SERVICE QUALITY AND CUSTOMER SATISFACTION: A STUDY WITH SPECIAL REFERENCE TO PUBLIC SECTOR BANKING INDUSTRIES IN INDIA

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1 INTERNATIONAL JOURNAL OF MANAGEMENT RESEARCH AND REVIEW Aug -2011/ Volume 1/Issue- 1 / Article No -3/ Research Article SERVICE QUALITY AND CUSTOMER SATISFACTION: A STUDY WITH SPECIAL REFERENCE TO PUBLIC SECTOR BANKING INDUSTRIES IN INDIA Satendra Thakur* 1, A. P Singh 2 1 Department of Management, RKDF Group of Institute, Gandhi Nagar, Bhopal, India 2 Maharana Pratap College of Management, Bhopal, India *Corresponding author: satendra.mba07@gmail.com ABSTRACT The purpose of this research article is to examinee relationship between service quality and customer satisfaction among group of customer towards the public sector banking industries in India. Study is cross sectional and descriptive in nature. Service quality consists of service product, service delivery and service environment, whereas service product refers to technical quality of service, service delivery refers to functional quality and service environment refers to internal and external. 400 questionnaires distributed to the customer of different department and agency, where 304 is return back. The hypotheses were tested using the multiple regressions. The finding indicates that service product is significantly and positively related to customer satisfaction; however service delivery and service environment are not significant predictors of customer satisfaction. Key words: Banking, sector, service environment

2 INTRODUCTION Service quality has become ever more important to improving customer satisfaction in the public sector organization. Public sector organization specially knows that customer satisfaction is one of the most vital factors that contribute in establishment reputation and credit in the public view. The public complaint about long queues poor service delivery and deficiency physical facilities direct effect on the level of service quality in the public sector organization. However we can say that it is not easy to measure service quality because of its unique characteristic namely intangibility, perish-ability, heterogeneity inseparability, according to the Rust and Oliver (1994) [20] Service quality has three component including service product, service delivery and service environment whereas service product refers to the technical quality of service, service delivery refers to the function quality of service and service environment refers to the internal and external activity of the service. Support had been gained for similar models in retail banking and health care samples (Mc Alexander, Goldenberg and Koenig, 1994) [14] According to the related literature, service quality that customers received must be reliable, responsive and emphatic involving service product, service delivery and service environment. Thus, the purpose of this study is to examine the extent to which service product, service delivery and service environment influence customer satisfaction among customers of public sector organization. REVIEW OF LITERATURE Service Quality Service quality has become as one of the key driving forces for business sustainability and is vital for firms accomplishment (Rust and Oliver, 1994) [20] Hence; many research activities on service quality has been conducted out worldwide. The development of the original 22-item SERVQUAL instrument by Parasuraman (1985, 1988, and 1994) [19,20,21] It has provided researchers with the possibility of measuring the performance expectations gaps composed by five determinants knows, reliability, responsiveness, empathy, assurance and tangibility. Rust

3 and Oliver (1994) [20] has given three component model including service quality, service product service delivery to investigate service quality but not many researcher has used it, whereas service product allude the technical quality, service delivery allude functional quality and service environment indicate internal and external. Rust and Oliver (1994) [20] have not tested their conceptualization but support has been found for related models in retail banking (Mc Dougalll and Levesque 1996) [15] and health care samples. Furthermore, Kotler and Amstrong (1996) [12] stated, A service firm s ability to hang onto its customers depends on how consistently it delivers value to them. Satisfaction is a person s feeling of the pleasure or disappointment arising from comparing products perceived performance in relation to expectation. The connection between customer satisfaction and future intentions has been identified. Service product Service product is a service which is design to deliver to the customer. The main facture of the service to identify and specify the offer, for example any policy with an associated payoff and yearly premium is known as service product. Service product also involves specification and targeting of service. According to Rust and Oliver (1994) [20] designing of service product is different to design the core physical product, Rust and Oliver (1994) [20] also found no mare individual take any action if they are not satisfy with the service product, because they don t want to supposed negatively. An employee who has complete their service delivery are also the part of service product, customer consume such service product and finally assess the service quality and consuming value, there are no chance for employee to correct service failure without customer awareness. The characteristics of service product are intangibility, inseparability, heterogeneity and perishable (Zeithaml and Bitner, 2000) [24] the production management jobs, of service industry are much different and difficult for managing than manufacturing industry. Beside, bad service product can cause service failures, bad service quality and low customer satisfaction. Therefore, the concept of service management must also include the component of employee's quality consciousness (Deng and Pei, 2009) [05] Service delivery Service delivery can be defined with the link to the role of performance, customers are thinking to enjoy expected sequence of proceedings and provide role expectation with most service encounter. The management needs to study service delivery to monitor the satisfaction level of customer. Performance of service delivery directly effect service quality and customer

