higher profit. Brown and Bitner (2007) also point out that due to rapid development in service quality in many countries, its significance has made organizations realized that it is important to measure and evaluate the service quality.

Seth and Deshmukh, (2005) affirmed that, for measuring service quality, many conceptual models have been developed by different researchers. These conceptual frameworks permits organization in identifying problems in quality and consequently this will help to plan for a quality improvement program and thus this will lead to improve efficiency, profitability and overall performance.

Both service quality and customer satisfaction are important in the evaluation of service quality in organizations striving for success in a competitive environment. Fisk et al (1993) stated that the focus on increasing service quality matches with total quality management and customer satisfaction in the field of business research

High quality service is considered as a critical determinant of long term profitability as service quality affects the repurchase intentions of both existing and potential customers (Ghobadian et al., 1994).Hence, it can be stated the latter concept is an effective means to ensure survival or even obtain a competitive position in today's dynamic environment. However, the only appropriate means is to thrive for continuous improvements.

2.5 CUSTOMER EXPECTATION AND CUSTOMER PERCEPTION

Berry and Parasuraman (1991) stated that, "Expectations are the wants of consumers, that is, what they feel a service provider should offer". Service quality is being judge by customers and their expectations of services greatly influence their resulting level of satisfaction. It is far easier to please customers with lower expectations than those with higher expectations.

Consequently, to understand customers' expectation is very crucial. Lewison (1997) categories service expectations in three levels: essential, expected and optional. Following the same paste Zeithaml, Berry and Parasuraman (1993) include three similar levels in their conceptual model of customer service expectations: predicted, adequate, and desired.

Perception is the basis for personal interpretation of the world. According to Schemerhorn et al. (2000) perception is a way of forming impressions about oneself, other people and daily experience.

However Mitchel (1978) argued that perceptions are those processes that shape and produce what one actually experiences. The way that customer perceived service quality are highly subjective as their perception are influenced by many external and internal factors such as cultural, social, psychological and economy. What a customer perceives can differ from objective reality. Therefore, measuring customer perception of service is important as the customer evaluation of service and future behavior depends on the perception, not on reality itself.

2.6 Perceived Service Quality

According to Getty and Thomson (1994) Perceived quality may be viewed as a global attitudinal judgment associated with the superiority of the service experience over time. It is crucial to understand how consumers perceive the quality of the product offering, including the service element, and how these perceptions impact upon the consumer's ultimate purchase decision. After having understood the consumers' perception of quality, the organization should be able to identify whether or not a gap exists between the customers' expectation and the manager in the development of appropriate managerial quality systems, which should maximize consumer satisfaction. The needs of survival and prosperity in the increasingly competitive marketplace are the main driving forces in the provision of superior quality services.

2.7 SERVICE QUALITY DIMENSION

The importance of quality service to positive guest experiences has long been recognized, and many techniques for improving service quality have been developed. Based upon the research conducted by Parasuraman, Zeithaml, and Berry (1985), a 22-item scale for measuring service quality, known as SERVQUAL was developed. According to the SERVQUAL model, service quality can be defined as the customer's perception of a specific firm's service quality based on comparison of the performance of that specific firm in providing the service with the customer's general expectations of all firms in the same industry who provide the service.

The SERVQUAL technique uses the following five individual dimensions to measure customer's expectations and perceptions:

Tangibles

Tangibles include the physical evidence of the service that is, physical facilities, appearance of personnel, tools or equipment used to provide the service, physical representation of the service and other customers in the service facility (Tim Knowles, 1998).

Reliability

Reliability involves consistency of performance and dependability, which means that the company performs a service right the first time. It also means that the company honors what it promises in delivering the right product at the right time. Specifically, it means Accuracy in billing, keeping records correctly and performing a service at a designated time (Tim Knowles, 1998).

Responsiveness

Responsiveness concerns the willingness or readiness of employees to provide service. It involves timeliness of service; that is, mailing a transaction slip immediately, calling customer back quickly and giving prompt service, e.g. setting up appointments (Tim Knowles, 1998).

Assurance

Assurance concerns the knowledge and courtesy of employees and their ability to convey trust and confidence. It involves knowledge and skill of the contact personnel, knowledge and skills of the support staff, explaining the service itself, the company reputation, personal characteristics of the contact personnel, confidentiality, and financial and personal security (Tim Knowles, 1998).

Empathy

Empathy concerns the provision of caring and individualized attention to customers, that is, recognizing regular customers, learning the customer's specific requirements and providing individualized or customized service (Tim Knowles, 1998).

