Definition Of Customer Satisfaction Commerce Essay

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In highly competitive environment, company must be customer oriented and customer satisfaction. It represent a modern approach for quality in business life and serves the department of truly customer oriented culture and management. Modern management philosophy considers customer satisfaction as base line standard of performance and possible standard of excellence for any business organization.

There is growing managerial interest in customer satisfaction as a means of evaluating quality. Achieving higher customer satisfaction is widely believed to be the best indicator of the company's future profit. Customer satisfaction can be experienced in various situation and connection to both good and service. It is highly personal assessment that is greatly affected by customer expectation.

Parker and Mathew (2001) expressed that there are two basic definition of the concept of customer satisfaction. First approach defines satisfaction as a process and the second approach defines satisfaction as an outcome of a consumption experience. These two approaches are complimentary, and often one depends on the other.

Customer satisfaction is an evaluation of the perceived discrepancy between prior expectation and the actual performance of the product (TSE and Wilto, 1988, Oliver 1999). Satisfaction of customer with products and service of accompany is consider as most important factor leading towards competitiveness and success (Henning Thurau and Klee, 1997). Kotler (2000) define satisfaction as "persons feeling of pleasure or disappointment resulting from comparing a products perceived performance in relation to his or her expectation".

Satisfaction can be related to specific attribute and overall performance. It is attributed specific weather it related to specific product or service (Cronin and Taylor, 1992). This theory approach has origin in the discrepancy theory (Porter, 1961), and which argued that satisfaction is determined by the perception of a difference between some standard and actual performance.

The outcome approach of the customer satisfaction is defined as the end-state satisfaction resulting from the experience of consumption. This post consumption state can be an outcome that occurs without comparing expectations (Oliver, 1996); or may be a cognitive state of reward, an emotional respond that may occur as the result of comparing expected and actual performance.

Parker and Mathews (2001), expressed that attribution has been focused on the nature of satisfaction of the outcome approach which includes the following:-

Fulfillment: - the theory of motivation expressed that people are given by the desired to satisfy their needs (Maslow 1994), or by their behavior aimed at achieving the relevant goals (Vroom, 1964). However, satisfaction can be either way viewed as the end point in the motional process, thus customer satisfaction can be seen as the consumers fulfillment response (Rust and Oliver, 1994).

Emotion: - satisfaction is viewed as the surprise element of a goods or service purchase and or consumption experience (Westbrock and Reilly, 1983). This knowledge the input of competitive cognitive process but goes further by stating that these may be just one of the determinant of the effective "state" satisfaction (Park and Mathews, 2001).

State:-there are four frame works of satisfaction, which related to reinforcement and arousal 'satisfaction as pleaser result positive reinforcements, where the product or service is adding to arousal restate 'Relief' satisfaction result from negative reinforcement (Oliver, 1989), In relation to arousal low arousal fulfillment is defined as 'satisfaction as contentment' a result of the product or service performing adequately in an ongoing passive senses. High arousal satisfaction is defined as satisfaction as either positive (delight) or negative surprise, which could be shock (Rusy and Oliver, 1994).satisfaction is conceptualized as an over all customer evaluation of product or service based on purchase and consumption experience over a time period(Fornell ,1992)

Whether customer satisfaction is a process or an out come many definition conceptualize satisfaction as a process which is currently the dominant view held by most scholars (Oliver, 1980). The process perspective infesayzed that customer satisfaction is a feeling of satisfaction that result from the process of comparing perceived performance and one or more predictive standards, such as expectation or desires (Khalifa and Liu, 2002).

Another important view in customer satisfaction literature is whether satisfaction is cognitive or affective. Although most scholars, notable proponent of disconfirmation theories, they view satisfaction as a process, but the nature of dissatisfaction is cognitive assessment involving comparison of product /service offering from a service or goods provider against expectation. Other scholar opinion that the feeling of satisfaction represent an emotional or affective stage of mind that is formed through the process of delivery where customer encounter service experience that affect their emotion.

