Table of Contents
1.1 MOTIVATION FOR THE RESEARCH
1.2 THE CONTEXT OF BANKING IN INDIA
1.3 A PERSPECTIVE ON THE RESEARCH PROBLEM
1.4 SUMMARY OF THE RESEARCH OPPORTUNITY
2 LITERATURE REVIEW
2.1 ‘SERVICE QUALITY EXPECTATIONS’ AND BRAND PREFERENCES
2.2 EXPECTED SERVICE QUALITY AND GROUP INFLUENCE
2.3 REFERENCE GROUP AND BRAND PREFERENCE
2.4 ‘COUNTRY OF ORIGIN’ AND SERVICE EXPECTATIONS LEADING TO BRAND PREFERENCE
2.5 CHOICE OF BRAND IN CONTEXT OF BANK
2.6 CONCEPTUAL FRAMEWORK
3.1 RESEARCH DESIGN
3.2 DATA COLLECTION
3.3 TARGET POPULATION
3.4 SAMPLING METHOD
3.5 SAMPLE SIZE
3.6 RESPONSE SCALE
3.7 KEY VARIABLES
3.8 DATA ANALYSIS PLAN
3.9 MEASUREMENT OF THE VARIABLES TO SELECT THE CORRECT DATA ANALYSIS
4 ANALYSIS OF THE DATA, RESULTS AND DISCUSSION
4.2 ANALYSIS OF DATA AND RESULTS
5 CONCLUSSIONS AND RECOMENDATIONS
5.2 SERVICE EXPECTATIONS AND GROUP INFLUENCE
5.5 FUTURE RESEARCH
SECTION I: PRE-TEST QUESTIONAIRE
SECTION II: FULL QUESTIONAIRE
This is to certify that this thesis titled EFFECTS OF REFERENCE GROUPS AND COUNTRY OF ORIGIN ON THE RELATIONSHIP OF SERVICEQUALITY EXPECTATIONS AND CHOICE OF BRANDS A STUDY WITH REFERENCE TO BANKING IN INDIA submitted by SANKALPA SEN in partial fulfillment of the requirements of the Degree of MASTER OF PHILOSOPHY IN MANAGEMENT of Jain University, is based on the results of the research work carried out by me and written by me under the guidance and supervision of Professor ARUN BHATTACHARYA The manuscript has been subjected to plagiarism check by TURNITIN software. This Thesis or any part thereof has not been submitted for any purpose to any other University or Institute.
This is to certify that this thesis titled EFFECTS OF REFERENCE GROUPS AND COUNTRY OF ORIGIN ON THE RELATIONSHIP OF SERVICEQUALITY EXPECTATIONS AND CHOICE OF BRANDS A STUDY WITH REFERENCE TO BANKING IN INDIA submitted by SANKALPA SEN in partial fulfillment of the requirements of the Degree of Master of Philosophy in MANAGEMENT of Jain University, is based on the results of the research work carried out under my guidance and supervision. The manuscript has been subjected to plagiarism check by TURNITIN software. This Thesis or any part thereof has not been submitted for any purpose to any other University or Institute
Bangalore Date: 15-Nov-2017
Title of the Thesis: EFFECTS OF REFERENCE GROUPS AND COUNTRY OF ORIGIN ON THE RELATIONSHIP OF SERVICEQUALITY EXPECTATIONS AND CHOICE OF BRANDS A STUDY WITH REFERENCE TO BANKING IN INDIA
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Name of the Researcher: SANKALPA SEN
Department: MARKETING MANAGEMENT
Institution: JAIN UNIVERSITY
Name of the Guide: ARUN BHATTACHARYA
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Sankalpa Sen (Arun Bhattacharya)
In the undertaking of the journey towards my M.Phil., this thesis has been continued monitored and brought to conclusion with the support and encouragement of several people including my research guide, academicians, well-wishers, friends, co-workers and different other personalities. It really is an enjoyable opportunity to share my heartfelt gratitude to those people who made this thesis possible and add in several ways.
