The Effects of Perceived Service Quality on Customer Satisfaction at Al Ain Distribution Company - Research Paper Example

?The Effects of Perceived Service Quality on Satisfaction at Al Ain Distribution Company (AADC) Introduction satisfaction has become a fundamental marketing concept as it remains to be a crucial factor in fulfilling customer needs and wants (Burton, Sheather, and Roberts, 2003; Evanschitzky, Groening, Mittal, and Wunderlich, 2010). Companies provide products and services along with satisfaction to customers; in turn, such businesses acquire profits. Research on the service sector and the quality of services that they offer emphasizes the need for service providers to meet or exceed the expectations of customers, thereby enhancing their levels of satisfaction (Voss, Roth, Rosenzweig, Blackmon, and Chase, 2004). Commonly, it has been interpreted that satisfaction is characterized by a feeling that is brought about by the evaluation process regarding what customers expect, such as the decision to purchase the service along with their needs and desires associated with such purchase. Moreover, according to Bitner and Zeithaml (2003), satisfaction reflects whether the service has fulfilled the customers’ needs and expectations. Satisfaction can be a positive and emotional state as an outcome of the evaluation of a working relationship (Boeselie, Hesselink, and Wiele, 2002). Over the recent years, due to such definition, there has been a focus on service quality and customer satisfaction among service providers and researchers alike, although such concepts are two conceptually distinct variables from the perspectives of customers. Background of the Study The researcher aims to focus on the Al Ain Distribution Company (AADC) which is a public joint stock company in the United Arab Emirates owned by the Abu Dhabi Water and Electricity Authority. AADC remains to be the largest distributor of electricity and water in the eastern region of Abu Dhabi (AADC, 2009). The company holds total ownership, control and regulation of electricity and water distribution, and operation of services for electricity and water supply. AADC aims to commit to their shareholders by bringing about the required investment returns. It also attempts to demonstrate excellent service quality by making sure that the provision of electricity and water is at a high level of superiority and that professionalism is shown through customer transactions and business actions that fulfill customer needs. Finally, AADC aims to stay committed to their employees through equitable treatment, effective employee recruitment and development, empowerment, competency maximization, recognition of contributions, and a safe and secure working environment. Through such objectives, the AADC aims to follow high standards to bring about favorable outcomes in their daily course of action. Research Objectives The current study aims to address one main objective and that is to examine the relationships of perceived service quality dimensions, as suggested by Parasuraman, Zeithaml and Berry (1988) (reliability, responsiveness, tangibility, empathy, and assurance) on the satisfaction of customers in Al Ain Distribution Company (AADC). Review of Related Literature Customer Satisfaction A wide number of researchers have examined the important role that customer satisfaction plays in achieving long-term business success (Homburg and Stock, 2005; Schmit and Allscheid, 1996). Although customer satisfaction has been described through various definitions, generally, a process for evaluation is a vital component that comprises customer satisfaction. It is an evaluation provided by customers with regards to their consumption experience or service encounter based on how favorable it should be (Hunt 1977). Engel and Blackwell (1982) also referred to this concept as an evaluation whether the selected option is in accordance with prior notions regarding such alternative. Hence, such conceptualizations point out that customer satisfaction is the process of assessing the observed differences between expectations and actual performance/encounter. Furthermore, according to Kotler (2001), satisfaction can be described as the feelings of an individual characterized by contentment or displeasure, as an outcome of his/her comparison between the perceived product/service outcome and to his/her expectations. It has also been suggested by Hoyer and Macinnis (2001) that satisfaction can be linked with positive feelings including happiness, delight, and acceptance. A wide range of factors have been reported to influence the satisfaction levels of customers; as asserted by Hokanson (1995), such factors may include the friendliness, courtesy, knowledge and willingness of employees; accuracy and convenience of services, overall service quality, pricing, clarity of product/service and price, and good value. Achieving a high level of customer satisfaction is to suggest that the needs and desires of customers are satisfied- their needs imply their deprivation of a certain component while their wants may be brought about by cultural influences and individual personality (Kotler 2000). Organizations place considerable value on customer satisfaction as a fundamental practice for marketing as the primary goal of businesses is to create satisfaction among customers. An increased level of customer satisfaction has been shown to result to increase profitability, or financial performance, reduce costs in relation to substandard products and services, increase willingness among purchasers to pay for price premiums, encourage buyers to give out positive recommendations, as well as motivate them to frequently make use of the product/service (Anderson and Mittal 2000). Consequently, to increase loyalty through satisfaction can further lead to higher future revenues and decrease of transaction-related costs in the future. The evidence points out toward the fact that customer satisfaction plays an essential part in the customers’ and organizations’ perspective. The financial performance of an organization, particularly in the future, heavily relies on customer satisfaction at the present time as retained customers must be considered as valuable assets that produce revenues for the company (Malthouse, Oakley, Calder, and Iacobucci, 2004). Empirical research has also shown that enhanced levels of customer satisfaction do not require substantial financial costs; indeed, a high level of satisfaction among buyers can further reduce