Satisfaction may be viewed as transactional or cumulative; on the other hand from a transactional-specific perspective, customer satisfaction is based on time, specific post, and purchase evaluative judgment of a service encounter (Hunt, 1977; Oliver, 1977). On the other hand, in cumulative final effect, customer satisfaction is conceptualized as an overall customer evaluation of a product or service based on purchase and consumption experiences over a time period (Fornell, 1992).

From the above definition customer satisfaction in insurance means the use of a policy product purchased for a cost, to the ultimate satisfaction of the buyer, when a claim is paid. The satisfaction is not fully achieved only when a product so purchased gives its full user, but it also stipulated that the product bought by the buyer give him the expected fruit i.e. peace of mind during the product cycle when it is in use by the customer.

Definition of Insurance

"Insurance is simply advice where by many people contribute to pool, so that a few who suffer loss may be compensated" (Sebiyam, 2005). Other scholars define insurance as equitable transfer of the risk of a loss, from one entity to another in exchange for payment (". Insurance, unlike most financial product is characterized by the reversal of the production cycle in so far as premiums are collected, when the contract is entered in to and claim and cost arise only if a specific event occurs" (IAIS, October, 2003).

An insurance policy may be broadly defined as contract under which the insurer agree, in return for a premium to indemnity the insured for loss suffered a loss as a result of the occurrence of specified event which cause the distraction, loss or injury of something in which the issued has an interest (http//.www.south Australia. Biclibrary insurance.pdf).

Types of Insurance

In Ethiopia Insurance Corporation (EIC) insurance services are categorized in to two. These are Long Term Insurance /Life Insurance and General Insurance /Non-life Insurance service.

Life insurance

Insurance that fall under life are classified in to two, namely temporary and permanent. Under permanent we have universal/whole life and endowment life insurance. Term deal with insurance of life for specific period in exchange for premium and factors to be consider under term are face amount, premium to be paid and length of coverage. Whole and endowment life insurance falls under permanent insurance which remain in force full policy matters, life saving, hospitalization, accident indemnity, burial and funeral expense plan are product life insurance (http// Insurance).

Non-Life Insurance

Non life insurance knows as property and casually insurance is the opposite of life insurance. An insurance policy against the protection of fire, burglar and consequential loss are all product of non-life insurance (http.// is insurance).

Player and Role of Insurance Service in the Industry.


Underwriting is the process of the eligibility of a customer in receiving quality. An insurance underwriter evaluate the risk and exposure of potential client, he/she decides of the risk of an applicant seeker on behalf of the insurance company; by determine if the particular insurance package would be of beneficial to the applicant as well as the insurance company. The role of an underwriter needs analytical and technical skill, a good communication skill and experience in research, not living out computer experience in research (http// insurance.php).


Claim are request made formally to an insurance company in return for payment based on the term of an insurance policy, they are carefully evaluated and gives the needed attention by claim staff that examine the policy, in addition responsible on handling claimant files their claim in order (http// insurance.php).

Loss Adjuster

A claim specialist who investigate claim on the behalf of insurance company and policy holder of an insurance policy is referred to as a loss adjuster. The loss adjuster work on a damaged property claim to determine the properly written off on insurance, review policies, get supporting documents to validate claim.

Insurance Agent and Brokers

An insurance agent referred to .representing on the behalf of an insurance company. And Insurance broker is an intermediary between an insurer and insured (http//www.myinsurance .guide -in insurance.php).

Risk Manager

Risk manager is said to be one who manager risk by assessing and quantify business risk, taking in to account control or measurer to reduce them: the risk manager evaluate risk which endangers the company's fund or capacity to pay claim (http// -in insurance.php).

Customer Satisfaction vs. Profitability

Customer satisfaction does have a positive effect on business organizations profitability. According to Hoye and Macinni (2001) satisfied customer form the foundation of any successful business as customer satisfaction leads to repeat purchase, brand loyalty and positive word of mouth.

Fornell (1992) showed that higher customer satisfaction help to achieve in to higher than normal market share growth, the ability to charge a higher price, lower transaction cost, and strong link to improve profitability. The higher the number of business conducted with a firm is directly related to customer satisfaction which leads to profitability and strongly associated with improved share of spending (Keiningham, 2005).