To start with, I'd like to share and express my profound sense of appreciation to my research guide Associate Professor, Arun Bhattacharya, Kautilya Entrepreneurial Management Institute (KEMI), Jain University, Bangalore for his insightful assistance, valuable advice, constructive ideas and considerable conversations within my research work. His frame of mind, regular support, encouragement and personal attention provided good and easy basis for my research work. I am thankful for his committed contribution in critiquing my improvement, writing, making corrections to improve and finalize the study documents as well as the thesis. Obviously, I will be highly indebted to him and continue my learning journey from with him.
I am indebted to all my Gurus who helped me in shaping my thoughts as researcher. It is not an easy transition from practitioner to an academic researcher. I will all my life respect the tough love shown to me by my professors during this journey. While they wished well, they did not allow any leniency or chance to compromise on the research work. I would like to thank our dean Dr Sandeep Shastri for making the classes fun filled learning. The anecdotes and analogies not only developed love for the research methodology, but also will help remember the concept for ever. The initial guidance and coaching of Dr. Sudarshan had helped shaping my thoughts.
The subject classes conducted by Professor Mithileshwar Jha, associate professor Kanti G, Dr. Amit Gupta were very useful in shaping how frameworks needs to be integrated to find a conceptual gap for study.
Indebted to Dr. Mythili Rao, who had always motivated and helped sail through the softer challenges any research scholar will have. I am also thankful to the Librarian of Jain University, for providing me comprehensive collection resources for my research work.
It really is my pleased privilege expressing my heartfelt appreciation to all my corporate colleagues who at times had stretched to accommodate my classes and the studies. They have also helped at times provided and managerial interpretation of the study so that the study does not lose the practitioners context.
It really is my honor and privilege expressing my deepest respect to family members. Because of their love, affection, perseverance, beliefs, silent sacrifices and profound encouragement for concluding might work.
I am also thankful to all who supported in developing the collaterals in printing and binding this thesis, help me check on the format compliance. Most importantly, I bow my mind before God Almighty, for blessing me with necessary effort to handle the work efficiently.
Bangalore, India 2017
LIST OF TABLES
1 Descriptive Statistics of Key Constructs
2 Distribution of 5 Quality Dimensions
3 Mean and SD distribution across Gender for Each Quality Dimension
4 Mean and SD distribution across Age Bin for Each Quality Dimensions
5 Mean and SD of Reference group and COO by Age Bin and Gender
6 Service quality scores and choice of Citibank
7 Service quality scores and choice of ICICI Bank
8 Correlation between SQT and Choice of bank
9 Linear Regression of SQT, RGIT
10 Normative and Comparative Influence and SQE relationship
11 Age Group Coefficientsa
12 Moderating effect of RGI on Primary relation of SQE and PBB - Citi
13 Statistics of SQT -PBB in case of ICICI
13a SQT -PBB ICICI with RGI Mediation
14 Normative a Comparative influence on Primary Relation of SQE and PBB
15 Relationship of SQT -PBB (Citi) with COO - US
15a Relationship of SQT -PBB (ICICI) with COO- India
16 Relationship of COO US on SQT-PBB (ICICI)
16a Relationship of COO India on SQT-PBB (Citi)
17 Moderating effect of COO on the SQT PBB (Citi)
17a Moderating effect of COO on the SQT PBB (ICICI)
18 COO US and SQT -PBB Citibank
18a COO India and SQT -PBB ICICI
19 Quality Dimension and COO
LIST OF FIGURES
1 Gronroos (1990) model of service quality
2 Determinants of Service Quality (Parasuraman et al. 1988)
3 Theoretical Framework for dissertation source: Self
4 Response Distribution Gender
5 Response Distribution Age Bin
LIST OF ABBREVIATIONS
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Chapter 1 Introduction
1.1 MOTIVATION FOR THE RESEARCH
In service marketing, the service quality is the most explored topic as service quality is one of the most important factors of service as offering. Previous empirical studies have connected service quality to firm’s performance (Zeithaml et al. 1996; Boulding et al. 1993), customer satisfaction is an outcome of the Gap model, it depends on the expectation and perceptions of service quality (Cronin and Taylor, 1992; Oliver, 1993; Taylor and Baker, 1994) and purchase intention (Zeithaml et al., 1996; Boulding et al., 1993). The Gap model in service quality measured using the ServQual model, is derived from the comparison that between ‘service quality expectations’ and service quality perception of the customers, perception is a derivation of the way the service has been delivered to existing customers (Parasuraman, Berry and Zeithaml, 1985; 1988). While expectation is a pre-consumption mental state.