costs associated with the redesign/rework of products and services or faulty goods. The important principle to establish satisfaction and retention among purchasers as well as obtaining the benefits that these can provide is to emphasize the planning and implementation of products and services that are of high quality. Customer satisfaction and retention which are attained by means of switching barriers, price promotions, and other similar means are not likely to bring about the same considerable impact that results from attracting and retaining customers through high quality goods and services (Matzler, Fuller, Renzl, Herting, and Spath, 2008). Therefore, to design such products and services that can fulfill and satisfy customer needs and expectations can yield positive long-term outcomes for both the organization and its customers. Service Quality The service industry has approximately generated more than half of the world’s gross national product since the beginning of the new millennium (Kara, Lonial, Tarym, and Zaim, 2005). For the service sector, service quality remains to be a strategic and valuable asset due to its association with customer satisfaction and retention, positive word-of-mouth and recommendation, repurchasing behavior among buyers, and expansion of market shares (Siu and Cheung 2001; Wisniewski, 2001). Owing to such facts, there is a need for service providers to thoroughly evaluate service quality to acquire strategic benefits, thus the considerable significance of research on service quality. Service does not refer to a physical or tangible product; rather, it is characterized by a certain process or performance. Services can be heterogeneous, consumable, and involve simultaneity (Jain and Gupta, 2004). Such aspects differentiate service quality from product quality; due to the indefinable nature of service and quality, it has been a challenge to measure and assess service quality (Bamert and Wehrli, 2005). In a study by Parasuraman, Zeithaml and Berry (1988), service quality was defined through perceived service quality. The researchers defined service quality as the perceptions of customers regarding the service provider’s superiority. It has also been asserted by Llosa, Chandon, and Orsingher (1998) that service quality is a form of attitude that has resulted from customer expectations and perceived actual performance; customers evaluate the quality of service through a comparison of the expected one and the one that has been experienced, hence the gap between perceived and expected service as the rate of customer quality. Parasuraman et al (1988) proposed five dimensions of service quality which included (1) reliability, (2) assurance, (3) tangibles, (4) empathy, and (5) responsiveness. Reliability is characterized by the service provider’s ability of performing service in an accurate and dependable manner whereas assurance has been described as the knowledge and courteousness demonstrated by employees. Tangibles are the physical surroundings and equipment as well as the employees’ appearance while empathy refers to the individual attention and care provided to customers. Finally, responsiveness is evident through the willingness in helping and providing service to customers. Customer satisfaction has been reported as one of the fundamental consequences of service quality and can influence the long-term success and survival of the service company (Parasuraman, Zeithaml, and Berry, 1994). Generally, customer satisfaction is influenced by the expectations of customers before obtaining a particular service. To understand such notions, it is necessary that service quality is differentiated from customer satisfaction; moreover, distinction between service expectations and perceptions must be made. Service expectations incorporate the predictions of customers with regards to what is anticipated to happen in a service encounter along with their desires from such experience; service perceptions are characterized by the customers’ comprehensive evaluation in relation to the excellence of the service. Through such definitions, service companies can further improve overall satisfaction among customers by enhancing customer perceptions or lowering their expectations. If services are not provided efficiently, service expectations may be higher than the customers’ perceptions. Hence, such malfunction can be referred to as a negative digression from the customers’ expectation. If the company continues to provide such ineffective service and fails to recover from such defect, this may result to customer satisfaction and consequently lead to their intentions of switching service providers (McCollough, Berry, and Yadav, 2000). All in all, aside from satisfaction, high levels of perceived service quality can lead to positive behavioral intentions among customers (Yuan and Jang, 2008). Behavioral intentions refer to the decisions of customers regarding future activities with the service company (Hume, Mort, and Winzer, 2007) and can be assessed through customer intentions of repurchase, customer loyalty, positive recommendations/word-of-mouth, complaining behavior, and sensitivity to price (Olurunniwo, Hsu, and Udo, 2006). Therefore, there is a need for service providers to carefully consider both customer satisfaction and perceived service quality. Methodology The main objective of this portion is to delve into the various methods used by the researcher in gathering data to address the research aims of the study. Determining the advantages and disadvantages of the methods to be used as well as the manner with which these will be carried out play a significant role in the methodologies section as these will further guide the researcher in successfully answering the study’s main problem. Generally, the current chapter aims to identify and discuss the most appropriate research strategy that will be utilized for data gathering and analysis in order to generate consistent results as well as to make justifiable conclusions in relation to the variables used in the study. The current study will make use of a quantitative approach to research which will be described, in the following sections. The research design, research strategy, sampling method, procedures, and method of data analysis will all be discussed and to be subsequently followed by a conclusion for the chapter. Research Approach The research will make use of a quantitative approach to research in order to gather information regarding the relationship between perceived service