Some empirical study demonstrated that; customer satisfaction has greater influence on repurchase intentions and profit for service company ( 2000); customer satisfaction affects share of wallet (sow) positively (Broun and Scope, 2003); Keiningham etal,2003). Customer satisfaction leads to increase profit (Fecikova, 2004) and customer satisfaction is strongly associated with improved share of spending (Keiningham , 2005). Increase customer satisfaction level will leads to high customer retention rate, which is a key determinant for customer loyalty, which may also increase the expected profit (Rust and Zohorik, 1993).

Coldwell (2001) growth strategies international (GSI) performed a statically of customer satisfaction data encompassing the finding of over twenty thousand customer survey conducted in forty country by in to quest. The conclusion of the study is as follow:-

Total satisfied customer contributes 2.6 times as much relevant to company as a somewhat satisfied customer.

Total satisfied customer contributes 17 time as much revenue as somewhat dissatisfied customers.

Total dissatisfied customer decrease revenue at a rate to 1.8 times what a total satisfied customer contributes to a business.

Customer Satisfaction vs. Customer Retention

Retention is a commitment to continue to do business or exchange with a particular company ongoing bases (Keiningham, 2005), and the direct return effort is based on the customer benefit effect (Bonnet and Rundle, 2004). Clarke (2001) said that a business that focuses exclusively on consumer satisfaction runs the risk of becoming an undifferentiated brand whose customer believes only that it meets the lower performance criteria for the category. Long term customer retention in competitive market requires the supplies to go beyond mere basic satisfaction and to look for ways of loyalty that will help to protect compotator attack.

Consumer satisfaction has good feed back to the firm to answer the basic and key questions in term of customer needs and want. It is confirmed that retention issued are initially based on consumer satisfaction. As Bennet and Rundele -Thiele (2004) argue that consumer retention is the center to the development of a business relationship with respect to satisfaction. Wholesome survey and researcher confirm satisfaction as profitability driver and state that satisfied customer is a sustained customer (Zineldinm, 2000).

Customer retention brings some remarkable benefit such as low price sensitivity, higher market share, positive word of mouth, low-cost, high efficiency and high profitability (Reichheld.f, 1994). Furthermore, customer retention some times has assumed as assign of customer loyalty. Customer satisfaction is a positive related to customer retention and the effect varies by customer size and customers current level of satisfaction of customer (Zineldinm, 2000).

Customer Satisfaction vs. Customer Loyalty

High customer satisfaction will result in increase loyalty for the firm and that customer satisfaction will result in increasing loyalty for the firm that customer will less prone overture from competition (Fonell, 1992). This view also shared by Anton (1996) who said that satisfaction is positively associated with repurchase intention, likely hood of recommending a product or service, loyalty and profitability. Loyal customer would purchase from the firm over an extended time (Evan and Berman, 1997). Satisfied customers are more likely to be repeat customer (Paul and Baker- Prewitt, 2000).

Some scholar argues that Satisfaction influences the likelihood of recommending a department store as well as repurchase. But has no direct impact on loyalty (Sivadals and Baket-Previt, 2000). Thus satisfaction in itself will not translate in to loyalty. However, satisfaction will foster loyalty to the extent that it is a pure request for maintaining a favorable relative altitude and for recommending and repurchasing from the store. Once customer recommends a department store it fosters both retention and loyalty to wards that store. |company with satisfied customer have a good opportunity to convert them in to loyalty customer, who purchase from those firms over an extended period (Evan and Berman, 1997).

Loyalty depends on industry, culture and market behavior .The ultimate goal of all firm is to make further purchase .The relationship between loyalty and satisfaction is not simple .It is assumed that loyalty is an outcome of higher level of satisfaction but there are some instance that show the pre requisite for loyalty (is not always higher level of satisfaction) .It does not mean that dissatisfied customer satisfaction is not accurate indicator of loyalty. Satisfaction is not accurate indicator of loyalty. Satisfaction is necessary condition but not sufficient condition for of loyalty (Fonell, 1992).

Satisfaction and loyalty are two different face of the same coin .satisfaction is relatively more dynamic measure and is directed specifically at product or service attribute. On contrary loyalty is broad attitude, which is more static to ward accompany which may include both rational and emotional element and it is clearly affected by satisfaction.