While satisfaction is a post purchase phenomenon, the pre-consumption anticipation or expectations of quality for services can be evolved and crafted in individuals over time. For a fixed level of perceived quality, the overall service quality may vary due to the varying service expectations of customer. Zeithaml, Barry and Parasuraman (1993) suggested that the service expectations are influenced by several controllable (explicit or Implicit service promises) and uncontrollable factors. One or few of these uncontrollable and variable factors may have a significant relationship to social group influences, like WOM, personal needs and perception of services quality alternatives and predicted services. Meuter et al. (2000) discovered that customers more often engage in positive word-of-mouth and if satisfied will repurchase and share their positive experiences. Further studies in the consumer behavior have revealed that for a consumer, pleasure, unhappiness and other elements of satisfactions will lead and motivate consumers to share their respective experiences with others (Dichter 1966; Neelamegham and Jain 1999; Nyer 1997) and most effectively with the relevant others.
Significant literature has been accumulated over years to confirm with confidence that there exists a significantly strong relationship between service quality and Choice or preferences moderated by satisfaction. “Consumers imitate each other following a social or vicarious learning paradigm” (Hawkins, Best and Coney 2004, pp.414), but what matters most to marketers are their social relationships and ability to influence each other. Groups interact and often collect information through explicit languages or through cues. The way a consumer passes his experience to other prospective consumers is of significant value, described as word-of mouth communication (WOM). This phenomenon helps consumers to share consumption experience, product information and experts to share opinions. These person to person or group to group communication, directs buyers to and away from specific brands, products and services (Hawkins, Best and Coney 2004). Experiences are discharged in the form of positive or negative feelings associated with product experience (Westbrook 1987), further service quality satisfaction leads to higher repurchase intent and willingness to share and to talk positively about a product or service (Boulding 1993, Rust, Zahorik & Keiningham 1995). Influence of WOM is significant in pre-consumption choices. Nielsen, a well-known market research firm published in 2009, a worldwide computer review report which claimed most respondents weighed the views of the closed group (friends and family) or a specific product, while seventy percent referred online forums viewpoints and comments, which is way above the count of people who considered advertisements as genuine. It is also observed that if the source of WOM is a close group member or someone with similarity in some form, the impact on behavioral consumption change is magnified. Reference groups can influence by two ways the behavioral decisions of consumers. One, reference group members have affinity and like and respect each other, and hence the behavioral change is driven due to the ability to connect, co relate and identify. Two, if closed group norms are relatively strong, the members may have strong pressure to conform to the norms. Influences happen and the magnitude of attitude change will depend on the visibility of consumption, which means other relevant members who matter to be displayed the consumption should be able to observe the expression or the attitude of observers (Cook and Flay 1978) and the degree of consensus among reference group members on the topic in question. Bearden and Etzel (1982), who revealed that social visibility and exclusivity were significantly important factors driving the RGI. In addition, perceived risk of services on consumer behavior was also explored. The perceived risk can be related to assurance and reliability aspects of the service quality dimensions. WOM has significance in both streams: Informational and Normative. Informational influence impacts when information is accepted as facts from relevant and acceptable source (Burnkraut, Cosineau, 1975). On Contrary, normative influence operates through compliance, indicating the common individual consumer conforms to the verbalized expectations of relevant others (Kelman, 1961). The Strength of WOM advice on the receiver's behavior or action is directly proportional and dependent on the magnitude of normative and informational influences exhibited,
Informational reference group was most important for the services, as services are intangible, the experiences of others and self becomes the input for service expectations before actual consumptions (Mehta, Lalwani and Ping 2001).
