AN ANALYSIS OF THE SERVICE GAP OF ADVERTISING AGENCIES IN BANGLADESH: AN EMPIRICAL STUDY ON AD AGENCY CLIENTS

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1 BANGLADESH RESEARCH PUBLICATIONS JOURNAL ISSN: , Volume: 3, Issue: 4, Page: , March-April, 2010 AN ANALYSIS OF THE SERVICE GAP OF ADVERTISING AGENCIES IN BANGLADESH: AN EMPIRICAL STUDY ON AD AGENCY CLIENTS Farhana Khan Farhana Khan.(2010). An Analysis of the Service Gap of Advertising Agencies in Bangladesh: An empirical Study on Ad Agency Clients. Bangladesh Res. Pub. J. 3(4): Retrieve from Abstract An Advertising Agency or ad agency is a service provider that works for clients to create an effective and goal oriented advertising campaign aimed at representing the Company positively in the eyes of its target customers. Businesses hire advertising agencies to connect with their target customers. In the face of stiff competition, every Co / brand wants to break through this clutter and create a favorable space for itself. Ad agencies help clients to do just this by creating attention grabbing, persuasive and unique ad campaigns that make the brand stand out in the minds of customers. Many businesses organizations are involved with different advertising agencies in order to maintain their activities effectively and efficiently. But till now, this sector has not developed their service up to level of expectation of user. There are plenty of reasons behind such condition of this sector, but one of the important reasons is that Ad agencies failed to meet the expectations of the clients regarding services. This study aims to compare the client s perceptions and expectations of services offered by the advertising agencies in Bangladesh and find out the gap by using the SERVQUAL model as the basis of conducting the research. Among the seven major service gaps, this study was concerned about gap five, i.e. the between the expectations and perceptions of the clients of Advertising Agencies. For conducting this research, 50 clients in the Dhaka city were selected who are involved with Ad agencies. From data analysis it is found that there is a significant gap exists between the clients expectations and perceptions in all the items under all of the dimensions of the chosen Model. As the highest gap exist in the Responsiveness dimension of the SERVQUAL model, the Ad agencies should concentrate on all the items of this dimension in order to minimize the service gap. It is also found that user perceptions vary significantly across their level of education, the different types of clients, and their status of experience with the agency. Employees of the agencies should give prompt service to clients and always be willing to help them. Moreover, they should not show any business to respond to customers requests. This study recommends some steps to minimize the service gap for the future growth of the Advertising agencies in Bangladesh. Key words: Advertising, Advertising Agency, Service gap, SERVQUAL Model Introduction With the growing population of the world, it is a natural thing that there is a great demand for products of all kinds. This demand for products means that there is an obvious need to create such products and launch them in the market. Another factor at work here is the growing industry which manufactures everything imaginable under the sun. Hence, there is a subsequent need to let Lecturer, Faculty of Business Administration, Eastern University

2 Farhana Khan people know about these myriad products. Herein comes the concept of advertising. Most individuals are ignorant about many products. Since the company has come to the market with the objective of selling its product, the onus is on the company itself to let more and more people know about their product. It is through advertising that this can be done. With the development of printing technology in the 15th and 16th centuries, handbills were used as a form of advertising. By the 17th century, newspaper advertisements made their way in England, which were mainly for printed books, and medicines. By the 19th century, classified advertisements became popular in the United States for promoting a variety of goods. This century also brought in the first advertising agency in Philadelphia, in From just being brokers for ad space in newspapers, the advertising agencies graduated to writing ad contents by the 20th century. An advertising agency or ad agency is a service business dedicated to creating, planning and handling advertising (and sometimes other forms of promotion) for its clients. An ad agency is independent from the client and provides an outside point of view to the effort of selling the client's products or services. An agency can also handle overall marketing and branding strategies and sales promotions for its clients. Typical ad agency clients include businesses and corporations, non-profit organizations and government agencies. Agencies may be hired to produce an advertising campaign. Many businesses organizations are involved with different advertising agencies in order to maintain their activities effectively and efficiently. But till now, this sector has not developed their service up to level of expectation of user. There are plenty of reasons behind such condition of this sector, but one of the important reasons is that Ad agencies failed to meet the expectations of the clients regarding services. This study aims to compare the client s perceptions and expectations of services offered by the advertising agencies in Bangladesh and find out the gap by using the SERVQUAL model as the basis of conducting the research. Objectives of the study The main objective of this study is to find out the service gap, i.e, the gap between the expectations and perceptions of the customers (here clients) about the service rendered by the Advertising Agencies. Specific objectives of this study are: To find out the expectations of the clients of Advertising Agencies To find out the perceptions of the clients of Advertising Agencies To find out whether the customers (here clients) perceptions vary across their different levels of education or not. To find out whether the customers (here clients) perceptions vary across the different types of customers (here clients) or not. To find out whether the customers (here clients) perceptions vary across their status of experiences or not. Advertising agencies in Bangladesh It is not long time adverting agencies have emerged as a major contributing industry to the economy of Bangladesh. More than 50 agencies are operating business currently in Bangladesh. Table 1 shows the list of the Leading Advertising Agencies in Bangladesh. These agencies come in all sizes and include everything from one or two person shops (which rely mostly on freelance talent to perform most functions), small to medium sized agencies, large independents, and multi-national, multi-agency conglomerates. Most full-service agencies work on a combination of fee-based and commission based compensation. The fee is paid by the entity for which the marketing is being done. The commission is a 1172