Customer loyalty schemes brings some long term advantages and benefits through premium price, decrease cost, and increase sales volume of purchase .If the customer feels a strong identification with the company, he or she will stay long period of time .This can be due to other factors such as price, demand experience and habit, for instance total customer experience that create loyalty not promotion.

Generally customer satisfaction is a direct determining factor in customer loyalty, which in turn is central determinant of customer retention(Harkiranpal,2006).Therefore ,organization should always work to insure that their customer are at most satisfied with service and quality of product.

Profitability of organization







Figure:1- relationship between customer satisfaction, retention, loyalty with the profitability of organization

(Source adopted from Anderson and Mittal, 2000)

2.6. Customer satisfaction vs. behavior intention

Customer satisfaction impacts the behavior of customers in the number of way. First customer satisfaction is found to be a main determinant of customer retention (Zeitham et. al1996).and as researcher mentioned customer loyalty which in turn drives profitability and performance. Also, increase customer satisfaction and customer retention leads to improved profit, positive word of mouth, lower marketing expenditure (Reichheld.1996).

It must be pointed out that customer loyalty and retention are not always attributable to customer satisfaction .It is because a customer may not always attributable to customer satisfaction. It is because a customer may not satisfied with the service /product but may find it difficult to switch to a competitor simple because of the circumstance she /he is faced with this is usually common in most service content.

For example with insurance services, until the time period for a particular insurance policy or product a customer may have bought expires, the customer may be dissatisfied but will be forced to remain loyal to an organization ;it is a kind of forced loyalty by implication .loyalty is therefore affected by situational factors and switching cost.

Generally speaking it becomes descriptive and misleading to assess or use customer loyalty trend to conclude that customers of an organization are satisfied .instead it is better a company examines as a part of its customer satisfaction study, the switching intention and likely hood to recommend.

2.7. Customer Satisfaction vs. Employ Satisfaction

Researcher works have shown the importance and the link of employ satisfaction to the customer satisfaction. There is the positive relation between employee satisfaction and this is achieved in companies that practice employee motivation and loyalty (Hill and Alexander, 2000). They report that employees that practice employee motivation and customer satisfaction tend to be more flexible in their approach to their work; make fewer mistakes and use more initiatives.

Focikova (2000) conduct study on the index method for customer satisfaction measurement with chair in Slovakia and reported that the satisfaction of internal customer is one of the basic factors to satisfy customer .thus she suggested that employee motivation and loyalty can be achieved through daily leadership, top management communicate their expectation to the employee, development of competence, corporation and employee retention and good will working condition.

Generally best employee satisfaction needs good working condition that bring satisfied employees which leads to loyal employees and by preparing all this ,good production would be followed which influence on customer satisfaction and make them loyal and as mentioned before high profit is about customer retention .

Circle of satisfaction

Figure 1-circle of customer satisfaction

(Source adopted from Hill and Alexander, 2000)

2.8 Customer satisfaction and its consequence

Symanski and Henard (2000) said that many researchers have given more attention to the antecedent of satisfied customer than the consequences of dissatisfy customers. Service firm must therefore do something about it in order to provide good customer service enhance; customer loyalty. Service failure as possibly perceived by customer is a major concern for the service firm because of its potential effects on the service outcome (Gustafson 2009)

According to Broadbriddge and Marshall( 1995), consume can resort to so many different kind of action in setting dissatisfaction. For instance customer can take private or public action. Dissatisfied customers might have to take action or not to take action. Some customer refuses to do anything about their dissatisfaction about service encounters and service settings. Mostly negative words of mouth influence about so 50% of customer who get dissatisfied with the service is the main action of customer .Only two third of the these customer further choose to switch to competitor or give warning concerning their dissatisfied encounter .

Generally the consequence of not satisfied customer can be severe. Dissatisfied consumer can decide to:-

Discontinue of purchase the good or service

Complain to the company or to a third party and perhaps return their items.

Engage in negative words of mouth communication.( Hoyer and Madnnis 2001).

Dissatisfaction must be reduced because according to Laberbare and Mazursky(1983) satisfied influences repurchase intention whereas dissatisfaction has been seen as a primary reason for customer defection or dissatisfaction of purchase.

