Customer satisfaction towards the bank card service quality at ho chi minh city

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OUM OPEN UNIVERSITY MALAYSIA RESEARCH PROJECT (BMBR5103) Research Proposal CUSTOMER SATISFACTION TOWARDS THE BANK CARD SERVICE QUALITY AT HO CHI MINH CITY STUDENT’S FULL NAME STUDENT ID INTAKE ADVISOR’S NAME & TITLE : HA NGUYEN PHUOC BAO NGUYEN VO GIAO HUONG : 2448461 2448448 : MAY 2012 : DR. UT TRAN October 2013 Business Research Methods ADVISOR’S ASSESSMENT ............................................................................................................................................ ............................................................................................................................................ ............................................................................................................................................ ............................................................................................................................................ ............................................................................................................................................ ............................................................................................................................................ ............................................................................................................................................ ............................................................................................................................................ ............................................................................................................................................ ............................................................................................................................................ ............................................................................................................................................ ............................................................................................................................................ ............................................................................................................................................ ............................................................................................................................................ ............................................................................................................................................ ............................................................................................................................................ ............................................................................................................................................ ............................................................................................................................................ Advisor’s signature Ha Nguyen Phuoc Bao & Nguyen Vo Giao Huong Business Research Methods ACKNOWLEDGEMENT We would like to express our special thanks of gratitude to our teacher – Dr. Ut Tran who gave us the golden opportunity to study a lot of information knowledge about Business Research Methods. Through Assignment on the title: Customer satisfaction towards the bank card service quality at Ho Chi Minh city, which also helped us in doing a lot of research and we came to know about so many new things. We are really thankful to Dr. Ut Tran. With kindest regards, Ha Nguyen Phuoc Bao & Nguyen Vo Giao Huong Ha Nguyen Phuoc Bao & Nguyen Vo Giao Huong Business Research Methods Table of contents Executive summary .................................................................................................. 1 CHAPTER 1: INTRODUCTION 1.1. Research background ................................................................................... 2 1.2. Research statement ...................................................................................... 3 1.3. Research objectives and the scope of the research ...................................... 4 1.4. Research significance .................................................................................. 5 CHAPTER 2: LITERATURE REVIEW 2.1. Research definition ...................................................................................... 6 2.1.1. Service quality .......................................................................................... 6 2.1.2. Customer satisfaction ............................................................................... 10 2.1.3. Relationship between service quality and customer satisfaction ............. 11 2.2. Related research ........................................................................................... 13 2.3. Related model in an analysis ....................................................................... 15 2.4. Theoretical framework ................................................................................ 22 CHAPTER 3: RESEARCH METHODOLOGY 3.1. Type of the research .................................................................................... 26 3.2. Research design .......................................................................................... 27 3.2.1. Data collection .......................................................................................... 28 3.2.2. Data analysis ............................................................................................. 31 3.2.3. Budget ....................................................................................................... 33 3.3. Activity plan ................................................................................................ 33 References ............................................................................................................... 35 Ha Nguyen Phuoc Bao & Nguyen Vo Giao Huong Business Research Methods Figures Figure 1: Gaps model of service quality............................................................. 17 Figure 2: Conceptual framework ........................................................................ 22 Tables Table 1: Relation between original model and adjusted model ......................... 20 Table 2: Estimated for cost of survey ................................................................. 33 Charts Chart 1: Activity plan ......................................................................................... 34 Ha Nguyen Phuoc Bao & Nguyen Vo Giao Huong Business Research Methods EXECUTIVE SUMMARY The study focused on finding the relationship between service quality variables and customer satisfaction toward bank card in Ho Chi Minh city. Service quality and customer satisfaction are very important concepts that companies must understand in order to remain competitive in business and grow. Customer responses were measured through an adapted questionnaire on a 5-point Likert scale. Hard copy questionnaire were distributed customer using card at the other banks and malls in Ho Chi Minh city. Total number of sample collected was 477. The data was analyzed using SPSS. Frequency, ANOVA, T-Test and Correlation analysis are used for to assess the hypothesis. The correlation analysis provided full support to prove almost all the hypothesis relation. Reliability test used for the data are actually reliable or not. And Frequency used for what percentages of people are answering the question for support the hypotheses. The results showed there is significant relationship between the service quality variables. The results also showed that there was a difference in satisfaction level between customer who are using card at the bank in Ho Chi Minh city. From this study the banks will get useful feedback on their actual service quality and know their customers’ satisfaction level from using bank card to improve better card service quality in future. Although we only make study customer satisfaction towards service quality the bank card at Ho Chi Minh city but we make sure it also shows overview picture of the market card in Vietnam. Ha Nguyen Phuoc Bao & Nguyen Vo Giao Huong Page | 1 Business Research Methods CHAPTER 1: INTRODUCTION This chapter presents the introduction to the study. It entails the research background, research problem statement, research objective and scope of the research, and research significance. 