1. REVIEW OF LITERATURE

Review of literature is the most useful and simple method of formulating the research problem.

The researches done by previous researchers are reviewed and their usefulness is evaluated to

serve as basis for further research. Thus researcher reviews and builds upon the work of others.

The reviews that are collected by the researcher should give an insight into the field under study.

The reviews must explain the need and scope of the study under consideration.

Sasser et al. (1978) has defined services as commodities that cannot be stored or disappear in

use, or as activities that require personal contact. The distinct characteristics of services are

intangibility, perishability, heterogeneity of the product, and simultaneity of production and

consumption Two economic units are required for a service to be produced – the consumer and

the producer. While the consumer cannot retain the actual service after it is produced, the effect

of the service can be retained. Managing a service operation requires the manager to understand

the service concept, service delivery system, and service levels. As the consumer has a key role

in the definition and evaluation of all three elements, it is imperative that service managers have

a clear understanding of consumer expectations and perceptions. Services may be provided by

private or public agencies. These characteristics enhance the importance of certain marketing

strategies that are unique to services marketing, such as service customization, managing

evidence, making the service tangible, and synchronizing supply and demand patterns.

Service quality is more difficult for the consumer to evaluate than goods quality. Perceptions of

service quality result from a comparison of consumer expectations with actual service

performance. Quality evaluations are not made solely on the outcome of a service; they also

involve an evaluation of the process of service delivery.

Parasuraman, Zeithaml and Berry (1985) emphatically pointed out that the concept of quality

prevalent in the goods sector is not extendable to the services sector. Being inherently and

essentially intangible, heterogeneous, perishable, and entailing simultaneity and inseparability of

production and consumption, services require a distinct framework for quality explication and

measurement.

As against the goods sector where tangible cues exist to enable consumers to evaluate product

quality, quality in the service context is explicated in terms of parameters that largely come

under the domain of ‘experience’ and ‘credence’ properties and are as such difficult to measure

and evaluate (Parasuraman, Zeithaml and Berry, 1985; Zeithaml and Bitner, 2001).

One major contribution of Parasuraman, Zeithaml and Berry (1988) was to provide a terse

definition of service quality. They defined service quality as ‘a global judgment, or attitude,

relating to the superiority of the service’, and explicated it as involving evaluations of the

outcome (i.e., what the customer actually receives from service) and process of service act (i.e.,

the manner in which service is delivered). In line with the propositions put forward by Gronroos

(1982) and Smith and Houston (1982), Parasuraman, Zeithaml and Berry (1985, 1988) posited

and operationalized service quality as a difference between consumer expectations of ‘what they

want’ and their perceptions of ‘what they get.’ Based on this conceptualization and

operationalization, they proposed a service quality measurement scale called ‘SERVQUAL.’

The SERVQUAL scale constitutes an important landmark in the service quality literature and

has been extensively applied in different service settings.

Boulding et al. (1993) perceived the dimensions of service quality as a function of a customer's

prior expectations of what will and what should transpire during a service encounter, as well as

the customer's most recent contact with the service delivery system. These perceptions of quality

dimensions form the basis for a person's intended behavior. Their findings suggest that the two

different types of expectations have opposing effects on perceptions of service quality and that

service quality perceptions positively affect intended behaviors.

Zeithaml et al. (1993) explored the gap between expectations and perceptions to better

understand expectations as they pertain to customer assessment of service quality and to extend

the theoretical work that exists in the customer satisfaction literature. Based on their study, the

gap between customer expectations and perceptions as proposed by Parasuraman et al. (1985)

can be conceptualized to reflect two comparison standards: desired service which reflects what

customers want, and adequate service which indicates the standard that customers are willing to

accept.

The comparison between desired service and perceived service or the level of service customers

believe is likely to occur, called perceived service quality (PSQ) is the perceived service

superiority gap. The comparison between adequate service and perceived service, called PSQ

Gap 5 is the perceived service quality adequacy gap. The smaller the gap between desired service

and perceived service, the higher the perceived superiority of the firm. The smaller the gap

between adequate service and perceived service, the higher the perceived adequacy of the

service.

Lowndes and Dawes (2001) have found that Service quality is commonly thought to comprise

of five generic dimensions - responsiveness, assurance, tangibles, empathy and reliability. These

dimensions form the basis for service measurement tool SERVQUAL. This tool predominantly

focused on customer perceptions and expectations of quality and helps the organizations to

improve upon their service quality resulting in greater customer retention.