To measure customer satisfaction, one needs to anticipate which dimensions or attributes of the product/ service customers are using in their overall quality assessment. The understanding of the priorities that consumers place on the various dimensions of service quality can help the company gain a competitive advantage.

"The model conceptualizes service quality as a gap between customer's expectations (E) the perception of the service providers' performance (P). According to Parasuraman et al. (1985, 1988, 1991), service quality should be measured by subtracting customer's / perception scores from customer expectation scores (Q=P-E). The gap that may exist between the customers' expected and perceived service is not only a measure of the quality of the service, but is also a determinant of customer satisfaction/dissatisfaction." (A. Pizam and T. Ellis, 1999)

2.8 MEASURING SERVICE QUALITY.

As service quality is becoming a major part of business practice, it is important to be able to measure and research its effectiveness (Mei et al., 1999). For instance, different management practitioners and writers proposed various concepts and models to assess this essential construct.

2.8.2 SERVQUAL INSTRUMENT

The measurement of service quality with a well known model known as SERVQUAL (Parasuraman et al, 1988) .The model has been developed as a substantial amount of research across the multiple service industries of retail banking, credit card provision, security brokerage and, product repair and maintenance. Parasuraman et al., (1988) originally evolved a set of ten dimensions, which was consolidated into five broad criteria after further in-depth research to evaluate service quality. The SERVQUAL consist of 22 items pertaining to expectation and perception and it is also based on the five dimension of the service quality.

SERVQUAL is viewed as the mostly used, valid, and generally accepted measurement tool (Brown and Bond, 1995). This instrument is used to assess customers' expectations and perceptions of quality through the five generic dimensions described below and as such, quantify the service expectations-perceptions gap.

Table 1.0 Dimensions of service quality (SERVQUAL instrument revised)

Service Dimensions

Details

Reliability:

Ability to perform and deliver promised service dependably and accurately.

Responsiveness

Willingness to help customers and provide prompt service.

Assurance

Employee's knowledge, courtesy and ability to inspire trust and confidence; serving with a smile and be courteous in their approach.

Empathy

Caring and individualized attention the firm provides its customers. Ability to make him feel unique and to cater to any of his/her requirements.

Tangibles

Appearance of physical facilities, equipments, personnel and communication material used to enhance image of the organization and to signal quality.

According to the model, service quality is a "gap" between the customer's expectations and perception and consequently, it should be measured by subtracting customer's performance scores (P) from customer expectation score (E). The greater the positive gap score (P>E) means the better service quality and vice versa. SERVQUAL model, which assumes quality is the result of gaps between people's expectations and their perceptions of service performance, has received a great deal of interest since it offers a practical instrument (Parasuraman et al., 1988).

Since it has been used in many studies of service quality, The SERVQUAL instrument has been proved popular. This is because it has a generic service application and is a practical approach to the area. A number of researchers have applied the SERVQUAL model to measure service quality since1988 by Parasuraman et al. which is five dimensions to study service quality to specific industries, products, target markets, and other in the service sector. Recent applications have extended it to the industrial market. For example, the public sector (Orwig, 1997), higher education (Anderson, 1995a), information systems (Kettinger & Lee, 1997; Pitt, 1997; Van Dyke, 1997), hospitals (Anderson, 1995b; Youssef, 1995) and the legal profession (Witt $ Steward, 1996).

The benefits derived from SERVQUAL approach are clear and may be summarized as; SERVQUAL gives management a clear indication of how the organization is performing in the customer's eyes, it helps prioritize customer needs, wants, and expectations by identifying what is most important in the customer's eyes., it allows the organization to set an expected standard of performance that can then be communicated to all staff and patrons, it can also identify the existence of any gaps between customers and providers and thereby helps focus improvement efforts by directing organizational energies at closing these gaps (Rust & Oliver,1994).

2.8.3 Criticism of SERVQUAL model

Though the SERVQUAL instrument has been widely used by many researchers, it has also been contest by certain researchers for its reliability to measure service quality. Carman (1990) questioned its methodology and found a need to expand and add on certain dimensions that were important across different services. Cronin and Taylor (1992) argued that the disconfirmation paradigm that SERVQUAL applied was inappropriate for measuring perceived service quality. They pointed out that the disconfirmation paradigm measures customer satisfaction instead of service quality.

