Customer expactations and customer perceptions

Introduction

This section outlines on the numerous definition and scopes of service delivery. The literature has also engrossed on variances between customer expectations and customer perceptions as the basis for service quality measurement. Similarly, various service quality models have been mentioned but much of the emphasis is geared in the direction of the SERVQUAL model. Both its benefits and criticisms have been pointed out in my layout below. A few empirical evidences have also been elaborated relating to service quality.

Service

A service is a complicated phenomenon. The word has many meaning, ranging from personal service to service as a product. In the 1960s, 70s and 80s a range of definitions of services was suggested. These definitions focus upon the service phenomenon, and mainly include only those services rendered by so-called service firms. As a criticism of the variety of definitions suggested, Gummesson, referring to an unidentified source, put forward the following definition: “A service is something which can be bought and sold but which you cannot drop on your feet”.

Although this definition in a way criticizes attempts to find a proper definition that can be agreed by everyone, it points out one of the basic characteristics of services; that is, that they can be exchanged although they often cannot be experienced in a tangible sense.

Nevertheless, in 1990 the following was reluctantly proposed:

“A service is a process consisting of series of more or less intangible activities that normally, but not necessarily always, takes place in interactions between the customer and service employees and/ or physical resources or goods and/or systems of the service provider, which are provided as solutions to customer problems” (Gronroos, 1990, p.27)

More amusingly, services have also been described as “something that may be bought and sold, but which cannot be dropped on your foot.” (Gummesson, 1987, p.22)

Three basic characteristics that can be identified for most services are:

Services are the process comprising of activities or series of activities rather than things.

Services are at least to some degree produced and consumed at once.

The customer takes part in the service production process at least to some level.

Process nature is by far the most essential characteristics of services. Services are methods consisting of a series of activities where a number of different types of resources, people as well as other kinds of resources, are used often in direct interactions with customers, so that a solution is found to a customer`s problem.

Since a service is not a thing but processes consisting of series of activities which are produced and consumed simultaneously. It is therefore difficult to manage quality control before the service is sold and consumed.

The last characteristics of services indicated that a customer is not only a receiver of the service but he also participates in the service process as a production resource as well.

Intangibility is another characteristic of services and intangibility is the heart of a service which is probably the most mentioned criterion of services. Intangibility service does not differentiate services from physical goods.

Quality

Quality is a word frequently on the lips of top executives, managers, employees and consumers. The key element for a success business is quality. It is very important for all businesses to put lot of importance on quality nowadays due to the fact that customers have become more selective and demanding of the services they consumed and the way it is being delivered to them. Furthermore, quality-focused organizations gain competitive edge advantage over competitors on the marketplace, both locally and internationally (Lewis, 1989; Cox and Dale, 2001).

In spite of the amount of debate both in the academic and popular publications the meaning of the term `quality` remains elusive. Holbrook (1994) suggests that `issues regarding the meaning of “quality”, appear to pose formidable obstacles to clear thinking`. However, the use of quality has evolved so much with time to the point that it is now commonly used to imply some form of value judgment

Despite the increasing importance of quality, there has been a lot of sematic problem when it comes to the definition of the term `quality`. Kasper et al. (1999) pointed out that quality is an indefinite term and the formulation of a comprehensive and constant definition of quality is an impossible problem. Pirsig (1987) is of the view that it is difficult to give a proper definition of quality, as quality itself, cannot be considered independently, but only in relation to what is perceived. Nevertheless, various authors are trying to clarify the term quality by giving it some definitions in order to help managers in the service industries to formulate a quality strategy.

Zeithaml (1988) calls it `superiority`

Crosby (1979) defined it as `conformance to requirements, not elegance`.

Quality is fitness for use, that is, the extent to which the product successfully serves the purpose of the user during usage (Juran, 1979).

Quality is exceeding what consumers expect from the service (Parsuraman et al., 1990a).