Discontinuity purchasing

Negative word of mouth

Post purchase behavior

Customer complain



Figure-3-consequence of customer satisfaction

(Source prepared for research purpose)

2.9 Factors that Affect Customers Satisfaction

Several researchers on customer satisfaction in the service industry identify important factors driving customer satisfaction (Colgate1992). For example Anderson and Sullivan (1993) conduct a study in Sweden and found that the level of customer satisfaction increases with level of perceived service quality. Colgate(1999)suggested that an increased level of customer satisfaction and loyalty are positive linked to a firms financial returns. Satisfied customers are likely to recommend their insurance to their friends and relatives. The author suggested the overall customer service, close relationship, and competitive fee and charges is top three deriver of customer satisfaction.

Parasamanet. al. (1985) argued that service quality involves not only the outcome but also the delivery process. The authors described service quality as a form of attitude that results from the comparison of consumer expectation with the service performance delivery furthermore service quality relates to satisfaction but the two things are not the same (Cronin and Tayler ,1992;parasuraman 1987) .

Customer from their overall satisfaction perception is based on four primary dimension; interaction quality, physical environment quality outcome quality and network quality. Further the service quality perception perceived by insurance customers are expected to influence their overall satisfaction value (price) is expected to have a moderating effect between service quality and intention quality ,physical environment, quality outcome and network quality respectively.

2.9.1. Perceived service quality

Service quality has been identified as an important contributing factor for financial organization to retain its customers (Enneu and Binks, 1990). In order to maintain competitive advantage within the industry and keep existing customers it is critical for financial industry to constantly improve their service quality (Avkiran1999). There is a direct relationship between service quality and customer satisfaction, complain behavior and commitment and conclude that service quality that leads to customer satisfaction.

2.9.2. Interaction Quality

Numerous insurance involves personal interaction therefore, researcher suggest that the interaction quality (the relation between staff and customer during service delivery) is important factor when customer evaluate service quality. (McDougall, Gordon Levasquen,1994). This author conceptualizes service quality from a technical and functional perspective suggested by Gronnroos (1984).

Dimension such as perceived price, core product, staff knowledge advice of offered efficiency in operation and accessibility also affect the service quality perception of consumer. Ojalso (2003) found out that the interaction during the service process have an effect on customers perception of service quality. Further ko and Pastore (2005) demonstrate the importance of interaction quality during the production and consumption of service due to high level of face to face communication.

2.9.3. Physical Environment Quality

Marketing researchers are concerned about the physical environment or non human factors that affect the customer perception of service quality (brand and Cronin 2001) Bitner (1992) reface to a non human factors as the services escape which is the service environment has significant impact on customers perception of overall service quality.

Leblance and Nguyens (1988) study show that the physical environment quality has a large impact on perceived service quality .There are five important service quality dimensions that the surrounding environment is one of the important diminutions used to measure overall service quality(Howcroff ,1993). This physical environment has a key role on customer satisfaction

2.9.4. Outcome Quality

McDougall, Gordan, Levesquar and Terrence (1994) describe outcome quality as the performance related aspects of service quality that are determines by; the skills and knowhow of the employees ability to solve problems when that occurs which leads to customer satisfaction.

McDougall and Levesque (1994) note that service quality is comprised of three updating damnations; process, outcome and the tangibles. Service quality using three criterions related to the process/ outcome perspective the subject /objective quality in United Kingdom (Blanch ard and Golloway ,1994) .

2.9.5. Network Quality

The rapid growth in the information technology and network system during the past decade has introduced major change in the global economy and business environment. Information technology development has increase the communication and transaction between branches in the industry. Technical innovation for insurance leads to time saving and improves service quality.

2.9.6 Perceived value

Research on the relationship between value/pricing and customer satsifaction has been widely conducted, Matzler,Wurtele andRenz(2006) describe the role of price as the determinant during the purchase and after the purchase process. Prior research in value (price) satisfaction relationship including pricing policy, money back guarantees (Heskette 1990). Low and fixed price and fair and honest pricing (Ortemeyer .The result of these studies are similar where "good" value (price) caused an increase in customer satisfaction. Value perceptions are considered to be the result of a cost benefit trade off(Zeithamls 1988) that compares the price customer have to pay with the quality they receive (Monroe,1990).