Jain and Gupta (2004) have done a comparative analysis of two major service quality

measurement scales: SERVQUAL and SERVPERF. An ideal service quality scale is one that is

not only psychometrically sound but is also diagnostically robust enough to provide insights to

the managers for corrective actions in the event of quality shortfalls. This study assesses the

diagnostic power of the two service quality scales. Using data collected through a survey of

consumers of fast food restaurants in Delhi, the study finds the SERVPERF scale to be providing

a more convergent and discriminant valid explanation of service quality construct. However, the

scale is found deficient in its diagnostic power. It is the SERVQUAL scale which outperforms

the SERVPERF scale by virtue of possessing higher diagnostic power to pinpoint areas for

managerial interventions in the event of service quality shortfalls. SERVPERF scale should be

used for assessing overall service quality of a firm because of its psychometric soundness and

greater instrument parsimoniousness. One should employ the The SERVPERF scale should also

be the preferred research instrument when one is interested in undertaking service quality

comparisons across service industries.

Arasli et al (2005) has analyzed and compared service quality in the commercial banking sector

of a small island economy – Cyprus. The author with others investigated the relationship

between overall bank customer satisfaction in the Turkish- and Greek-speaking areas of Cyprus

and positive word-of-mouth about their banks. There is disparity in the banking sector of a

divided Cyprus, where banks in the South have undergone significant restructuring before EU

accession and banks in the North are affected by the economic crisis and need to restructure if

they want to join the EU.

After descriptive and factor analysis, multivariate regression was used to estimate the impact of

service quality dimensions on overall customer satisfaction and word of mouth. 

It was found that the responsiveness dimension failed to load and thus the SERVQUAL scale

proved to be of a four-dimensional structure in this study. Research results revealed that the

expectations of bank customers in both areas were not met and that the largest gap was found in

the empathy dimension. The assurance dimension had the largest influence on customer

satisfaction and overall satisfaction of bank customers in both areas of Cyprus had a positive

effect on their word-of-mouth. The study helped the banks in both areas of Cyprus to redefine

their corporate image to one that is customer-focused and driven by service quality.

Prajapati and Kachwala (2006) in their study have found out that the delivery of information

i.e. knowledge transmission in the case of Management Education Institutes (MEI) is intangible

in nature. Therefore, the inputs in terms of delivery of this knowledge - faculty, equipment and

the entire environment and infrastructure are very important for quality.

A gap was found between the quality rendered by faculty and service provider, and quality

required by students. It is essential to understand the exact quality required by the students to

develop a course and curriculum that suit their requirements. Service quality needs to be

quantified and thus it can be described in terms of objective and perceptual characteristics:

Objective characteristics include things like, lecture time, wait time, etc., and can be easily

quantified. Perceptual characteristics on the other hand, depend on the students' perceptions,

which include dimensions of service quality based on the SERVQUAL and other service quality

instruments. The study encompassed Business Schools in Mumbai as perceived by students are

evaluated.

The questionnaire is on the basis of a hypothesized model for service quality. Factor analysis of

the responses helped to develop a working model for the perceived service quality factors in

Management Education Institutes. This helped in identifying the improvements in Service

Quality in Management Education Institutes.

Cauchick Miguel et al (2007) have highlighted the fact that competitiveness and search for

profits have called for more attention towards customer’s satisfaction and increased

organizations interest in service quality.

SERVQUAL technique is applied on a multinational company service chain including one

hundred shops located throughout the country, to assess quality service dimensions that are

delivered through the perspectives of managers and customers. It was found that the certain

quality dimensions and characteristics call for managerial attention. Responsiveness and

assurance were found to be the most relevant to shop managers and customers, respectively.

Quality improvement initiatives were proposed to enhance the service rendered by the car repair

shops. The paper concludes that there are differences among the perspectives of shop owners and

customers with regard to quality dimensions.

Hii Geng Hing (2007) has examined Service Quality (SERVQUAL) variables from the

perspective of hotel guests in Sibu. Since Sibu is an emerging market for tourism industry so the

information obtained from hotel guests can be utilized to attract more guests. Stanley has used

Gap 5 (Gap between expected service and perceived service) and factor analysis to analyze the

data obtained in order to determine satisfaction and perception of the guests. Data obtained from

189 respondents revealed a negative Gap 5 perception and a rich expectation and perception

factors. Recommendations for managers and future studies are presented.