It is worth mentioning that these definitions of quality show diverse opinions on quality and that no one definition is best.

Service Quality

In conceptualizing service quality, many scholars have tried to understand and define the concept of service quality (Cronin and Taylor, 1992,). “There is no universal, parsimonious, or all-encompassing definition or model of quality” as being noted by Reeves and Bedmar (1994).

The traditional approach when defining service views service quality perception as a comparison of consumer expectations with actual performance which was referred as disconfirmation (Bakus and Bodler, 1992). Disconfirmation therefore represents the “degree and direction of discrepancy between consumer`s expectations and perceptions” (Parsasuraman et al., 1988). Expectations and perception form the backgrounds of service quality (Babakus and Boller, 1992).

Contrary to the traditional approach of the definition of service quality, the concept of service quality was defined, by Bitner and Hubbert (1994), “as the consumer`s overall impression of the relative inferiority or superiority of the organization and its services”.

The most important element of the definition of service quality is that service quality must acknowledge the role of the customer when comparing the superiority or inferiority of the service provided against the customer`s own standard of quality. Therefore this evidently shows that the scale for quality is the customer`s own sense of what is service quality rather than some objective standard of what a majority of customers would recognize is quality service.

Moreover a second key component of the definition of service quality is the manner that the customer uses to generate their valuation of the level of service quality, which is in contrast between customer expectations and perceptions (Parasuraman et al, 1985).

When taking into consideration these two components of the definition of service quality, we can therefore say that service quality is defined as the customers` overall impression of service excellence.

Various authors have defined and described service quality in their own way:

According to Lewis and Booms (1983), they defined service quality as “a measure of how well the service level delivered matches customer expectations` with the consistent basis”.

Rust and Oliver (1994) defined service quality as ” a comparison to excellence in service encounters”

Gronoos (2000) has described service quality in terms of 7 perceived criteria which are mainly professionalism and skills, attitudes and behavior, accessibility and flexibility, reliability and trustworthiness, service recovery, servicescape and finally reputation credibility.

Customer Expectation

A service is described as a promise of satisfaction (Levitt 1983). Service organizations make promises, which are both implicit and explicit, influence the customer`s expectations of the service experience (Bitner 1990). Expectations are the standards against customers’ service quality, it is important to understand the nature of customers` expectation.

According to Lovelock and Wright (2001), customers` expectations about what constitutes good service vary from one business to another. Expectations are also likely to vary in relation to differently positioned service providers in the same industry. Customer expectation may also vary from one industry reputations and past experience to another, and from country to country.

The acquisition of information both from the memory and the environment create of what is known as service experience. This concept has been operationalized by a number of authors as `expectations` (Olson and Dover, 1976). In their definition of `expectation`, Olson and Dover describe expectations as pre-purchase beliefs about a service. A number of different expectations have been identified in the literature.

Miller (1997), for example, has put forward four different types of expectations and they are known as:

Ideal

Expected

Deserved

Minimum tolerance

The ideal is the `wished for` level of performance. Expected is an objective calculation of the profitability, whist deserved is the customer`s subjective opinion of their investment. Minimum tolerance is obviously the bottom level of performance acceptable.

Moreover customers` expectation is shaped by several keys and they are namely:

Word of mouth communications.

The customers` personal needs and wishes (Edvardsson et al, 1994).

Past experience of services (Ziethmal and Bitner, 1996).

Similarly Parasuraman et al. (1991) also suggested that expectations have two levels, they are known as

Desired

Adequate

However according to Lovelock and Wright (2001), customer expectations composes of a number of elements which include;

Desired service

Adequate service

Predicted service

Zone of tolerance

The figure below shows the formation of expectation for desired an adequate service.

Explicit & Implicit Service promises word of mouth past experience

Personal needs

Desired Service

Belief about what is possible

Zone

of

Perceived Service Alterations tolerance

Adequate Service

Predicted Service

Situational Factors

The type of service which customers hope to receive is termed as “desired service”. It is of the belief of the customer of what can and should be delivered according to their personal needs. It is in fact the service that the customer hopes to receive.