4 satisfaction (Mohr and Bitner 1995) [16] Many researcher are highlighted the importance of customer contact in creating and providing good service quality (Bitner et al. 1990; Hartline and Ferrell, 1996) [02,10] Salesperson s service behaviors are important in building trust and customer Satisfaction (Ahearne et al. 2007) [01] therefore, when the manager tries to make effort of service quality and customer satisfaction improvement is the significant management topic in present human resource management and service management. Service environment Service environment include many dimension which can be classified in to main argument such as internal environment and external environment. Internal environment primary focus on the organizational culture and the dominant philosophy bring to service provision by management on the other hand external environment particularly focus on the physical activity of service location. According to the Fisk, Brown and Bitnar (2000) [08] accurate work place condition are significant factor for health and performance and also favorable for each and every way. Apart from it Meanwhile, Rust and Oliver (1994) [20] indicate that improving workplace condition and health standard both are pledge employee performance. To produce physical infrastructure is useful to satisfy internal and external customer also to obtain higher workplace has direct impact on organizational success the atmosphere smell and music also expressed be the physical environment directly can be effect customer perception and behavior. The overall atmosphere filled with inspiring delight-affected customers to stay longer in stores. It could enhance the willingness for customers' to interact and to communicate with service providers and business performance of stores could be improved Customer satisfaction Customer satisfaction, a term frequently used in marketing is a measure of how products and services supplied by a company meet or surpass customer expectation. Customer satisfaction is defined as "the number of customers or percentage of total customers, whose reported experience with a firm, its products, or its services (ratings) exceeds specified satisfaction goals, Customer satisfaction is the primary mental state of customer which comprise by two thing (1) expectation before purchase (2) perception about performance after purchase (Oliver 1997) [18] according to the many authors customer satisfaction is feelings of customer in the process that what has been received against what was accepted including expectation and perception about purchase decision and need and want associated with purchase decision.

5 OBJECTIVE OF THE STUDY i. To determine the strength of relationship between service quality, customer satisfaction ii. To identify the service quality dimension and there priority iii. To measure the customer satisfaction of the public sector banking industries iv. To analyze the service rendered by public sector banks in India v. To find out most important dimension of service quality RESEARCH METHODOLOGY Theoretical Framework Based on the above review of literature, the following model and hypotheses were proposed to be tested in this study. Three independent variables were identified, service product, service delivery and service environment. These variables were hypothesized to influence customer satisfaction. Service product Service delivery Customer satisfaction Service environment Independent variable dependent variable H1: Service product is positively related with customer satisfaction. H2: Service delivery is positively related with customer satisfaction. H3: Service environment is positively related with customer satisfaction. Methodology Due to the constraint in obtaining necessary information about the population element this study utilized sampling technique. 400 questionnaires distributed to customer whereas 304 were return back. DISCUSSION AND FINDINGS Through Data, this study was analyzed after collecting data from all respondents and illustrated in the form of table and bar charts. There were only 304 sets of questionnaires that were