Saravan and Rao (2007) have highlighted that in service firms the practitioners are interested to

know the customer perceptions of service quality for identifying shortfalls and improving service

delivery. This study has analyzed the discrimination among the three groups (customer oriented,

employee oriented and technology oriented) of overall service quality from the customers’

perspective.

The results indicate that both the technological factors and the people-oriented factors appear to

contribute more in discriminating the three groups of overall service quality. Further, the service

quality indices in the Indian automobile service sector as a whole indicate a satisfactory

performance.

Swaid and Wigand (2007) in their study have found that to satisfy and retain customers the

organization has to offer a superior service quality. The study indicates that the key dimensions

of ecommerce service quality are website usability, information quality, reliability,

responsiveness, assurance and personalization.

Secondly customer satisfaction is influenced mostly with the perception of reliability, while

customer loyalty is affected by the perception of assurance and customer retention is predicted

by the customer satisfaction index.

Rajagopal (2008) has analyzed the impact of market orientation strategies and performance of

customer services on customer acquisition, retention and sales of automobiles which reveals

overall performance of automobile dealers in Mexico. The study comprehends understanding on

customer-dealer relationship in the automobile market segment referring to key factors which

establishes service quality encompassing tangibility, responsiveness, trust, accuracy and

empathy. It was found that the customers perceive better quality of relationship in a given frame

of functions that are performed effectively by the dealer lowering the extent of conflicts thereof.

High conformance quality services of dealers and value added customer relationship to offer

high customer satisfaction develop life time customer value and strengthen the customer-dealer

relationship.

According to vavra (1995), quality is consistently delivering products and services that fully

meet consumer needs and expectations. Quality is defined by stonebraker and leong (1994) in the

following terms: product or service quality requires a total system, which identifies customer

requirements, which designs the product/service to those requirements and which establishes a

production or service delivery system to produce in conformance with the specifications.

According to woodruff (1997), customer value is: a customer’s perceived preference for and

evaluation of that product attributes, attribute performances, and consequences arising from use

that facilitate (or block) achieving the customer’s goals and purposes in use situations.

Vandermerwe (1996) makes three assumptions regarding customer value:

1. Value is not what goes into a product, but what a customer gets out of it.

2. A customer gets this value out over a period of time, rather than at a point in time.

3. Value happens in the customer's space rather than in supplier’s space, where only costs

accumulate. According to naumann and giel , becoming market driven means identifying market

growth, market attractiveness, and target markets, while becoming customer driven means using

the customer to drive continuous improvement, organizational reinvention, and radical redesign.

When a company is customer driven, it means that the customer is the one to decide on the

supplier's value added processes. Quality work does not mean quality service (maister, 1997).

According to brown (1992), customers prefer organizations that deliver quality service, and

suppliers can charge premium for quality services. Early research (grönroos, 1982) suggests that

customers access service quality by comparing what they feel a seller should offer and compare

it against the seller's actual service performance.

Quality control and marketing must take place during service production and consumption.

Grönroos (1988) has identified a list of six criteria of good perceived quality professionalism and

skills, attitudes and behaviour, accessibility and flexibility, reliability and trustworthiness,

recovery, and reputation and credibility. The first is outcome-related, reputation and credibility

are image-related, and the rest are process-related. Storbacka and holmlund note that relationship

quality can be seen as an antecedent to many other perception concepts, for example, value,

satisfaction, trust, and commitment. The service quality model of parasuraman (1985) identified

five key gaps that can cause problems in service delivery. These gaps are:

1. Research gap – between customer expectations and management’s perception of that

expectations.

2. Planning and design gap – between management's perception of what the customer wants and

the designed capabilities of the system that management develops to provide the service.

3. Implementation gap – between what the service system is designed to provide and what it

actually provides.

4. Communication gap – between what the service system provides and what the customer is told

it provides.

5. Reality gap – between customers' service expectations and their perception of that service.

A company should always pay attention to the customer perceptions and expectations. If there is

a difference between customer expectations and perceptions, there is a gap and in practice, it

does not matter whether the gap is based on facts or feelings, but how the customer perceives

service matters. In studies of customers' expectations of service quality and their actual

experiences, the following five elements are seen as the most important to a buyer (gitomer,

1998, heskett et al. 1990, parasuraman and grewal.