However most customers understand that organizations can’t deliver the service level they would prefer. Therefore, there is somehow an alternate level of expectations which is termed as the “adequate service”. The adequate service is based on the prediction of how the service will be. It is defined as “minimum service customers will accept without being dissatisfied” (Lovelock and Wright, 2001).

On the other hand, predicted service is the service level that customers actually anticipated to received and it tend to directly affect the definition of adequate service (Lovelock and Wright, 2001). Hence, if good service is predicted the adequate level will be much higher compared to poorer service expectations. The predictions of customers towards a service may be situational that is, it depends on a number of factors such as time, weather, political, economic etc.

The inherent nature of services makes consistent service delivery difficult across the employees of the company. The extent to which customers are willing to accept this . a variation is called the zone of tolerance (Lovelock and Wright, 2001). A performance that falls below the adequate service level will result into frustration and dissatisfaction. In contrast one that exceeds the desired service level will please and surprise customers, thus creating what is sometimes called as customer delight.

Customer Perception

Perceived service quality is a widely studied concept (Parasuraman et al, 1988). Perceived service quality is defined as the customer`s assessment of the overall superiority or excellence of the service (Ziethmal, 1988). On the other hand Ghobadian (1993) says “perceived quality” is the customer’s feel for the “quality” of the service. On the other side Edvarsson (1988) pointed out that the concept of service is best approached from a customer perspective. It is the customer’s total perception of the outcome that is “the service”. It forms the perception of quality and determines whether he is satisfied or not.

Moreover according to Parasuraman et al. (1988), perceptions measure those facets of the service as actually delivered or experienced. Oliver stated that customer perception is “a comparison to excellence in service by the customer”. Customer perceptions of a service are often made after the service delivery. Customer`s perception of service encounters or “momemt of truth” is the evidence of the service, image and quality of an organization. Hence, it forms the overall perception of the customer in terms of quality, satisfaction and value (Zeithmal and Bitner, 1996).

During the service delivery, verbal and non-verbal behaviors are considered to be the key determinants as compared to tangible cues such as equipment and physical settings (Gronroos, 1990; Zeithmal and Bitner, 1996). However, it is due to the intangible nature of services that are searching for cues to help them determining the service level. Three major categories have been identified, they are namely:

The appearance, attitude and behavior of the person who is delivering the service.

The service delivery process, whether it is complex or bureaucratic.

The physical evidence, that is all the tangible aspects of the service such as equipment, statements and in some cases, the physical facility also.

Berry and Parasuraman (1994) stated that organisations need to be fair when offering services which are too technical for customers to judge whether they are being carried out appropriately. According to Chebat et al, (1990), perceptions towards a service can be affected by the mood of the customer in particular, the interactive parts of the experience. Additionally, a favorable image can influence perceptions positively vis-à-vis a service. Image and reputation which is referred as the set of perceptions reflected in the associations held in the memory of the customer (Keller, 1993). On the other side of the coin Williams and Buswell (2003) has stated that the customer perception of a service encompasses a complex series of judgments made during and at the end of the experience.

Customer Satisfaction

Nowadays it has been found that the concepts of service quality and customer satisfaction are closely inter-related. Customer satisfaction is a psychological concept that involves the feeling of well-being and pleasure that results from the obtaining what one hopes for and expects from appealing product and service (WTO, 1985).

By definition, satisfaction is the outcome of customers` assessment of a service based on a comparison of their perception of service delivery with their prior expectations (Johnson and Clark 2005). Furthermore customer satisfaction is generally described as the full meeting of ones’ expectation (Oliver, 1980). Customer satisfaction is in fact what a customer feels after having used a service or product.