This causal relationship was also confirmed by other researchers in a number of empirical studies across various industries .For instance Fornell (1996) investigate the impact of value and perceived quality on overall satisfaction in seven major economic sectors in the US (including the financial sector).are Both value (price) and perceived service quality have a positive effect on overall customer satisfaction.

2.9.7. Corporate image

Image has been described as subjective knowledge (Boulding 1956) as an attitude and as a combination of product characteristics that are different from the physical product (Erickson Image was critical to service firms and to a great extent determined by customer's assessment of the service they receive .The author conceptualized. That Perceived service quality from three perspectives that includes image (Gronroos, 1984).

Bloemer, Ruyter and Peters (1998) find the image has clear positive influence on service quality perception. Similarly (2001) measures image by credibility (name repetition technological excellence and the ability to satisfy future customer's needs.

Customer satisfaction

Corporate image

Service quality

Perceived value

Network quality

Out come quality

Interaction quality

Physical environment

Figure 4-multi level of customer satisfaction (source adopted Brand and Cronin 2001)

2.10 customer satisfaction vs. Information Technology

Today consumer has many choose of products and service form companies across mutual channels. Greater use of the internet for vital communication entertainment and commercial has also made customer much more informed. This increase customer satisfaction with new technology has spawned a new bread of consumer capable of quickly finding and purchasing product online.

Now a day people use the internet to find and compare product. Server companies are taking advantage of this trend to make it even easier for consumer to buy from the lows provider that allow consumer to compare a wide range of insurance offering.

Cost reduction, improved organizational research and quality can be achieved through shared infrastructure of information technology play a key role. This is because now a day customer prefers to use their computer to get information about the business organization. Specially the insurance sector must build a data base about their client and reduce unnecessary dalliance because of old method of handling document.

2.11. Customer satisfaction index model

Prior to Symanski and Hanard (2001),Few studies had investigated the outcome of customer satisfaction. Understanding the outcome of customer satisfaction including customer loyalty (Bei and Chiao, 2001) and the intention to continue to do business with a particular provider remain relatively unexpected even though they are of central importance to marketers (Burnham

The Swedish satisfaction barometer (scsk) model established in 1989 was the first national customer satisfaction index model pertaining to purchase and consumed product and service (Fornell,1992).The concept defined the natural customer satisfaction index model requires a methodology with two properties (Fornell1992).

First the methodology must recognize that the customer satisfaction index and other model represent different type of evaluation that cannot be measure directly. To this end those customer should be seen as latent variables and these scored or index should be general enough to be comparable across firm industry sector and national.

Second Customer satisfaction must be measured in a way that not only account for consumption experience .But also is for word looking. Accordingly the customer satisfaction index is embedded in a system of cased and effect relationships.

Due to the success of the SCSB more and more nation and area has modified this model to construct different types of natural customer satisfaction index model. Some of the national indexes are the following.

American customer satisfaction index (ACSI), depend in mid-1990s, for insurance, has provided a basic from work for many other index model created else ware in the world however the related study have been mostly focused on measuring customer satisfaction indices for in five industry sectors and the ranking produced have been used for the purpose of advertising the concerned sectors and marketing. Few of the previous study in this field explored perceived quality factor that have an actual impact on customer satisfaction or sought to develop strategies for quality improvement. The higher customer expectation, leads to the higher the perceived quality; and the higher customer satisfaction likewise.

The European customer satisfaction index (ECS1) Model use six constructs namely, image, customer expectation, perceived value, Customer satisfaction and loyalty. These six factors are also conected through a casual relationship Image has a determinant influence on customer expectation and customer intern affect perceived quality of hard work or soft work. The European model eliminates the category of "customer complains" present in the original Acsi model. ECSI model proposed the following study on postal service. It consists of seven factors namely; image, hardware quality, customer service, quality of human ware, perceived value customer satisfaction and customer complain.