Reliability – ability to provide what was promised

Assurance – knowledge and courtesy of employees and their ability to convey trust and

confidence.

Tangibles – physical facilities, equipment and the appearance of the personnel

Empathy – caring and individual attention

Responsiveness – willingness to help and provide prompt service.

Two critical dimensions are reliability and responsiveness. Generally, reliability is the most

important for customer when they assess service. Responsiveness means anticipating problems

before they occur, rather than fixing problems quickly. Companies must work at making sure

that problems will not occur at all. Once the customer is sure about the quality of the product and

responsiveness of the employees, the probability of a customer becoming a loyal customer

increases.

According to friday and cotts (1995), customers evaluate services based on the purpose of the

service, necessity, importance, results, cost, and risk. In order to have appropriate expectations, a

customer should have a full picture of the purpose of a job. Depending on the customer’s

perception, the necessity of a service can vary. If a service is necessary to help customers

perform their jobs, they have high expectations for the job. If a customer sees a risk associated

with dealing with the company, their perception of the added value can be minimal.

Ghobadian et al. (1994) posit that most of the service quality definitions fall within the

“customer led” category. Juran (1999) elaborates the definition of customer led quality as

“features of products which meet customers’ needs and thereby provide customer satisfaction.”

As service quality relates to meeting customers’ needs, we will be looking at “perceived service

quality” in order to understand consumers (Arnauld et al., 2002). Grönroos (1984) and

Parasuraman et al., (1985) looks at perceived quality of service as the difference between

customers’ expectation and their perceptions of the actual service received. Other researchers

look at perceived service quality as an attitude. Arnauld et al., (2002) defined perceived quality

“whether in reference to a product or service” as “the consumers’ evaluative judgment about an

entity’s overall excellence or superiority in providing desired benefits” (p. 327). Hoffman &

Bateson (2001) defines service quality as an attitude “formed by a long-term, overall evaluation

of a performance”. Attitude is defined as “a consumer’s overall, enduring evaluation of a concept

or object, such as a person, a brand, or a service.”

(Arnauld et al, 2002) Service quality as “an attitude” is consistent with the views of Parasuraman

et al., (1988), Cronin & Taylor (1992) & Sureshchandar et al., (2002). Basis of the view is

elaborated by the latter: “As perceived service quality portrays a general, overall appraisal of

service i.e. a global value judgment on the superiority of the overall service, it is viewed as

similar to attitude.” (p. 364).

Feinburg & de Ruyter (1995) pointed the importance of adapting the definition of service quality

in different cultures. Ueltschy & Krampf (2001) contended that differences in culture affect

measure of quality in a service sector. They encapsulated service quality measures as “culturally

sensitive” and “may not perform properly or comparatively in a culturally diverse group

domestically or abroad” (p.22). Cultural factors are said to have greater influence on people’s

evaluation of services than on their evaluations of physical goods due to involvement of

customer contact and interaction with employees while a service is delivered (Mattila, 1999).

Feinburg & de Ruyter (1995) postulated that the differences “require adapting service quality to

an international setting” (p. 4). Furthermore, the service quality dimensions that are critical most

to consumers vary according to culture and industry (Winsted, 1999).

It is difficult to measure service quality as compared to good’s quality. The difficulty to measure

is due to fewer tangible cues available when consumers purchase services (Parasuraman et al.,

1985), fewer search properties, but higher in experience and credence properties (Zeithaml, 1981

in Parasuraman 1985), as compared to goods.

It also requires higher consumer involvement in the consumption process (Grönroos, 1984).

Researchers operationalize the service quality construct either as a gap between expectation of

service and perceived performance of service, or just perceived performance alone (Hurley and

Estalami, 1998). On the other hand, service quality dimensions are seen as the criteria to assess

service quality (Parasuraman, Zeithaml, and Berry, 1985). Feinburg, and de Ruyter (1995)

supported this idea as they postulate that the dimensions are instruments for measuring perceived

service quality. They also posit that consumer-perceived service quality is usually seen as a

multi-dimensional construct.

The earliest research on service quality dimensions was done by Grönroos (1984). He found that

the perceived quality of a service is affected by the experience that the consumer went through

for a service. Therefore, he encapsulated the perceived quality of a given service as the outcome

of an evaluation process; a comparison between the consumer expectations of the service with

his perceptions of the service he has received. He also pointed that expectation is influence by

traditions, ideology, word-of-mouth communication, and previous experience with the service

and the consumer’s perception of the service itself determines his perceived service.