3 An Analysis of the Service Gap 1173 payment from the medial to the agency and is usually equal to 15% of the cost of the advertisement. The broadcast media, radio and television traditionally pay a commission. Interactive agencies may differentiate themselves by offering a mix of web Design/Development, Search Engine Marketing, Internet Advertising/Marketing, or E-Business/E-Commerce consulting. The advertising agencies always try to give their best for your product because they want to create a good impression on you so that you will refer others to their agency and remain faithful to their work. Table-1.Leading Advertising Agencies in Bangladesh Adcomm Ltd Media Comm Ltd Tint Communication Asiatic Marketing Neptune Adverting Universal Media Communication Ltd Benchmark Limited Nimbus Adverting Unitrend Ltd Beach Adverting Nishu Advertising ZANALA Bangladesh Bitopi Adverting Popular Advertising ACI Media Expression Ltd. Prism Andes Ltd. Grey Advertising Bangladesh Protishabda AD Headquarter Ltd. Ltd. Interface Communications Roop Communications AD SCIENCE Interspeed Advertising Step Media Ltd Bicon Ad. Mattra Triune Advertising Care Ad. Charisma Chowdhury Advertising Confidence Desh Procharoni Dhara Ad. Discovery Don Advertising DP7 Elegant Advertising Expressions Ltd. Gemini Genesis Glory Ad. GUNGCHIL Goti Media Ltd. Goti Media Ltd. Images Impression Ltd. Inter Ad. Private Ltd. Madona Media plus Media-mix Enterprise Ltd. Poli Adverting Prochito Protishabda Prova Ad Corner Rubicon Communications Sani Advertising Sharna Trade International The Austral Publicity Turn Communications Vision Advertising Wings Advertising COREMEDIA Ruma Advertising Perfect Design The Progoti Adverting Rekhayon Advertising Ltd. Arani Advertising Ltd Literature Review Services can be defined as any activity or benefit that one party can offer to another that is essentially intangible and does not result in ownership of anything. Its production may or may not be tied to a physical product. A company s offerings often include some services. (Lovelock Christopher, 2004). The instrument used in this study was adapted from SERVQUAL model (Parasuraman, Zeithaml and Berry, 1988). This model highlights the main requirements for delivering high service quality. Few studies have used SERVQUAL to mesure Ad agency s service quality (KIM 1990: Pitt, Watson and Kavan 1995; Shaw, Delone and Niedman 2002). These studies have confirmed that SERVQUAL can be used in the environment of Advertising agencies. The SERVQUAL is based on the concept of a service quality gap that exists between the customers expected level of services (from the previous experience and word-of-mouth communication) and their perception of actual level of service delivery. And the model also identifies seven gaps that cause unsuccessful delivery. The figure of the gaps of SERVQUAL Model is stated below:

4 Farhana Khan 1174 Word of mouth communication Personal needs Expected service Past experience Gap 5 Consumer Gap 6 Perceived service Provider Employee perceptions of consumer expectation Gap 3 Gap 4 Service delivery (including pre-and post contacts) Translation of perceptions into service quality specifications. External Communications to customers Gap 1 Gap 2 Gap 7 Management perceptions of consumer expectations. Figure 1. Model of service quality gaps (Parasuraman et al., 1985; Curry, 1999; Luk and Layton, 2002). Based on this service-quality model the researchers identified the following five determinants of service-quality in order of importance. 1. Reliability: Ability to perform the promised service dependably and accurately. 2. Responsiveness: Willingness to help customers and provide prompt service. 3. Assurance: Employees knowledge and courtesy and their ability to inspire trust and confidence. 4. Empathy: Caring, individualized attention given to customer. 5. Tangibles: Appearance of physical facility, equipment, personnel and written materials. Based on these five factors the researchers developed the 22-item SERVQUAL scale. These are listed below: 1. Reliability: Providing service as promised. Dependability in handling customers service problems. Performing services right the first time.

5 An Analysis of the Service Gap 1175 Providing services at the promised time. Maintaining error-free records. 2. Responsiveness: Keeping customer informed as to when services will be performed. Prompt service to customers Willingness to help customers Readiness to respond to customers requests. 3. Assurance: Employees who instill confidence in customers Making customers feel safe in their transactions Employees who are consistently courteous Employees who have the knowledge to answer customer questions. 4. Empathy: Giving customers individual attention. Employees who deal with customers in a caring fashion. Having the customers best interest at Heart. Employees who understand the needs of their customers Convenient business hours. 5. Tangibles: Modern equipment Visually appealing facilities Employees who have a neat, professional appearance Visually appealing materials associated with the service. Methodology This study used self-administered questionnaire to collect necessary data. The target population of this study was the clients of Advertising Agencies in Dhaka City who are provided services by these agencies in their business operation. Among various types of clients, this study only considered three types of clients such as businesses and corporations, non-profit organizations and government agencies. For conducting this research, necessary data had been collected from 50 customers (here clients) on a convenient basis. The detail of the sample size is shown in the following table. Table 2. Details of Sample Size Sl No. Types of clients(according to business size) Number of Clients 1 Non-profit organization 10 2 Business and corporations 35 3 Government agencies 05 Analysis and Findings t-test Total 50 For analyzing the data we have followed the t-test where null hypothesis was that there is no gap exists between the customers expectation and

6 Farhana Khan perception of service delivered by the Advertising agencies. As the t value of all items under the dimension of Reliability falls in significant area, we couldn t accept the null hypothesis. Thus we can conclude that, there is a significant gap exists between the users (here clients) expectations and perceptions in all the items under the dimension of Reliability. The following table shows the result: Table 3. Reliability SL. No. 1 The firm will perform the service right the first time 2 When the firm promises to do something by a certain time, it will do so. 3 When a customer has a problem, the firm will show a sincere interest in resolving it. a = Significance at 1% level 1176 Mean Scores t Expected Actual Value a a a As the t value of all items under the dimension of Responsiveness falls in significant area, we couldn t accept the null hypothesis. Thus we can conclude that, there is a significant gap exists between the users (here clients) expectations and perceptions in all the items under the dimension of Responsiveness. The following table shows the result: Table 4. Responsiveness SL. No. 1 Employees in the firm will give prompt service to customers 2 Employees in the firm will always be willing to help customers 3 Employees in the firm will never be too busy to respond to customers requests a = Significance at 1% level Mean Scores t Expected Actual Value a a a As the t value of all items under the dimension of Assurance falls in significant area, we couldn t accept the null hypothesis. Thus we can conclude that, there is a significant gap exists between the users (here clients) expectations and perceptions in all the items under the dimension of Assurance. The following table shows the result: Table 5. Assurance SL. No. 1 Employees in the firm will be consistently courteous with customers 2 Employees in the firm will have the knowledge to answer customers questions 3 Customers of the firm will feel safe in their transactions. a = Significance at 1% level Mean Scores t Expected Actual Value a a a As the t value of all items under the dimension of Empathy falls in significant area, we couldn t accept the null hypothesis. Thus we can conclude that, there is a significant gap exists between the users (here clients) expectations and perceptions in all the items under the dimension of Empathy. The following table shows the result:

7 An Analysis of the Service Gap 1177 Table 6. Empathy SL. No. 1 The firm will have employees who give customers personal attention 2 The employees of the firm will understand the specific needs of their customers 3 The firm will have the customers best interests at heart. Mean Scores t Expected Actual Value a a a a = Significance at 1% level As the t value of all items under the dimension of Tangibles falls in significant area, we couldn t accept the null hypothesis. Thus we can conclude that, there is a significant gap exists between the users (here clients) expectations and perceptions in all the items under the dimension of Tangibles. The following table shows the result: Table 7. Tangibles SL. No. 1 Materials associated with the service will be visually appealing in the firm a = Significance at 1% level Mean Scores t Expected Actual Value a Based on data analysis, the major finding of this study is that there is a significant service gap exists regarding the users expectations and their perceptions in all the items under all the dimensions of the SERVQUAL Model. It indicates that the vendors are not concerned about expectations of their customers (here clients) regarding the services they offered. Though all the dimensions under this model represents gap, the intensity of the gap is not the same in all dimensions. Based on average mean score, the following table shows the intensity of the service gap of all the dimensions under the model concerned. Table 8. Relative position of the dimensions based on service Gap Dimensions Perception Average Expectation Average Reliability Responsiveness Assurance Empathy Tangibles From the above table it is clear that the Responsiveness dimension has the highest gap based on the customers (here clients) perception (mean score) and their expectations (mean score). The second large gap is found in the Empathy dimension. ANOVA To see whether the users perceptions vary across the different levels of education, types of clients, and status of users experience, the ANOVA test was used. The following tables (09, 10 and 11) show it. Gap

8 Farhana Khan Table 9. Variation of Users Perception across the level of Education Sl No. F Value 1. When a customer has a problem, the firm will show a sincere interest 5.636a in resolving it. 2. Employees in the firm will give prompt service to customers a 3. Employees in the firm will always be willing to help customers 7.213a 4. Employees in the firm will never be too busy to respond to 5.028a customers requests 5. Employees in the firm will have the knowledge to answer customers 3.311b questions 6. The firm will have the customers best interests at heart b 7. Materials associated with the service will be visually appealing in the firm 4.842a a= significance at 1% level, b= significance at 5% level From the above table it is clear that among the 13 items of the chosen model, customers (here clients) perceptions vary significantly across their level of education (under graduation, graduation, and post graduation) in the 7 items. Table 10. Variation of Customers Perception across Different Types of Customer Sl No. F Value 1. When a customer has a problem, the firm will show a sincere interest in 2.592b resolving it. 2. Employees in the firm will always be willing to help customers 3.514b 3. Employees in the firm will be consistently courteous with customers a 4. Employees in the firm will have the knowledge to answer customers a questions 5. The firm will have employees who give customers personal attention a 6. The employees of the firm will understand the specific needs of their 4.951a customers 7. The firm will have the customers best interests at heart a a= significance at 1% level, b= significance at 5% level Above table shows that customer perceptions also vary significantly across the different types of customers in 7 items out of 13 of the chosen model. Table 11. Variation of Customers Perception across status of their Experience Sl No. F Value 1. When the firm promises to do something by a certain time, it will do 6.606a so. 2. The firm will perform the service right the first time 7.827a 3. Employees in the firm will give prompt service to customers 4.328b 4. Employees in the firm will always be willing to help customers Employees in the firm will never be too busy to respond to 4.951b customers requests 6. Employees in the firm will be consistently courteous with customers 6.760a 7. Employees in the firm will have the knowledge to answer customers a questions 8. The firm will have employees who give customers personal attention a 9. The employees of the firm will understand the specific needs of their 7.248a customers 10. The firm will have the customers best interests at heart a a= significance at 1% level, b= significance at 5% level 1178