Reference or closed groups influences services choices as they do in case of products (Arora, Stoner: 2008) While service quality leads to preference of service brands, it also generates inputs for decision through WOM. This can have informational and normative influences deriving service choice.
Parasuraman et al. (1994) has contended that measurement of expectations is necessary in the measurement of the service quality gap model. Expectation or anticipation of service quality is considered as one of pre-consumption assumptions for service. Very few, but studies have revealed that, the expectation of service significantly changes with culture, age and gender (Armstrong, et al. 1997, Tarkanyi Eszter, 2008). We though shall limit our study to understand the reference group’s relationship in the context of the relationship between ‘service quality expectations’ and service brand preference.
Organization can improve overall customer satisfaction score either by managing expectations of customers or by improving service quality. This is because overall service quality needs to be aligned to the firm’s competitive strategy. Increasing or decreasing the firms service quality significantly, will not only have capital and other expenditure, it may also lead to a different target market and place the organization in between different customers and competition, it may have changes in vendor, employees but for sure it will also have significant cost burden. The service expectations get influenced by four behavioral factors, the information by WOM, personal needs, past experiences, as well as advertisements (structured and planned communication with external parties). WOM informational influence comes from reference groups, the effect of comparative and normative influences on services like banking which are slowly becoming privately consumed necessity has not been academically experimented very often.
One aspect of service quality expectation (SQE) is also perceived service risk. Risk has a strong relationship with Trust and assurance, one of the key dimensions of service quality. While brand images are linked to perceived risk and expected quality. One of the key constructs - the COO of the brand is significantly important. Bilkey and Nes (1982) did a longitudinal qualitative research on COO and shared that the COO impacts the choice of product brands and the consumers’ product purchase decision. However, they did not conclude with confirmation that the COO has an influence on the customers’ purchase decisions concerning services industries. This would be the next motivation of our study.
Purpose of this academic study includes: Exploring the influence of the COO image, on the consumer preference decision in services, particularly banking. While making choice or preference decisions, customer search for appropriate amount of information to make the right choices and pre-consumption reconciliations, Chao and Rajendran (1993). In relation to products, its knowledge for consumers is an important consideration when purchasing, in absence of adequate information the ‘country of origin’ plays a significant role in decision making and in the process of products or brand information on the consumer’s information searching intention and consumption intention. Though these theories primarily relate to the tangible products, and not products post sales services or services or service brands to choose. To summarize for this study our motivations is to identify the relationship of influence of reference groups on the established relationship of service expectations and choice of service brands. The COO as a construct also impacts choice in absence of information of products or brands. This study will also measure the strength and relationship of COO of the service brands on the relationship of ‘service quality expectations’ (SQE) and service brand preference.
1.2 THE CONTEXT OF BANKING IN INDIA
There have been several studies in the subject of Service quality, and factors which drive choice of banking (Almossawi 2001, Mokhalis, 2009, Renman and Ahmed 2008 and Sharma & Rao 2010). While Service quality has seen evolution of much specific scales for banking and now online banking, the factual study of choice and banking had been more specific to regions and geographies. The studies have also been more focused on either the ServQual dimensions or product specific needs which were in domains of financial management or in the faculty of commerce. Few consumer behavioral aspects and constructs were used in the study of factors which influence the choice of banks.