The original service quality theories is that customers are satisfied when their judgment of the service they have received, that is perception, equals or exceeds what they expected:

Customer Satisfaction = Perceptions = Expectations

Oliver (1997), has identified three satisfaction levels in his theory, they are known as

Negative disconfirmation, this occurs when the service or product is inferior to that expected.

Positive disconfirmation, this occurs when the service or product is better that what is expected.

Simple disconfirmation, this arises when the service is as was expected.

Confirmation or positive disconfirmation of customers’ expectation leads to satisfactory customers in contrast negative disconfirmation of customer expectation result in dissatisfied customers.

Customer satisfaction can also be defined as satisfaction based on an outcome or process. According to Vavra`s (1997) definition of customer satisfaction, satisfaction has been characterized as “the end-state resulting the experience of consumption”. This end- state may be a cognitive state of reward, an emotional response to an experience or a comparison of rewards and costs to the anticipated consequences. In terms of process Vavra (1997) has defined customer satisfaction by putting emphasis on the perceptual, evaluative and psychological processes which contributes to achieve customer satisfaction.

In fact customer satisfaction is broadly regarded as one of the most vital factor for customers future purchase intensions (Taylor and Baker, 1994). Hence satisfied customers are intended to share their favorable experiences thereby engaging in positive word of mouth advertising. On the reverse side of the coin, dissatisfied customers are intended to change brands and thereby engaging in negative word of mouth advertising. However behaviors such as positive word of mouth and repeat purchase tend to directly affect the viability and profit of a firm (Dabholkar et al., 1996).

Previous literatures have demonstrated that service quality is a key indicator of customer satisfaction (Spreng and Mackoy, 1996) that is customer satisfaction depends on service quality (Bolton and Brew, 1990, 1991; Cronin and Taylor, 1992). Similarly, Carman (1990) advocated that service quality is an antecedent to customer satisfaction. Despite the fact that some authors have been able to demonstrate the inter-relationship between service quality and customer satisfaction but still the inter-relation according to some authors are questionable.

According to Crompton and Mackoy (1989) customer satisfaction and service quality are not the same. They stated that “satisfaction is a psychological outcome emerging from an experience whereas service quality is concerned with the attributes of service itself. In addition Oliver (1997) has been able to find the differences in how customers judge service quality and customer satisfaction.

This is illustrated in the table 1 below:

Table 1: Customer judgment of service quality and customer satisfaction

Service Quality

Customer Satisfaction

Evaluated using specific clues.

Evaluation more holistic.

Based on perceptions of `excellence`.

Based on needs.

Cognitive.

Emotional.

However, Parasuraman et al. (1988) agreed with the fact that customer satisfaction and service quality are different, but they considered that customers use somehow similar criteria to judge both of them as they are inter-related.

Dimensions of service quality

Parasuraman, Zeithaml and Berry (1985), identified ten general dimensions through a seminal research study based on the customer expectations and perceptions of delivered service. These ten service quality determinants are namely: tangibles, reliability, responsiveness, competence, courtesy, credibility, security, access, communication and understanding the customer.

These ten dimensions of service quality were then condensed to five dimensions which are known as the SERVQUAL, which evaluated consumer perceptions of services. It has been through a factor analysis of consumer responses to SERVQUAL that has resulted in the conclusion that there are five dimensions of service quality. They are namely: reliability, assurance, tangibles, empathy and finally responsiveness and they are also known as RATER (Parasuraman et al, 1990).

The table 2 below explains the five dimensions of the service quality.

Table 2: Five dimensions of service quality

Reliability

The ability to deliver promised services in a dependable, accurate manner.

Assurance

The ability to inspire thrust and confidence.

Tangibles

Physical elements of the service such as facilities and equipment.

Empathy

The degree to which customers are treated as individuals.

Responsiveness

The willingness to help customers and provide prompt service.