9 An Analysis of the Service Gap 1179 Above table indicates that customers perceptions also vary significantly across their status of experience with agency in 10 items out of 13 of the chosen model. Finally, it can be said that there is a significant gap exist between the perceptions and expectations of the customers regarding the services provide by the Agencies and there is a significant variation in the customers perceptions across their different level of education, the different types of customers, and their status of experience with software. Limitations of the study Like any other research work, several limitations are associated with this task. They are as follows- Data were not available about customers as well as about agencies. Some respondents were reluctant to provide information about the subject mater. Further scope of the study Actually this study was conducted to find out the service gap between the customers perception and expectation by using the SERVQUAL model. This is a unique study because in case of analyzing the service gap of the Advertising Agencies, the SERVQUAL model was not used here in Bangladesh. But the same study can be done by using SERVPREF model (Cronin and Taylor 1992) also. So, there will be an opportunity for the researchers to conduct the same study by using another model and there will be a scope to find out the validity of such type of research. Conclusions Based on the SERVQUAL model, this article developed a questionnaire to evaluate the customers perceptions of services rendered by the Advertising Agencies in Bangladesh. A significant service gap (gap between the customers perception of services and their expectations) has been found in all dimensions of the chosen model. But among five dimensions, the largest service gap exists in the responsiveness dimension. So the Advertising Agencies should concentrate on each and every item under all the dimensions of the SERVQUAL model in order to improve their target customers perceptions of services quality. Besides, the customers perceptions about the services rendered by the Advertising Agencies vary significantly across their level of education, the different types of customers, and their status of experience with agency. Thus service providers should concern about the users level of education, the experience they have about the agency and different types of customers in order to ensure the better quality services. Recommendations As the highest gap exist in the Responsiveness dimension of the SERVQUAL model, the Ad agencies should concentrate on all the items of this dimension in order to minimize the gap. Employees of the agencies should give prompt service to customers and always be willing to help them. Moreover they should not show any business to respond to customers requests. The advertising agencies should have employees who give customers personal attention. Agencies should understand the actual need of their customers as they are offering services. The firm should have the customer s best interests at heart. The firm should keep its promises to do something by a certain time. When a customer has a problem, the firm should show a sincere interest in resolving it. Moreover they should perform the service appropriately the first time. Employees of the agencies should be consistently courteous with customers. The agencies should take in to consideration the education level of the user as it is one of the factors that causes the variation in the customers perceptions of services.

10 Farhana Khan References Babakus, E., and G.W. Boller, 1991, An empirical assessment of the SERVQUAL scale. Journal of Business Research 24,pp Babakus, E., and G.W. Boller, 1991, An empirical assessment of the SERVQUAL scale. Journal of Business Research 24,pp Kotler Philip, Keller Kevin Lane, Marketing Management, Twelfth edition, Pearson Hall, pp , Love lock Christopher, Wirtz Jochen, 2004, Service Marketin: People, Technology, Strategy, 5 th edition, Pearson education(singapore) Pte. Ltd., pp Parasuraman A., Zeithaml V.A, and Berry L.L., 1988, SERVQUAL:A multiple-item Scale for Measuring consumer Perceptions of Service Quality, Journal of Retailing 64 (spring 1988), pp Zeithaml Valarie A., Bitner Mary Jo, 2003, Services Marketing: Integrating Customer focus across the firm, third edition, TATA McGraw-Hill publishing Company Limited,pp61-79,84-113, Appendix 01 Questionnaire on Service Gap Analysis Name of the respondent: Address: 1=Strongly Disagree, 2=Disagree, 3= Neutral, 4=Agree, 5= Strongly Agree What do you How do you rate expect an Ad firm your firm s service to be liked for each performance for factor? each factor? 1 When the firm promises to do something by a certain time, it will do so. 2 When a customer has a problem, the firm will show a sincere interest in resolving it. 3 The firm will perform the service right the first time 4 Employees in the firm will give prompt service to customers 5 Employees in the firm will always be willing to help customers 6 Employees in the firm will never be too busy to respond to customers requests 7 Employees in the firm will be consistently courteous with customers 8 Employees in the firm will have the knowledge to answer customers questions 9 The firm will have employees who give customers personal attention 10 The employees of the firm will understand the specific needs of their customers 11 The firm will have the customers best interests at heart. 12 Customers of the firm will feel safe in their transactions. 13 Materials associated with the service will be visually appealing in the firm

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