quality and customer satisfaction in the Al Ain Distribution Company (AADC). Positivism is the underlying principle for this approach and will aim to gather data in a numerical and methodical manner in order to create tables, scales, and graphs, and enable the data to undergo statistical analysis. Surveys are the most common instruments for data collection in a quantitative research, hence, researchers should provide simple and clear survey statements for a systematic process of data gathering, analysis, and interpretation (Balnaves and Caputi, 2001). Hypotheses should also be created before the research is carried out and tested using statistical analysis. Quantitative data are more precise since it is tailored specifically for the purposes of the study. Quantitative research can also identify relationships and cause and effect relationships between variables, unlike qualitative research that are limited to describing (Wholey, Hatry, and Newcomer, 2004). The sample size needed for a quantitative study is generally larger than the sample size needed for a qualitative data. On the other hand, the qualitative approach to research primarily relies on observations and aims to attain a comprehensive perspective of all gathered data in order to understand the subject. Denzin and Lincoln (2003) defined qualitative research as a kind of empirical study that is interpretative or naturalistic, which implies that it observes the variables being studied in their natural environment, without manipulation. However, this form of approach consumes more time and effort for data collection and analysis. A qualitative research also is primarily concerned with processes rather the products or the outcomes. It aims to understand and make meaning on how people make sense of their lives and the world, thus it commonly involves fieldworks and human interactions. The researcher immerses himself or herself into the field and physically interacts and observes the subjects. Research Strategy The current research will use survey questionnaires to be deployed among the study’s respondents for the collection of primary data in AADC. Accordingly, the encoding of data will be conducted and the results be subjected to statistical analysis. Such quantitative procedures can provide more benefits to the researcher as these allow for accuracy, reliability, and convenience. These methods may also be favorable to the participants as well as survey questionnaires allow these selected individuals to answer questions privately without having to directly converse and communicate with the researcher, hence, possibly resulting to more honest, unbiased, and reliable answers (Balnaves & Caputi, 2001). Research Design A descriptive, correlational research design will be applied for this current research which aims to delve into the relationship between perceived service quality and customer satisfaction (Bernard, 2006). Using such research design will not allow the researcher to influence the subjects to be examined. The descriptive aspect of such design enables the researcher to directly observe a particular condition as it occurs. In this case, the ratings on the variables influencing customer satisfaction and the latter shall make for the descriptive comoponent of the study. Consequently, the outcomes will be correlated in order to identify the most significant predictors of customer satisfaction. Hence, the correlational design assists researchers in determining the positive relationships among/between variables and identifying which should be further examined in the future. Subjects and Sampling Plan A type of non-probability sampling, known as the purposive sampling, will be applied in the current study. To make use of this method is to ensure that all participants possess a number of characteristics that match the necessary attributes of the study’s sample. In the present case, the researcher will select the sample from the customers of Al Ain Distribution Company (AADC), particularly those who have been customers of the firm for 6 months or more. 120 customers will be the target population for the study using a purposive sampling procedure. Data Collection Procedures Secondary data for the study will be gathered by collecting information relevant to the subject through books, journal articles, and online resources. All gathered data will then be integrated and structured to create a portion in the study set aside for the review of related literature with regards to perceived service quality and customer satisfaction. Meanwhile, survey questionnaires will be distributed to the study’s participants as a means for collecting data in order to examine how customers’ perceived service quality can affect their satisfaction levels. The sample will be selected through purposive sampling with which participants should be customers of the AADC for at least 6 months or more. Consent forms will also be distributed to confirm the willingness of the selected individuals in participating in the research. Accordingly, once survey questionnaires are completed and returned, the researcher will then make use of the Statistical Package for the Social Sciences (SPSS) version 16.0 for the encoding of results and generating statistics from the collected data. Data Analysis Quantitative statistical analysis will be conducted when results have been encoded in order to come up with accurate statistics for measuring the relationship between the two variables- perceived service quality and customer satisfaction. Moreover, linear regression shall be used for ascertaining which variables predict customer satisfaction at AADC. Summary The current study will make use of a quantitative research design with which respondents will be selected, using purposive sampling, from the customers of AADC. The latter may provide relevant information on how they perceive service quality in the company and how this affects their level of satisfaction. Secondary data will be gathered from relevant literature to further examine the association of the two variables. Survey questionnaires will be distributed to the participants; consequently, the collected data will be encoded in the SPSS version 16.0 to produce statistics that will permit the researcher to address the research objectives. References AADC (Al Ain Distribution Company) (2009) AADC overview. Retrieved from: http://www.aadc.ae/ Anderson, E.W., and Mittal, V. (2000). Strengthening the satisfaction- profit chain. 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