One of the key attributes is the feeling of safety (Almossawi 2001). Mokhalis (2009) concluded through their research, consumers prefer banking with a financially strong and large bank and expect assurance of data and transactional confidentiality, privacy and security with each financial interaction. To rearticulate, security is conceptualized as, that secures feeling both in the brick and mortal bank as well as in the governance of the bank (Sharma & Rao, 2010). Renman and Ahmed (2008) and Sharma & Rao (2010) discovered convenience to be the decision influencing important factor impacting customer choices among other lead expectations like, customer services, digital banking facilities and overall premises, coping with and adoption of internet and transaction mobility. With more and more transaction going digital, the driver of satisfaction identified by is technology and its adoption by the banks Almossawi (2001) and Lenka, et al. (2009). While technology eliminates the construct of proximity, contradictorily Almossawi (2001) identifies that proximity and service quality are very important for customers in considering a commercial bank. Thu most of the contemporary literatures have talked about the product characteristics and other quality dimensions, but based on our first section of brief compilation of literature and its connection to banking, we notice a significant gap in experiments with reference groups influence and ‘country of origin’ in the space of banking and in context of India.
There is severe competition in the financial services space, especially banking, with a significant portion of banking needs being catered by non-banks like payments banks or wallets. Technology is reducing the variability and the service offerings are similar across banks (Holstius and Kaynak 1995), is making it more significant for banks to focus on first time resolutions and those other important things that drive the choice of banking service provider.
Technology is the disrupter, it is significantly changing the way banking is done and hence is a critical to quality aspect. Corporate studies by Accenture suggest the digital transactions will significantly increase. The digital banking will make banking services privately consumed necessity from publicly consumed necessity or in some cases of premium banking, publicly consumed luxury. Banking is a luxury for few, while is a necessity for most and is consumed almost publicly and sometimes privately. More and more day to day transactions are private. While limited studies have measured the impact of group influences, the study by (Johar and Sirgy, 1991; Kelman, 1961) share the dominance of normative over informational impact for publicly consumed products. In this study, we shall exclude this important but established concept of information influence. It is distinctly formalized through literature that, information search is one of the key factors of consumer decision making (Darley, Blankson, & Luethge, 2010) and especially so in high-involvement, high-risk consumption decisions (Beatty & Smith, 1987).
In this dynamic scenario, we studied researches done in service quality of Banking, preference of Banking Brands in domain of Marketing and referred studies done as research in commerce and Finance to understand the factors that influence Banking choice. The elements ranged from functional quality to operational quality but none of the research either in Marketing or Finance had considered constructs of reference groups and COO in details as a factor or had discussed about them as a possible factor. Though, some of the outcome of findings could be directly or indirectly attributed to these constructs.
1.3 A PERSPECTIVE ON THE RESEARCH PROBLEM
The study has a relational research problem. Previous studies have established the relationship between service quality and service expectations and the preference of brand (Zeithaml, Berry Parasuraman 1996, Richard, Allaway 1993, Bebko 2000, Moeller 2010). Service quality is one key factor for choice of service or product service. There are other factors which apply and may apply to choose of services. With advent of technology, the adoption of is both ways from the provider and the consumer. This has led to consumption of transactions through use of technological communication tools. Last three decades since liberalization of the economy, the banking scenario has significantly changed by regulations, technology adoption and more importantly competition. The share of private banks and foreign banks has increased, squeezing the government sector banks. The fast growth of it and the huge use of the internet have altered the marketplace conditions, since consumers now have options of different information programs, without having need to be physically show gather or be area of the information dissemination. To react in this drastically changing business environment financial service marketers need to comprehend and review the factors that impact consumer's behavior in financial services. While previous studies were done in Finance and Commerce to understand the banking specific needs as factors of choice. We shall in this study leverage those studies and blend our marketing conceptual framework to induct two not much investigated and researched constructs of reference group and COO as possible factors of bank choice.
