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Literature Review
This chapter will give an overview of literature and models that are related to the
research problem presented in the previous chapter. In this chapter we will introduce
the concepts of service quality, service quality model, service quality dimensions,
E-service quality, customer satisfaction, satisfaction formation, the linkage between
customer satisfaction and service quality, and Internet banking. Moreover, this
chapter will present some information related to the research such as, the conceptual
of real time customer service, characteristics of the Thai retail banking industry and
the company overview in order to give a clear idea about the research area.
Parasuraman, Zeithaml, and Berry (1985) defined service quality as the comparison
between customer expectations and perceptions of service. In addition, they suggested
three underlying themes after examination of the previous writing and literature on
services:
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(1) service quality is more difficult for customer to evaluate than goods quality,
(2) service quality perceptions result from a comparison of consumer expectations
with actual service performance, and
(3) quality evaluations are not made solely on the outcome of service; they also
involve evaluations of the process of service process of service delivery.
Parasuraman et al. (1985) suggested the Service Quality Model in order to serve as
a framework for further research.
Word of Mouth
Communications
Personal Needs
Customer
Past Experience
Expected Service
Gap 5
Perceived Service
Provider
Service
Delivery
Gap 4
Gap 3
Gap 1
External
Communications
To customers
Service Quality
Specifications
Gap 2
Management Perception of
Customer Expectations
Figure 2-1: Service Quality Model
Sources: Parasuraman et al., (1985) p.44
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Communication:
In their following research (Parasuraman, Zeithaml, and Berry, 1988), then they
purified and distilled the ten dimensions to five:reliability, tangibles, responsiveness,
assurance, and empathy, which constitute the base of global measure for service
quality -SERVQUAL Based on these five dimensions listed above, the researchers
developed 22- item scale with a set of service quality dimensions to quantify a
customers assessment of a companys service quality. However, the traditional
service quality dimensions cannot directly apply to Internet banking, because it
represents a different and unique service delivery process. Different dimensions have
been accepted in previous studies measuring electronic service quality. Nevertheless,
the studies of Parasuranman (1988) offer particularly strong service quality
dimensions for measuring traditional services and could be serve as a good starting
point for further research (Yang and Fang, 2004)
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Yang and Fang (2004) identified six key dimensions of service quality of online
securities brokerage services: reliability, responsiveness, competence, ease of use,
security and product portfolio. Yang, Jun and Peterson (2004) have uncovered six key
online service quality dimensions: reliability, access, ease for use, attentiveness,
security and creditability-employed. Further more, Yang et al.(2004) suggested that if
online retailers want to achieve high level of customers perceived service quality,
four dimensions should be focused on: reliability, attentiveness, ease for use, and
access.
Yang and Fang (2004), have noted that traditional service dimensions, such as
competence, courtesy, cleanliness, comfort and friendliness, are not relevant to online
retailing, whereas other factors, such as reliability, responsiveness, assurance, and
access, are critical to both traditional service quality and e-service quality.
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Wolfinbarger and Gilly (2002) have found four online retailing service quality
dimensions through focus group interviews and an online survey. These are website
design, reliability, and privacy/security and customer service. Furthermore,
Wolfinbarger and Gilly (2002) have found that reliability and fulfillment are the
strongest predictor of customer satisfaction.
In order to measure end- user computing satisfaction, Doll and Torkzadeh (1988)
proposed five quality dimensions that influence end-user satisfaction: content,
accuracy, format, ease of use and timeliness. Recently, several studies on e-commerce
have noted that some features of web sites are critical to their business success. D
Angelo and Little (1998) argued that factors such as navigational characteristics,
visual characteristics, and practical consideration (including images, background,
color, sound, video, media, and content) are important considerations in designing a
Web site. Liu and Arnett (2000) considered the following four factors as major
ingredients for the success of a web site as: system use, system design quality,
information quality and playfulness. Jayawardhena and Foley (2000) suggested that
the features of Internet banking Web sites, such as: the speed to download, content,
design, interactivity navigation and security, are critical to enhancing customer
satisfaction.
Based on the focus interviews and the insights of previous research, Santos (2003)
developed a conceptual model of e-service quality. This model proposed that e-service
quality consists of incubative and active dimensions, and each dimension is composed
by five or six determinants, as illustrated in Figure2-2.
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Santos (2003) further explains that before the launching of a web site, the incubative
dimension needs to be considered and be ensured that:
links are set up and maintained, and the broken links are avoided;
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When a Web site has been established, the active dimension needs to be maintained
throughout the entire period of active e-commerce on the Web site. The determinants
of activate dimensions are:
reliability;
efficiency;
support;
communications;
security; and
incentive.
Yang, Peterson and Huang (2001) identified and measured six dimensions of customer
perceptions of service quality:
Accuracy of content
Timeless of response
Privacy
Lociacono, Watson and Goodhue (2000) established a scale called WEBQUAL with
the twelve dimensions: informational fit to task, interaction, trust, response time,
design, intuitiveness, visual appeal, innovativeness, flow, integrated communication,
business processes and substitutability. Latimore, Watson and Maver (2000)
mentioned in their study that eighty seven percentage (87%) of Internet Banking
customers want to use a variety of financial transaction including paying their bills
electronically and automatically, viewing their monthly bank statement and
purchasing stocks and insurance.