Consequently through their study, Cronin and Taylor (1992), have make use of the performance scale (SERVPERF) only and through their research they have discovered that this instrument outperformed the SERVQUAL model. O'Neill, Wright and Fitz (2001) also argued that, "SERVPERF made use of the original SERVQUAL scales and also requires the consumer to rate the provider's service performance along a seven point scale, but uses a single set of questions concerning post consumption perceptions of service quality and does not seek to measure expectations"

2.8.4 THE GAPS MODEL OF SERVICE QUALITY

According to Kotler, Bowen, and Makens (1996) ,the five-gap model is known as the widely used model of service quality. The gap model was developed by Parsuraman,Zeithaml, and Berry (1988), and it one of the earliest frameworks of service quality model. It serves the purpose of identifying quality gaps namely understandability, service standard, service performance, communication and service quality in organization. Richard G McNeil (2000) stated that, "Knowing what customers expect is the first and possibly the most critical step in delivering service quality". Thus, to be able to provide services that customer perceives as excellent an organization must know what the expectation of the customers is.

Figure 1: The gap analysis model (Parasuramann et.al., 1991)

Figure 1 show four gaps identified on the marketer side of the model (gap 1-4) and a fifth gap, which represents the comparison between expectations and perceptions of service received on the customer side of the mode

GAP 1: The Management Perception Gap

(Differences between consumer expectations and management perceptions of consumer expectations).

Customer's Expectation

Company's Perception of Customer Expectation

Reason

For

Gap 1

Inadequate marketing research

Lack of upward communication

Managers' perceptions of what consumers expect may be different from actual customers' needs and desires. The reason for this gap is lack of proper market or customer focus. Agency executives may not always understand what features connote high quality to consumers, what features a service must have in order to meet consumer needs, and what levels of performance on those features are needed to deliver high quality service. Therefore appropriate management processes, market analysis tools and attitude need to be adopted.

GAP 2: The Quality Specification Gap

(Differences between management perceptions of consumer expectations and service quality specifications).

Translation of Perception into Service Quality Specification

Reason

For

Gap 2

Poor Service Design

Absence of Customer-Defined Service Standard

Management Perception of Customers Expectation

Even if customer needs are known, they may not be translated into appropriate service specifications. There may be constraints of resources or market conditions, which prevent management from delivering what the consumer expects, or there may be an absence of total management commitment to service quality. This gap relates to aspects of service design.

GAP 3: The Service Delivery Gap

(Differences between service quality specifications and the service actually delivered).

Failure to match Demand and Supply

Poor Human Resource Policies

Customers not fulfilling their roles

Reason

For

Gap 3

Service Delivery

Customer-Driven Service Design and Standard

This is referred to as the service performance gap and indicates that quality specifications are not met by the performance in the service production and delivery process. There are several reasons for this includes: lack of sufficient support for the frontline staff, process problems, or staff performance variability.

GAP 4: The Communication Gap

(Differences between service delivery and what is communicated about the service to consumers).

External Communication to Consumers

Reason

For

Gap 4

Inadequate Communication

Inadequate management of customer expectations

Service Delivery

Consumer expectations are shaped by the external communications of an organization. This gap indicates that promises given by market communication activities are not consistent with the service delivered. A service organization must ensure that its marketing and promotion material accurately describes the service offering and the way it is delivered.

GAP 5: The Perceived Service Quality Gap

(Differences between consumer expectations and perceptions of the quality of the service received).

Customer Expectation

Not Knowing what the consumer expect

Not Delivering Service To standard

Not matching performance to promised

Customer Perception

Reason

For

Gap 5

This gap results when the perceived service falls short of the expectations of customers. This is how consumers perceive the actual service performance in the context of what they expected.

If the service gap model is used properly, it will help the management to identify systematically service quality shortfalls. In other words, it facilitates the identification of gaps between a numbers of variables affecting the quality of the offering.

Gaps 1-4 are within the control of an organization and need to be analyzed to determine the cause or causes and changes to be implemented which can reduce or even eliminate These four gaps emerge from emerge an executive perspective on a service organization's design, marketing and delivery of service. They, in turn, contribute to another gap, mentioned earlier; Gap 5 which is the discrepancy between customers' expected services and the perceived service actually delivered.

Gap 5 is the surveying of employees can help to measure the extent of Gap 2 to Gap 4 (Zeithmal et al, 1990). This may reveal a difference in perception as to what creates possible gaps.

The gap model put emphasis on the customer. Quality is realized by the customer after the service has been received and it relates to the difference between expected and perceived quality.

CONCLUSION.

This chapter has shown how the quality of services is a major factor in the customers' future decisions. Managers therefore have a critical responsibility for ensuring that their customers are not dissatisfied, while emphasizing the satisfying aspects of service. In this research the SERVQUAL model have been used for measuring service quality by focusing on the Gap5 and the service quality dimension.