Most studies reveal service expectations are key choice factors, but does the want for a service get influenced by the information that consumer collects from close groups, do they have normative pressures to choose a brand, is there an aspiration need for services particularly banking, which is going through a transition in India from being a publicly consumed luxury to a privately consumed necessity. While the influencing groups impact the preference through ‘word of mouth’ or possibly through the intangible pressures of norms. The groups which are made of individuals also develop the perception longitudinally by experience and by cumulative accumulation of information from others. This study will try to see if the ‘reference group influence’s the relationship of service quality expectation and preference of brands. In general, this relation to be established will require a more detailed and broader study across services like healthcare, hospitality, banking and insurance, education and grooming. This study has focused on banking in India as the service is going through transitions. The banking sector as discussed is expanding as a large section is brought under the banking net, though as a necessity and not luxury of premium banking. On the other side, the banking regulations may allow switching banking providers without changing account numbers. Banking as a service has most interaction with service provider may be second to a transportation provider or an academic institute, but banking on other hand is becoming more and more privately consumed with the use of technology. Hence it makes it more interesting to evaluate the relationship of the constructs in a very dynamically changing environment.
Banking like hospitality has got many foreign players. The operations of foreign banks alongside the Indian banks give opportunity to consumers to choose between. While not many tier two cities and all rural consumers have access to the highly priced foreign banking, but consumers may possibly have a perception of superior quality of service from a priced foreign bank or trust more an Indian bank or the factor of nationality may drive the choice for an Indian bank irrespective of perceptions of country image as a quality power house.
In a focused market, service organizations are relied upon to contend on both cost and quality of service and furthermore it is critical for the banks to meet the purchasers' prerequisites and desires in cost and service quality (Melody, 2001).
The challenge for banking service providers in India is to find out the critical factors that influence the customer’s preference. Though for this research we shall not include the construct of customer satisfaction, but experiments and academic research have concluded the relationship of quality leads to satisfaction and then to preference behaviors. In general satisfaction is developed on the information from all prior experiences with the service supplier.
Almost two decades ago, post liberalization the options to choose from foreign banks was opened for Indian banking consumers. Not many had experiential understanding of service quality, also information with customers were few. The COO of the brand was a decisive construct. With technology and its ability to replicate at low cost and more banks and banking customers doing transactions using structured non-human platforms, the service quality variability has decreased. Kotler (2012) highlighted service in general has four characteristics primarily different from products: “intangibility, inseparability, variability and perishability”. Variability, is important in context of certain services as most of them are executed by humans and there will always be an extent of issue with gauge repeatability and reproducibility with varying individuals on same task., Thus service varies with when and where it provided, hence services vary widely by COO and the values and rigors of processes of the service organization. Humans have repeatability and reproducibility issues and hence may impact the delivery of a service for each customer. It would be interesting to see the impact of COO as an expectation - choice moderator in such times when variability is getting eliminated by technology (Love, Ehrenberg, 2014) and at a period when information of brands is more easily accessible (Mitchell 2013 pp.56).
1.4 SUMMARY OF THE RESEARCH OPPORTUNITY
Given the premise that, individual’s service expectations have great influence on his or her preferences of service providers, we will use the studies thus far to understand the possible behavioral constructs which affects the service expectations and thus the relationship of SQE and PBB. In this dissertation, we shall look at the other moderating or mediating variables from the marketing literature which may influence the preferences of service providers in this case banking in Indian context.
- To understand the relationship between the service expectations and the normative and comparative reference groups (Groups influence service expectations)
- To examine the effect of reference group as a moderator between the ‘service quality expectations’ and preference of banks;
- To study the consequence of inclusion of ‘country of origin’ of banks, to examine how the COO moderates the relationship between service quality and preference of banks.
- The relationship of reference groups, particularly the comparative reference groups on the perceptions of ‘country of origin’ of banks.
To summarize, we argue that the strength of an individual’s preference to a service brand, in this case banking, is influenced by not limiting to ‘service quality expectations’; it also gets moderated or mediated by (a) influence of reference groups, (b) ‘country of origin’ of the bank.
Chapter 2 Review of Literature
2 LITERATURE REVIEW
This section we shall cover literatures which are relevant to this research such as service quality dimensions particularly with focus on the expectations, reference groups and its influences on brand preference, ‘country of origin ’ of the product and its moderating impact on the relationship of service expectations and choice. Concluding with a conceptual relationship between the above constructs, which shall be the theoretical framework, we shall try to establish through our further research. To accomplish this, we have referred to all seminal publications and other relevant literary observations archived on leading sources like Jstor, ProQuest, Credo, e-Literature for understanding recent researches and leveraging the building the constructs. Papers mostly referred are published in leading Operations, Finance and Marketing Journals.