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Bahia and Nantel (2000) also proposed an alternative measure of perceived service
quality in retail banking that comprises thirty one items with six underlying key
dimensions. These dimensions are: effectiveness and assurance, access, price,
tangibles, service portfolio and reliability.
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Image and
Reputation
Service
setting
Customer
Expectations
Perceived
Service
Quality
Customer
Participation
Service
Encounter
The model showed that in the context of internet banking five key elements are
central dimension of perceived service quality. They are:
1. Customer expectations of the service
2. The image and reputation of the service organization
3. Aspects of the service setting
4. The actual service encounter
5. Customers participation
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Satisfaction Formation
The disconfirmation theory emerges as the primary foundation for satisfaction models.
According to this theory, satisfaction is determined by the discrepancy between
perceived performance and cognitive standards such as expectation and desires
(Khalifa and Liu, 2003). Customer expectation can be defined as customers pretrial
beliefs about a product (Mckinney, Yoon and Zahedi, 2002). Expectations are viewed
as predictions made by consumers about what is likely to happen during impending
transaction or exchange (Zethaml and Berry, 1988). Perceived performance is defined
as customers perception of how product performance fulfills their needs, wants and
desire (Cadotte, Woodruff and Jenkins, 1987). Perceived quality is the consumers
judgment about an entitys overall excellence or superiority (Zeithaml, 1988).
Disconfirmation is defined as consumer subjective judgments resulting from
comparing their expectations and their perceptions of performance received
(Mckinney et al. 2002, Spreng et al. 1996).
Oliver (1980) described the process by which satisfaction judgments are reached in
the expectancy-disconfirmation framework. Figure2-4 shows how satisfaction
judgment is related to expectancy- disconfirmation approach. Buyers form
expectations of the specific product or service before purchase and perceived quality
level which is influenced by expectations.
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+
Expectation
Disconfirma
- tion
+
Satisfaction
Perceived
Quality
The figure 2-4 explains that the arrow drawn from expectations to perceived quality
indicates perceived quality may increase or decrease directly with expectations.
Perceived quality may either confirm or disconfirm pre-purchase expectation. The
determination of the extent to which perceived quality expectations are disconfirmed
is depicted in figure 4-2 by arrows drawn from expectation and perceived quality to
disconfirmation. Satisfaction is positively affected by expectations and the perceived
level of disconfirmation that is also shown by the arrow in the figure 2-4
Disconfirmation and perceived quality have a stronger impact on satisfaction (Oliver
1980).
Moreover, Zairi (2000) found that satisfied customers possibly share their experiences
with five or six people while dissatisfied clients might inform another ten. It cost 25
per cent more to recruit new customers than to maintain existing ones. Naumann
(1995) and Dawes and Swailes (1999) also pointed out that retaining an existing
customer costs about five times less in money, time and corporate resources than
attracting a new customer.
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Information
Quality
Information
To Use
Use
System
Quality
Net
Benefit
User Satisfaction
Service
Quality
Within the e-commerce context, the primary system users are customers or suppliers
rather than internal users. Customers and suppliers use the system to make buying or
selling decisions and execute business transactions. These electronic decisions and
transactions will then impact individual users, organizations, industries and even
national economies. This communication and commerce proves fits nicely into
updated DeLone & McLean IS Success model(2003) and its six success dimensions.
This model describes system quality, information quality, service quality singularly
and jointly affect both use and user satisfaction. Additionally the amount of use can
affect the degree of user satisfaction positively or negatively.
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The figure 2-5 explains the six dimensions that are included in the model. The
dimensions are described below:
System Quality in the internet environment measures the desire characteristics of an Ecommerce system. System qualities that are valued by users of and E-commerce
system are usability, availability, reliability, adaptability and response time (e.g.
download time). Information Quality in the Web content should be personalized,
complete, relevant, easy to understand, and secure that will be easy for the customers
to initiate transactions via the Internet and return to site on a regular basis.
Service Quality means the overall support delivered by the service provider, applies
regardless of whether this support is delivered by the Information system department,
a new organizational unit, or outsourced to an internet service provider (ISP). Its
importance is most likely greater than previously since the users are now customers
and poor user support will translate into lost customers and lost sales. (DeLone and
McLean 2003).
Usage means everything from a visit to a web site, to navigation within the site, to
information retrieval, to execution of a transaction.
User satisfaction remains an important means of measuring customers opinions of ecommerce system and should cover the entire customer experience cycle form
information retrieval through purchase, payment, receipt and service.
Net benefits are the most important success measure as they capture the balance of
positive and negative impacts of the e-commerce on customers, suppliers, employees,
organizations, markets, industries, economies and even societies. Net benefits success
measures are most important, but that cannot be analyzed and understood without
System Quality, Information Quality, and Service Quality measurements.
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The table 2-1 demonstrates six dimensions of the updated DeLone & McLean (2003)
Information System Success model that can be used as e-commerce success metrics.