The Swiss index of customer satisfaction [SWICS] measure; three factors customer satisfaction, customer dialogs and customer loyalty (Burniham 2003). All the three factors exist in a casual relationship in which customer loyalty and customer dialog affected customer loyalty.

Most nation customer satisfaction index models such as SCSB and ACSI Models show that increase customer satisfaction both increased customer loyalty as well as decreased customer compliant (Fornell and Wernarlet, 1998). When dissatisfied customer has the option of going to competitor, or voicing compliant facilitate decreasing retention, further more an increase. In the number of complaints alleviate decrease loyalty.

2.12. Measuring Customer Satisfaction

Measuring customer satisfaction is about profit and competitive advantage to achieve long term success in market, firm should monitor the customer satisfaction signals regarding product, service and relationship. Measuring customer satisfaction provide a comprehensive insight to the customer per and post purchase behavior.

Increasing customer satisfaction is beneficial to marketing manager,how to measure it is clear. Customer satisfaction has been studied from the perspective of the individual customer and, also what drives their satisfaction (Oliver and Swan 1998). As well as form an industrial wide perspective to compare customer satisfaction score across firms and industry (Fornell 1992).

Sweden is the first country to have reconciled cross-company and cross industry national evaluation document for customer satisfaction and assessment of quality product and service in 1998.The Swedish customer satisfaction barometer (SCSB)as it is called was adapted for use in the American customer satisfaction index (ASCI) (Anderson and Fornell,2000).The productive experience of the Swedish customer satisfaction barometer (SCSB)and American customer satisfaction index (ACSI)gave birth to the European satisfaction index (SCSI) (Juhletall.2002).

Customer satisfaction has been analyzed in the marketing literature as the difference between perceived performance of a product service and some cognitive standard such as expectation and desired of customer (Oliver 1980).

The most widely accepted conceptualization of the customer satisfaction is the expectancy disconfirmation theory (MC quality, firm and wiley 2000).This theory was developed by Oliver, who proposed that satisfaction level is a result of the difference between expected and perceived Performance. Satisfaction (positive disconfirmation) occurs when product or service is better than expected. Product or service less than expectation of customer result dissatisfaction (Negative disconfirmation). The study shows that customer satisfaction may have direct or indirect impact on business result.

The three broad category of measuring customer satisfaction scales are performance scale, disconfirmation scale, and satisfaction scales. Performance scale are those that use scale such as poor, fair, good, excellent, disconfirmation scale are these that use scale such as very dissatisfied to very satisfied .

The researcher will use both satisfaction scale and five point of disconfirmation scale to assess customer satisfaction.

Performance et -al (1988) identified five dimension of service quality (SERVQUAL) helps to identify clearly the impact of quality dimension on the development of customer perception and resulting customer satisfaction .SERVQUAL includes:-

Reliability: - The willingness to help customer and provide prompt service

Assurance: - The knowledge and courtesy of employee as well as their ability to convey trust and confidence.

Empathy: - The provision of caring, individualized attention to customer and

Tangibility:-The appearance of physical facility equipment personal and communication materials

Evenif SERVQUAL has so many criticize, Carillat .et al(2007) as cited in Zaramdini and Rankan (2009) investigated the validity of SERVQUAL using 17 studies that applied servqual and come up with the conclusion that it is adequate and valid tool to measure service quality and customer satisfaction ,and still the most widely used measurement instrument.

According to Long and Mc Mellon (2004) the SERVQUAL scale can be adjusted depending on the industry to study to suit any particular study. Therefore in this study customer satisfaction of Ethiopian Insurance Corporation will be assessed by using SERVQUAL method and adjusted according to insurance industry.








Fig 5 customer satisfaction model

(Source: developed for research purpose.)

Theoretical frame work

Figure -6- theoretical frame work

(Source prepared for search purpose)

Factor influence customer satisfaction

Customer Satisfaction

Achieve organization goal


Perceived service


Physical env.nt



Corporate image




Employ satisfaction

Behavioral intention

Facality of Business education

Department of marketing management education

Assessment of customer satisfaction in the case of

Ethiopia Insurance Corporation

Literature review and questioner

Submitted to Dr Worku

Prepared by Ashenafi worku Gss/0066/02