Relationship between Service Quality and Customers Satisfaction

In the case of Jawwal (Palestinian Cellular Communications Co)

Michael Tanas

Supervisor:

Mr. Harry Meijer

Thesis proposal

25-May-2010

Background:

In the recent year, the telecommunications industry has become a dynamic service industry subject to increase competition with huge growth potential (Graack, 1996). In addition, in many countries the number of mobile subscribers has overtaken the number of fixed-line subscribers (Fink et al., 2003). Thus understanding the strategic behavior of the telecommunication companies has attracted many academic literatures recently. Currently the number of telecommunications companies operating in Palestine is five; one is called ‘Paltel’ which is the national telecommunications provider that offers the fixed-line telecommunication. The second company that has been found in Palestine is called ‘Jawwal’ which the biggest company that offers cellular communication in Palestine. The third one is called ‘Hadara’ which promoted by a leading provider of Internet service in Palestine, with more than 60% of the market of Internet services in both retail and corporate sectors. The fourth one is called ‘Palmedia’ which is a dynamic multimedia production and broadcast service provider. These four companies go under the Palestinian Telecommunication Group companies, while the fifth one is called ‘Wataniya’ which is a new mobile company that launched recently in Palestine and it is a major competitor for Jawwal because both of them are mobile companies and offering cellular communication in Palestine. The high competition between the communication companies in Palestine especially between Jawwal and Wataniya has forced these companies to change their strategy behavior in order to gain and improve their competitive advantage.

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In this emerging market, those companies are forced to consider how to satisfy and create loyal customers and transfer service quality as it perceived from the customer perception, because these days one of the key challenges for organizations is how to manage service quality which reflects a great importance to customers’ satisfaction.

The purpose of this study is to gain better understanding of the service quality dimensions that affect customer satisfaction from customer perspective. Based on detailed literature review, some service quality dimensions were selected to be tested in Jawwal Telecommunication Company that operating in Palestine and its relationship with customers in order to explore the relationship between service quality and customer satisfaction.

Many researchers and academicians have investigated the relationship between service quality and customer satisfaction, and how to define and assess service quality perceived by customer. (Cronin and Taylor, 1992; Bolton and Drew, 1991; Oliver, 1993; Zeithaml, Berry and Parasuraman, 1993). Bitner and Hubbert (1994) defined service quality as a general attitude before the service, and when we measure perceived quality, there is a difference between what the customers expect and what they received, so according to Oliver (1997,p.188) customer satisfaction and service quality are not equivalent because they have different operating levels.

This section will provide the background of the research area which contains general background of the service quality, customer satisfaction and the relationship between both of them. Moreover this section will provide a clear idea for the importance of service quality and customer satisfaction and how to measure service quality.

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1.1.2 Definition of Quality

Various definitions have given by researchers on quality in particular areas like; manufacturing of products and services. However, there is no universally accepted definition of quality, but most of these definitions have been found to be correlated to each other. Many researchers have agreed that quality is in the eye of the customers; it can be seen and can be measured. While Garvin (1984) has defined the quality by classified it into five major groups, which are; Intuitive that means something understood spontaneously and not easy to communicate such as beauty. The second group is Product-based which means the quality in the components and characteristic of a product that can be measured and have objective characteristic. The third group is User-based which means that the customer satisfaction on the product. The fourth group is Manufacturing-based which means product conformations to design specification or conformance to requirement. The last group is Value-based which means the good value for the price of product. Parasuraman et al., 1995 have given the definition of quality as meeting or exceeding customers’ expectation. Zero defect (Crosby, 1979), conformance to requirement (Crosby, 1979), performance over expectation (Besterfield, 1999). However, despite there is no one single definition of quality, but there are common basic definition of quality as mentioned by Geotsch and Davis (2003), who figured out the common definition of quality and define it as : “a dynamic state associated with products, services, people, processes, and environments that meets or exceeds customer expectation”.

1.1.3 Service Quality

Service quality is an interesting topic for researchers for many decades and doesn’t have universal definition yet. Wisnieweski (2001) has argued that, by not having overall agreement among the literatures and facing difficulties in defining and measuring it. There are too many different definitions have been given for quality service. According to Sasser et al. (1978), service quality is determined of how the received quality matches customers’ expectations. Parasurman et al. (1985) defined service quality as “the global evaluation or attitude of overall excellence of service”. In other words, service quality is the difference between customers’ expectation and perception of service quality delivered by service firm. However, despite the difficulties in giving one definition for quality service, we can find common definition which is “The difference between customer expectations of service and perceived service” (Parasurman et al., 1985; Lewis and Michelle, 1990; Asubonteng et al,. 1996; Nitecki et al., 2000; Wisnieweski, 2001; Newman, 2001). Therefore when the received service is greater than customer’s expectation, then customer satisfaction occur, while when the received service is less than expectation the customer dissatisfaction occur (Parasurman et al., 1985).