2.1 ‘SERVICE QUALITY EXPECTATIONS’ AND BRAND PREFERENCES
Customer expectations are pre-consumption belief about product and services (Olson, Dover 1979). In a situation of limited or no information, the expectation of services will be null, but it never happens so, people build some expectations based on other factors. Information is very vital and leads to expectations and thus choice. This is more relevant in financial products as people take no chances with risk or loss. However, the customer has many sources of information, like prior experience of services, word of mouth, expert opinion, communications lead and generated by the organization and the exposure and experience of similar products from competition (Zeithaml, Parasuraman, Berry 1991). In this section, we shall review all the existing literature till date about service expectations and its relationship with brand preferences.
Service quality has been considered as both a specific, holistic analysis of the service and a detailed analysis of the various dimensions of the service quality (Iacobucci, 1998). In addition, some experts argued that service quality is either industry or product specific (Babakus and Boller, 1992). Various earlier studies have considered service quality as a subjective analysis of individuals against the expectations and perceptions (Adam Finn, 2005). Though, the concepts and measures of service quality may vary by individuals and are subjective but the perception of one can cross pollinate between a group of likely people, further through ‘word of mouth’ (WOM) sets the product quality expectations of possible purchasers or repurchases.
Customer’s assessment of the overall service excellence or superior quality of the service (Zeithaml, 1988) is defined as Service quality. The most used model, which has evolved with basically compares customer expectations with customer perceptions of actual service performance (Gronroos, 1982; Parasuraman et al., 1985, 1988). Managing the service quality has been always more daunting and complicated than the management of product quality, due to measurability (Garvin, 1987). The literature on product quality does not provide an overlapping guidance of service quality (Parasuraman et al., 1985). Services have always been different than products due to its intangibility, heterogeneity, inseparability, and perishability. It is generally agreed that service quality is a multiattribute construct (Gronroos, 1982; Parasuraman et al., 1985).
Following is a consolidation of key studies in the service quality expectation space over the years how the ‘service quality expectations’ have evolved and the drivers of service quality.
Summary of Key Literature:
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The key construct of the study is service expectations. We shall build the same based on the above and the following few literature references.
Expectation is a set of criteria a consumer has toward a service which is usually based on a customer’s knowledge of a company’s reputation or a customer’s earlier experience with the same or similar company. It is formed consciously or unconsciously prior to the actual service delivery. As a customer receives more information about a company, through word-of-mouth, advertisement, or service encounters, expectation is continuously updated to the images of the company and its service in a customer’s mind. Extant services marketing literature has found that individuals from different cultures have different expectations and evaluations of services ( Donthu and Yoo, 1998; Laroche et al., 2004).
Zeithaml, Parasuraman and Berry (1993) defined expectations as “consensus concerning the specific nature of the expectation standard, and the number of standards used - has not yet been reached”. The same set of authors in a following research work suggested the factors of customer expectations are still unspecified, though the service marketing literature concludes few very distinct characteristics that may further complicate the expectation formation process. This can include involvement of the customer in service production process (Parasuraman et al., 1994).
‘service quality expectations’ (SQE) is an intangible mental desire of service delivery that is pegged as a standards or reference points against which service quality is evaluated, leading to acceptance and satisfaction. Since, customers compare their perceptions of service quality with these reference points when scoring service quality.
Knowing what the customer expects is utmost critical step in delivering good quality of service, Zeithaml, Berry, Parasuraman (1993) It is important to understand the meaning and types of expected service and factors that influence ‘service quality expectations’ (SQE) the first helps relate to theories that leads to choose of service and the next helps understand if there is relationship to other mediating or moderating variables.