6 answered by the respondents who were customer of different department. We also can say that this particular data analysis can be used by researcher for all the type of test Table: 1 Demographic Data (frequency and percentage) Characteristics frequency percentage Age Group 1) ) ) ) ) ) 45-above Gender 1) Male ) Female Education level 1) P.G ) Degree ) Diploma ) Other Martial status 1) Married ) Single

7 All the respondents for the present study are 304 individual from different discipline from all individual 179 male and 125 female, of the subject 45 individual age between 20-24, 41 individual age between 25-29, 129 individual between years age, 30 individual between year age, 36 individual are between and 23 above 45 from the individual 93 has complete there P.G degree in various subject, 131 Individual Has Complete there Degree 46 individual are diploma holder and 34 other including PhD and any Other Degree. Of the subject 171 individual are married and 133 single. Table 2: Summary of reliability analysis Variable No. Of item Cronbach s Alpha Customer satisfaction Service product Service delivery Service environment Cronbach s alpha used to measure the reliability, the reliability score for all variable are shown in table the range of alpha is 0.60for service delivery to 0.75 service environment, on the other hand the alpha for customer satisfaction is 0.73 which were also relatively high and exceed the acceptable cutting point of 0.70 thus all the item are reliable and acceptable because sufficient range of alpha should be between 0.5 and 0.6 (Nunnally 1978) [17] Table 3: Descriptive Analysis (mean & standard deviation) Variable Mean Standard Deviation Customer satisfaction Service product

8 Service delivery Service environment Table 3 show mean and standard deviation for all study variable all the variable mean are above the mid point 4 whereas the range of mean form 4.38 for customer satisfaction to 4.28 for service environment on the other hand SD Range from 0.43 to 0.60 Table 4: Inter Correlation matrix or service quality and customer satisfaction Variable Customer satisfaction 0.21** 0.19** 0.11** Service product 0.64** 0.51** Service delivery 0.55** Service environment The result of correlation analysis is present in table 4 which show that the service product is positively related with customer satisfaction (r = 0.21, p<.01), service delivery (r = 0.19, p<.01) and service environment (r = p<.01) the result of correlation analysis provided initial support to the study hypothesis. Table 5: Multiple regressions Independent variable Beta Significant Service product Service delivery

9 Service environment Table 5 shows that only service product is positively related with customer satisfaction, service delivery and service environment was not related with customer satisfaction hence we can say that only H1 is supported. CONCLUSION This study has been conducted to describe relationship between service quality and customer satisfaction towards the public sector banking industries in India. The finding clearly shows that service product is better predictor of customer satisfaction than service delivery and service environment. Hence we can say that public sector banks need to focus on service product to win customer satisfaction On the other hand we can say Customer satisfaction will be better if they recognize that there is a favorable service product, Relationship quality has a significant influence on behavioral intention, That means customer satisfaction and trust established will enhance word-of-mouth and repeated patronage, Service delivery and service environment both are not significant predictors of satisfaction, towards their service the organization focus on service product, The development of new product should be according to the customer need. A regular service should be given to the customer through the department website, Brochures and other by conducting regular survey, the result can be used by the department to come up with a new excellent product such as quality of printing or documentation for delighting their customer. REFERENCE Ahearne, M., Jelinek, R., and Jones, E Examining the effect of salesperson service behavior in a competitive context. Journal of the Academy of Marketing Science 35(4): Bitner, M.J., Booms, B.H., and Tetreault, M.S The service encounter: diagnosing favourable and unfavourable incidents. Journal of Marketing. 54: Bitner, M.J Servicescapes: the impact of the physical surroundings oncustomers and employees. Journal of Marketing. 26: Bitner, M.J. and Hubbert, A.R Encounter satisfaction versus overall satisfaction versus quality: the customer s voice, in Rust, R.T. and Oliver, R.L.(Eds), Service Quality: New Directions in Theory and Practice. Sage Publication. London, Deng, W.J. and Pei, D.L Development of the Hospitality Quality Consciousness Scale: A Pilot Study. The Business Review, Cambridge. 12(1):

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