However, he did not discuss the relationship between perception and expectation and how it

influences service quality.

Grönroos (1984) found that “service quality” comprises of three global dimensions. The first

dimension is the technical quality. This dimension refers to the outcome or what is delivered or

what the customer gets from the service. For a retail store, technical quality may include the

range of products offered and the availability of parking space. The next dimension is the

functional quality which refers to the manner in which the service is delivered or how it is

delivered. Customers of a retail store will measure whether the salespeople are friendly or

whether products are easily returnable. Finally, the last dimension is the corporate image. The

store’s image is built by mainly both technical and functional quality and to some extent other

factors like the traditional marketing activities.

The most popular service quality model in the 1990s (Robinson, 1999) is the model by

Parasuraman et al., (1985). Their model supported Grönroos’ findings on as the models are based

on these three underlying themes: “1) Service quality is more difficult for the consumer to

evaluate than goods quality; 2) Service quality perceptions result from a comparison of consumer

expectations with actual service performance; 3) Quality expectations are not made solely on the

outcome of the service; they also involve evaluations of the process of the service” (Parasuraman

et al.,1985, p. 42)

Unlike Grönroos (1984) who used global measure of service quality, Parasuraman et al. (1985)

identified items or criteria in measuring service quality. They argued that consumers used similar

criteria irrespective of the type of service in measuring service quality. They then group these

criteria into 10 key categories which they labeled as “service quality determinants” (p. 48). The

determinants are reliability, responsiveness, competence, access, courtesy, communication,

credibility, security, understanding/knowing the customer, and tangibles. Later in another

research (Parasuraman et al., 1988), into only five dimensions - tangibles, reliability,

responsiveness, assurance, and empathy.

Physical Aspects

Service is said to be distinguished from goods due to its intangibility (Santos, 2002). The

tangibility aspects of a service have a significant effect on perceived service quality (Santos,

2002). The tangibility importance varies according to types of service (Santos, 2002). For a retail

store, the tangibility aspect will be critical as the retailers offer a mix of merchandise and service

quality (Dabholkar et al., 1996). Specifically, the physical environment plays an important role

in the service encounter of the grocery industry (Keillor, et al., 2004).

The importance of physical environment in a service setting is due to its ability to influence

consumer attitudes(Koernig, 2003), behaviour intention (Keillor, et al., 2004) and behaviour

(Bitner, 1992; Koernig, 2003). As customers are involved in the production and consumption

process of a service conducted within a physical environment, the physical environment will

have a deep impact on customers’ perception of service experiences (Bitner, 1992). Bitner

(1992) also noted that physical environment is often used as cues of a firm’s competences and

quality by consumers before a purchase. Specifically, proper layout in a store will reduce

shopper’s search time (Sirohi et al., 1998), colour combine with lighting were suggested to

“affect consumers’ cognitive representation and affective reaction” (Babin et al., 2003, p. 549),

and a light and pleasing scent affects shoppers’ perceptions of a shopping environment in which

the latter will have a significant effect on shoppers’ mood (Chebat & Michon, 2003).

Researchers have given several names with different interpretations to the “physical” elements of

service quality measure. Dabholkar et al. (1996) used the term “physical aspects” to refer to the

physical appearance of store and layout convenience. Parasuraman et al. (1988) called it as

“tangibles” adding appearances of staff besides physical facilities and equipment. Baker (1986)

and Santos (2002) acknowledged the appearance of staff as part of tangibles. They also added

existence of other customers in the service facility onto the interpretation. Bitner (1992) dropped

the social environment as listed by Baker (1986), Parasuraman et al.

(1988), and Santos (2002) but focus instead on the “built environment” or what she called as

“servicescape”. She categorized the servicescape to include ambient conditions, spatial layout

and functionality, and signs, symbols, and artifacts. Ambient conditions include colour, music,

temperature, lighting, and scent. Spatial layout refers to the arrangement, size, shape, and spatial

relationships of machinery, equipment, and furnishings.

Functionality refers to the capability of machinery, equipment, and furnishings to enhance

performance and achieve customer goals. Lastly, signs, symbols, and artifacts act as signals that

communicate information about the service place to customers.