Service quality expectation can vary widely depending on the reference individual customers have developed (Woodruff, Cadotte and Jenkins, 1987). Each expected quality has a tolerance zone, which is the gap between desired expectations and minimal expectations. The tolerance zone of service quality significantly varies, while few customers have very narrow zones of tolerance, whereas other customers allow a greater range of service quality. Various factors drive the tolerance limits, like pricing, with premium pricing customers tend to be less tolerant of poor service as the zone of tolerance decreases because the adequate or minimum service level shifts upward. LeBlanc and Nguyen (1992) concluded that service quality of bank is the top most significant factor that impacts the preference of a bank brand over others. Quality can be identified and assessed as belief claims or attribute performance (Churchill and Suprenant, 1982). Considerable evidences are there to support that satisfaction affects future choice. Fornell and Wernerfelt (1987, 1988) experimented that satisfaction leads to improved customer loyalty, while, Boulding and colleagues (1993) and Rust, Zahorik, and Keiningham (1994, 1995) established that service quality satisfaction leads to higher repurchase intent, as well as willingness to recommend and willingness to talk positively about a product. Researchers have established that service quality and satisfaction will trigger the decision of a customer switching (Bitner, 1990; Zeithaml, Berry, and Parasuraman, 1996).
Thus, we find that there is an established relationship between service expectations and service gap, leading to choose. In following sections, we shall try to review the existing work on reference groups and their relationships on choice or if any on the service expectations. How ‘country of origin’ has relationship with service quality and choice of service.
2.2 EXPECTED SERVICE QUALITY AND GROUP INFLUENCE
In most consumption including service, customers prior to consumption are likely to seek or take in information from several different sources (Coile and Howe, 1999, Zeithaml 1981). They may touch base a retailer, ask a close group member like good friend and family or record advertising to find service. Other resources for service related information can be possibly from unsolicited comment from a colleague regarding a service that was performed well. This section talks about mostly the possible connection of one interior and three exterior factors that affect both desired service and expected service objectives: (1) explicit service promises, (2) implicit service promises, (3) word- of-mouth communications and (4) experience, centering specifically on implicit service offer, WOM and previous experience (Prugsamatz et al. 2006, Zeithaml et al., 1993)
Implicit service claims are service-related cues apart from explicit assurances that lead to inferences in what the service should and would be like. These quality cues are dominated by price and the tangibles from the service. Customer who continues to be at a five-star hotel will probably desire and anticipate an increased standard of service than from a hotel with less impressive facilities (Zeithaml et al., 1993).
Word-of-mouth communication in shaping anticipations of service is well researched (Davis, Guiltinan and Jones, 1979). These formal or casual statements created by individuals or teams apart from the service agency convey to possible customers the service will end up like and effect both expected and desired service. Word-of-mouth communication are usually considered reliable and impartial as an information source, there is also significance predicated on the source. WOM is commonly very important in services that are difficult to judge before purchase and straight experiencing them, credited to insufficient tangibility. Experts (including consumer reviews, relatives and buddies) are also word-of-mouth options that make a difference the degrees of desired and forecasted service. The effect of WOM information shows on these devices has customarily been mentioned by types of social influence (e.g. Bansal and Voyer, 2000;; Cohen and Golden, 1972). Through this stream of research, they may have often been suggested that communal or social impact can be categorized as either informational or normative impact (Deutsch and Gerrard, 1955). WOM can operate through both channels: Informational impact occurs when information is accepted as evidence reality. Alternatively, normative impact functions through conformity, meaning the average individual conforms to the verbalized targets of relevant others. How strongly a WOM suggestion affects the receiver's behavior or action therefore depends upon the quantity of informational and normative affect exhibited. Especially two source characteristics, competence and similarity, have been learned and analyzed in earlier research as deciding the social effect, and therefore, the consequence of WOM recommendations.
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- Sankalpa Sen (Author), 2017, Effects of Reference Groups and Country of Origin on the Relationship of Service Quality Expectations and Choice of Brands, Munich, GRIN Verlag, https://www.grin.com/document/434334