On the other hand Gronoos model (1982, 1984) identified two dimensions of service quality, they are namely known as:

Functional quality

Technical quality

Functional quality which is also referred as an interactive quality (Lehtinen and Lehtinen, 1982) or as a process quality (Parasuraman et al, 1985) represents how delivering a service.

Technical quality also stated as physical quality (Lehtinen and Lehtinen, 1982) or outcome quality (Parasuraman et al, 1985) shows what the customer is really receiving or the result of the service. Due to the fact that the customers often have continuous contact with a service of a firm, the customer`s image was added as a third element of Gronoos perceived service quality model in order to justify the dynamic feature of the process of creating service quality awareness ( Gronoos, 1990).

Service Quality models

There are indeed several models which are being used to measure service quality and the two most major and widely use models are the Gronroos Perceived Service Quality Model (Gronroos, 1982) and the SERVQUAL Model (Parasuraman et al., 1988). As such there are many more models which have been put forward by several authors and ten of them are:

Attribute service quality models (Haywood-Former, 1988)

Ideal value model of service quality (Mattson.1992)

The Technical/functional framework (Gronroos, 1984)

Synthesized model of service quality (Brogowicz et al., 1990)

Performance only model (Cronin and Taylor, 1992)

Attribute and overall affect model (Dabholkar, 1996)

Retail service quality and perceived value model (Sweeney et al., 1997)

Evaluated performance and normed quality model (Teas, 1993)

Service quality, customer satisfaction and customer value model (Ol,1999)

Model of perceived service quality and satisfaction (Spreng and Mackoy, 1996)

Perceived service quality model

The perceived service quality model was introduced in 1982 by Gronroos due to the fact that there has been lots of attention being drawn on the interest of service quality in the end of 1970`s (Gronroos, 2000). This method is based on research carried out into consumer behavior and the effects of expectations vis-à-vis worthy performance on post-consumption assessments. Over the years the focus of the study into service quality has been varied and perceived service quality has been developed to help researches and managers to understand the mind of the customers towards a service (Gronroos, 2000).

According to the perceive service quality model, the quality of service as is being perceived by a customer is the outcome of a comparison between expectations and his/her real-life experience. If the “experienced quality” is much more than the “expected quality” then the “total perceived quality” is positive. If on the other hand, expectations is not met by expectations or the actual experience then the perceived quality is low. The final success is dependent on the initial expectations in contrast with actual performance (Gronroos, 1991).

This is illustrated in figure 2.

Image

Total perceived

Expected quality quality Experienced quality

Marketing communication Image

Sales

Image

Word of mouth

Public relations

Customer needs and values Technical quality: Functional quality

What How

Source: Gronoos Perceived Service Quality Model (1982)

SERVQUAL instruments

The SERVQUAL instrument was developed by Parasuraman et al. (1985), to measure service quality. They defined it as, “a concise scale whose items would be meaningful to a variety of service settings”. It consists of 22 pairs of items, along with two categories namely expectations and perceptions. The first one measures the expectations of customers’ vis-à-vis a service by asking them to provide a rating on a seven point scale. The second one with an identical of 22 statements measures the perceptions of customer towards a service. Hence, later on these 22 items were categorized into five dimensions namely; tangibles, responsiveness, reliability, assurance and empathy as illustrated in fig 3.

Dimensions

Items in scale

Reliability

4

Assurance

5

Tangibles

4

Empathy

5

Responsiveness

4

Parasuraman et al. (1985) defined service quality as “a function of pre-purchased customer expectations, perceive proves quality and perceived output quality”. Furthermore they specified that service quality is the difference between what consumers expect in relation to a service and what they perceived after experiencing that service.

As a result there has been the development of SERVQUAL instrument based on the gap model, which measures the scores or gaps between expectation and perception. The difference between the ranked perceptions and the ranked expectations is calculated; the average of the gap scores is the SERVQUAL overall quality score (Nitecki and Hernon).