Furthermore, measuring quality service is very important before and after changes in order to improve delivery of product and service. However, there is disagreement and no consensus about how to measure quality, but one common approach for measuring service quality is called ‘SERVQUAL’ has been found which developed by Parasuraman et al. (1985, 1986, 1988, 1991, 1993, 1994; Zeithaml et al., 1990). This method has been chosen to be studied and applied in this research in order to compare customers’ expectations before a service encounter and their perceptions of the actual service delivered in Jawwal.

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Parasuraman et al. (1994) has developed the SERVQUAL and stated that it is the dominant method to measure customers’ perception of quality, which has five dimensions as the following:

Tangibles. “Physical facilities, equipment and appearance of personnel”.

Reliability. “Ability to perform the promised service dependably and accurately”.

Responsiveness. “Willingness to help customers and provide prompt service”e.

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Assurance (“including competence, courtesy, credibility and security). Knowledge and courtesy of employees and their ability to inspire trust and confidence”.

(5) Empathy (“including access, communication, understanding the customer). Caring and individualized attention that the firm provides to its customers”.

1.1.4 Customer Satisfaction

Customer satisfaction is a key factor of success for any business, and it is essential for building long-term customer relationships (Patterson et al. 1997). It can be defined as when the customers’ expectation of the service provided matches their perception of the actual service received (Sasser et al. 1978; Groonroos 1982). Customer satisfaction is an important instrument to create and maintain loyal customers (Schoenbachler et al., 2004), and as a result for loyal customers, contribute towards high repeated purchase (Law& Hui, 2003), which means increasing revenues and profits. Bitner & Zeithaml (2003) stated that satisfaction is the customers’ evaluation of a product or service in terms of whether that product or service has met their needs and expectations. Thus understanding factors that affect customer satisfaction has become paramount aspect for all firms that provide services and products.

For the importance of customer satisfaction in business, an intensive emphasis on studying and understanding this area in business and academia alike has been arisen. A Common agreement between numbers of literatures about the relationship between service quality and customer satisfaction, and their findings were that there is a strong relationship between both of them. Spreng and Mackoy (1996) stated that service quality guide to customer satisfaction, while Sureshchandar et al., (2003) and Lin (2003) emphasized that these two are different from the customer point of view and when the customers see that the perceived performance exceed their expectation then they will be satisfied, but if the perceived performance is less than their expectation then they will be dissatisfied.

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1.2 Problem Statement:

Understanding customer’s needs become an important issue in the competitive market place. In that sense, organizations started to move from product centric to the customer centric position. Nevertheless, satisfaction is also a great interest to practitioners because of its important effect on customer retention (Patterson et al, 1997). While retention is the major challenge because customers can easily switch from service provider to another at low cost (liu, 2003). So it is very important to study the determinants of customer satisfaction (Van, 2001).

My research area is Jawwal company activities and it’s transactions with its customers. Jawwal company is the first Palestinian Provider for communication services, it helps all people to communicate through the latest technology, and was the only mobile communication provider in Palestine in the West bank and Gaza until beginning of the year 2010 when a new company called Al Watanieh telecommunication has been found and started taking form the market share.

Due the hard competition with the new company, Jawwal has lots of problems with it’s customers that they got dissatisfied and start to shift to the new company. There are big differences between perceived performance and expectation from customer’s point of view that make them dissatisfied

.

It is important that Jawwal provides its customers with high quality service to survive in the highly competitive telecommunication industry business. Thus Jawwal needs to understand the attributes that customers use to judge service quality and monitor the service performance. Many studies had identified the key service quality dimensions in other business industries and the relationship with the customers satisfaction, but none of literature has investigated service quality in telecommunication in Palestine, therefore more researches is needed to determine the dimensions of service quality and needed to be conducted in different industries and in different countries (Zeithaml et al. 2000).

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1.3 Research Objective:

Based on the problem area discussion my research objective is formulated as follows:

To gain better understanding of service quality dimensions that affect customer satisfaction, in case of Jawwal.

1.3.1 Research Question:

Based on the problem area discussion my research main question is formulated as follows:

What are the service quality dimensions in Jawwal operations and how do they affect customer’s satisfaction?

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Research sub-questions:

How to measure the service quality and customer satisfaction?

How can the relative importance of the service quality dimensions can be described for Jawwal in relation with the satisfaction.

1.4 Research Scope

As the aspect of this chosen research problem is too broad, I will narrow down the focus for a specific area. The purpose of this research is to gain better understanding of the service quality dimensions that affect Jawwal customer satisfaction from their perspective. In the second chapter, I will try to give complete literature about service quality and customer satisfaction, in order to make it easier for the reader to understand the research and explain the proper context in a specific area.

1.5 Disposition of the research

This research is divided into five chapters; the first one is containing the background of the research area, a discussion about the problem statement, the research objective and the main question. Then the second chapter is containing the literature review and related previews studies about the research topic. Chapter three is containing the methodology and the research approach. In chapter four I will present the collected data and contains the analysis of these collected data after the collecting process. Finally, chapter five will contains final conclusion and express the limitations that have faced this research, and the implication for further research in the future about this topic.

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