Measurement Variables
success model
System Quality
Information Quality
Service Quality
Use
User Satisfaction
of
understanding,
Net benefits
Ease
saving
expanded
markets,
Incremental
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Chaudhuri and Holbrook (2001) suggest that behavioral, or purchase, loyalty consists
of repeated purchases of the brand, whereas attitudinal brand loyalty includes a degree
of dispositional commitment in terms of some unique value associated with the brand.
Hence, an intermediate view on the matter asserts the constructs are related, yet by
definition are distinct, with commitment leading to loyalty (Beatty and Kahle, 1988).
In this study, commitment is defined as a consumers psychological attachment to an
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e-service that develops before a customer would be able to determine that their repeat
purchase behavior was derived from a sense of loyalty (Beatty et al., 1988). Loyalty is
defined as the intention of a consumer to repurchase products/services through a
particular e-service vendor.
Service loyalty
Research into customer loyalty has focused primarily on product-related or brand
loyalty, whereas loyalty to service organizations has remained underexposed (Gremler
and Brown, 1996). Frequently, a high positive correlation between the constructs of
satisfaction and product loyalty is reported. With regards to service loyalty, perceived
service quality is often viewed as a key antecedent (Dick and Basu, 1994). However,
there are a number of reasons why findings in the field of product loyalty cannot be
generalized to service loyalty (Keaveney, 1995; Gremler and Brown, 1996). Service
loyalty is more dependent on the development of interpersonal relationships as
opposed to loyalty with tangible products (Macintosh and Lockshin, 1998), for
person-to-person interactions form an essential element in the marketing of services
(Czepiel and Gilmore, 1987; Surprenant and Solomon, 1987; Crosby et al., 1990;
Czepiel, 1990). Gremler and Brown (1996) state that customer loyalty is the degree to
which a customer exhibits repeat purchasing behavior from service provider,
possesses a positive attitudinal disposition toward the provider, and considers using
only this provider when a need for this service exits.
Furthermore, the influence of perceived risk is greater in the case of services, as
customer loyalty may act as a barrier to customer switching behavior (Klemperer,
1987; Guiltinan, 1989). Indeed, it has been demonstrated that loyalty is more
prevalent among service customers than among customers of tangible products
(Snyder, 1986). In the services context, intangible attributes such as reliability and
confidence may play a major role in building or maintaining loyalty (Dick and Basu,
1994).
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On the basis of factor analysis on the 13-item scale, five dimensions were identified
by Zeithaml et al. (1996):
(1) loyalty to company;
(2) propensity to switch;
(3) willingness to pay more;
(4) external response to problem; and
(5) internal response to problem.
Three properties of Customer Loyalty
Long-Term Purchase: Generally, people often think Long-Term Purchase is the
main performance of Customer Loyalty. Even some managers infer that Long-Term
Purchase parallel with customer's loyalty to enterprises products and service. Many
domestic and foreign scholars adopt actual purchase behavior to measure loyalty. For
instance, Jacoby & Chestnut thinks that the purchase of the high frequency degree is
Customer Loyalty. We think, only Long-Term Purchase is not equal to Customer
Loyalty, yet actually it is an important basis to determine whether the customer is
loyal.
Recommendation: Canadian scholar Barnes and Closenss (1997) show that the loyal
customer can experience the delicate connection with enterprises, and the connection
of this kind of emotion makes the customer keep loyal. They will also energetically
recommend other customers the products and service of the enterprise. From Barnes
et.al. research we can find that recommendation is an important characteristic of
Customer Loyal, giving recommendation to others helps the enterprises to earn more
customers and to reduce the propaganda and promotion expenses of enterprises, thus it
can stint on expenses indirectly for enterprises and increase the income.
Expected Repurchase: Expectation is taking more and more proportion in customer
loyalty research and the uncertainty of expectation differentiation makes loyalty
manifest dynamic complexity to a certain extent. Olivers (1980) researches indicate
that customer will assess the actual achievements of the products and service
according to one's own expectation in the course of consuming or after consuming. If
expectation is higher than the actual achievement, the customer will possibly give up
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purchase; if equal to or less than the actual achievement, the customer will repurchase,
thus loyalty is realized.
Model of loyalty
Dick and Basus Typology of Loyalty
Recent work has continued to support definitions of loyalty that combine behavior and
evaluation. Dick and Basu (1994) have offered an attitude-behavior typology of
loyalty that is shown as Figure 2-6. This divides consumers into four segments using
two levels of behavioural loyalty and two levels of attitude toward the brand. Dick and
Basu state that customer loyalty is viewed as the strength of the relationship between
an individuals relative attitude and their repeat patronage.
Dick and Basu (1994) give attention to the appropriate measure of attitude. To be
chosen, a brand must be liked more than alternatives and therefore the attitude
measure should be relative. In figure 2-6 , customer with high attitudinal and
behavioral loyalty are described as true loyals, those with high behavioral loyalty
but low attitudinal loyalty as spurious loyals, those with high attitudinal loyalty but
low behavioral loyalty as latent loyals, and those with low attitudinal and behavioral
loyalty as non loyals.
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