SERVQUAL Score = Perception Score – Expectation Score

A company`s quality of service along with each of the five dimensions can thus be measured across all customers by doing an average of their SERVQUAL scores on reports making up the dimensions.

Benefits of SERVQUAL

An important benefit of SERVQUAL is that it has been proven valid and reliable across a large range of service context. The SERVQUAL instrument was made to measure service quality across a range of business, for example Parasuraman et al. (1985), measured the service quality delivery at retail banks, securities broker, credit card companies and long distance telephone company. SERVQUAL seems to be the best way for cross-sectional research and industry benchmarking.

Martin and Palmer have identified the following benefits for SERVQUAL and they are as follows:

SERVQUAL provides the management a clear indication of how the company is performing in the eyes of the customer both individually and as a whole.

SERVQUAL ranks the customer needs, wants and expectation by recognizing what is most important in the customer`s eyes.

SERVEQUAL permits the organizations to establish an expected standard performance that can be communicated to all staff and customers.

SERVQUAL can recognize any gap concerning customers and providers and thus in that way help focus improvement efforts by guiding organizational energies at ending these gaps.

Criticism of SERVQUAL

Some researchers have, however, put forward that the SERVQUAL instrument also have weak points both theoretically and operationally. This disagreement is due to the fact that according to some researchers these five basic dimensions of service quality (Parasuraman et al., 1985) are questionable. They have suggested that the SERVEQUAL dimensions are contextual and therefore they are not universally applicable (Ekinci & Riley, 1999; Brown et al., 1993; Cronin & Taylor, 1992; Teas, 1993; Bouman & Van der Wiele, 1992; Gagliano & Hathcote, 1994, Kang and James, 2004; Lee, 2005; Fowdar, 2007). Babakus and Boller (1992) suggested that the number of service quality dimensions is dependent on the service being offered.

SERVQUAL`s limitations results from the flaw of the traditional disconfirmation definition of service quality. Yong (2000) has noted several problems in the traditional definition of service quality. First, the needs of the customers are not all the time easy to identify thus if needs are not correctly identify the needs will result in measuring conformance to a specification that is improper. Second, the traditional definition fails to offer a method to measure the expectation of a customer that determine the level of service quality. Because customer expectation may vary over time (Reeves and Bednar, 1994), a definition of service quality based on expectation cannot be parsimonious. It is unacceptable, empirically speaking, to use the inequality of scores of expectation and perception to measure service quality.

In a nutshell, there are still issues and various opinions about the dimensionality of service quality and the universality of the five dimensions (Rust and Oliver, 1994). These are of interest to and noteworthy for users of SERVQUAL anf for all those who wish to comprehend well the concept of service quality. Henceforward there is still a need for fundamental research into the dimensionality of service quality while bearing in mind the contextual situations, the specific industry and service setting. However due to its limitations, researchers have only just started to implement other measures, while taking into consideration the SERVQUAL dimensions, in order to improve the descriptive power of the model.

Gap Analysis

The gap analysis was developed by Zeithmal et al. in 1988 as they suggested that service quality is a function of the dissimilarities between expectations and perceptions along the quality dimensions. Consumer perceptions are in fact the differences between the consumer expectation from the service and what they actually perceived out of it. This is provided in the diagram below. It is an essential for the managers to consider the expectations and perceptions of customers of the quality being provided to them. As such, it should cover the whole of the service offering and the assignment should be conducted for each of the strategic quality dimensions.

Past Experience

Personal Needs

Word-of Mouth

Communications

Expected Service

Gap 5

Perceived Service

Service Delivery

External Communications

to Customers

PROVIDER Gap 4

Gap 3

Service Quality Specifications

Management Perceptions

of

Customer Expectations Gap 2

Gap 1: The gap 1 is the difference between actual customer expectations and management`s idea or perceptions of customer expectation. In other words it can be said as being the market information gap as the result of lack of research and lack of interaction with the customer. Therefore inappropriate understanding of e