1.1. Research background Customer satisfaction is imperative for the long term success of any organization. Generally, any organization needs to know how to keep their customers, even if they seem to be satisfied. This can basically determine the success and profitability of a company as a satisfied customer would most likely to spread the good word or would have be happy to do business again with the firm. The banking industry is highly competitive, most bank product developments are easy to duplicate and when banks provide nearly identical services, they can only distinguish themselves on the basis of brand of bank, price and quality. Therefore, customer satisfaction is potentially an effective tool that banks can use to gain a strategic advantage and survive in today’s ever-increasing banking competitive environment. Banks are the financial institutions that provide different services through deposit products, loan-products and card products is one of the prominent service of bank, which offers customers 24 hours banking access, such as cash withdrawal, purchasing of goods and services, and so on. In today’s fast-paced and increasingly competitive market, keeping the importance of customer satisfaction in mind, banks need to maintain stable and close relationships with their customers. Customer satisfaction levels need to be judged. Therefore, my group decided to study “Customer satisfaction towards the bank card service quality at Ho Chi Minh city” to assess customer satisfaction and look for the opportunity to improve card service quality. Ha Nguyen Phuoc Bao & Nguyen Vo Giao Huong Page | 2 Business Research Methods 1.2. Research statement Customer satisfaction gives an indication of how successful the organization is for its products or services in the market. Because it is said that customer is the God. With title of study "Customer satisfaction towards the bank card service quality at HCM city", we will consider to measure the satisfaction level of bank card users of different private commercial banks and to improve customer satisfaction toward card service quality. In the current trend, customer satisfaction identify the factors of service quality and according to this service quality can be evaluated based on five dimensions including reliability, assurance, tangible, empathy and responsiveness. ‒ Reliability: Ability to perform the service dependably and accurately. ‒ Assurance: Employees’ knowledge and courtesy and their ability to inspire trust and confidence. ‒ Tangibles: Appearance of physical facilities, equipment, personnel and communication materials. ‒ Empathy: Caring, individualized attention given to customers. ‒ Responsiveness: Willingness to help customers, provide prompt service and solve problems. All activities of the banks are directed towards customer satisfaction which leads to customer retention, a key factor for achieving the goal of banking business. Such as: Service quality was determined as the subjective comparison that customers make between their expectations about a service and awareness of how the service is run. Parasuraman (1985) defined service quality as a function of the differences between expectation and performance along ten major dimensions. In later research, Parasuraman (1988) revised and defined the service quality in terms of five dimensions: tangibility, reliability, responsiveness, assurance, and empathy. Ha Nguyen Phuoc Bao & Nguyen Vo Giao Huong Page | 3 Business Research Methods In the banking industry, most researchers are interested in customer satisfaction maximization. Hernon & Whitwan (2001) defined customer satisfaction as a measure of how the customer perceives service delivery. For this reason, it is important to understand how customer expectation is formed in order to identify the factors of service satisfaction. The fact that different customers have different expectations, based on their knowledge about a product or service. This may imply that a customer can make estimates of the service will be or might be thinking that what should be done. If you perform services that meet or exceed customer expectations, customers will be satisfied. On the other hand, customers are more likely to be satisfied if the provision of services is less than what they have expected. From this study the banks will get useful feedback on their actual service quality and know their customers’ satisfaction level from using bank card, which in turn will help them take positive steps to improve card service quality and to maintain a competitive edge. Beside, some recommendations are made on the basis of the measurement of satisfaction for better card services in future. 1.3. Research objectives and the scope of the research Research objectives: In the light of the above, the main objective of this study is to identify the banking services in HCM city. The study is conducted with the following objectives below: Identify the factors of customers’ satisfaction according to the model Servqual (Parasuraman, 1988). To measure customer satisfaction of bank card services in HCM city. Make comparative analysis of customer satisfaction at banks survey. Draw conclusions and make recommendations on what banks should do to increase customer satisfaction toward its card services. Ha Nguyen Phuoc Bao & Nguyen Vo Giao Huong Page | 4 Business Research Methods Scope of the research: A number of surveys are conducted in HCM city. This study is mainly confined to the customer preference and satisfaction towards banking services only, who have been using the particularly card. The survey is conducted from July to October, 2013 in HCM city. Limitation of the research: Every research has some limitations. In conducting this research the following limitations are faced: Sometimes respondents were reluctant to provide information. The primary data is collected through a structured questionnaire and the sample size is only limited to respondents. 1.4. Research significance With the phenomenal increase in the country's population and the increased demand for banking services, speed, service quality and customer satisfaction are going to be key differentiators for each bank's future success. There is an overview of the level of customer satisfaction with service quality of the bank card and identify the factors of customers‘ satisfaction based on to evaluate objectively customer needs and quality of service issuer current card. From the study, we make recommendation to enhance the performance of the bank and help customers satisfied when using the bank card service. And the lastly, the study contributes to completing framework of customer satisfaction measurement on bank card service quality. Ha Nguyen Phuoc Bao & Nguyen Vo Giao Huong Page | 5 Business Research Methods CHAPTER 2: LITERATURE REVIEW This chapter covers the literature reviewed of Theories, models and empirical evidence of the variables of the study - service quality and customer satisfaction. The literature reviewed include: research definition, Related research, Related Model in analysis, and theoretical framework. 2.1. Research definition 2.1.1. Service quality a. Service concept: Up to now, there is no definition of acceptable service on a global scale. The diversity, complexity and invisible of the type of service make the service definition more than difficult. According to Zeithaml & Britner (2000), the service is the behaviors, process, method to perform certain task in order to create value for customers to use, and to satisfy customer expectations. According to Kotler & Armstrong (2004), service is an act or performance offered by one party to another. They are the economic activities create value and benefits for customers at times and specific locations as a result of bringing the desired change that the business can provide to clients establish, strengthen and expand relationships and long-term cooperation with customers. According to the marketing experts and management thinkers the concept of services is a wider one. The term services are defined in a number of ways but not a single one is universally accepted. The distinct characteristics of services are mentioned below: ‒ Intangibility: Services are intangible and insubstantial: they cannot be touched, gripped, handled, looked at, smelled, and tasted. To overcome this, consumers tend to look for evidence of quality and other attributes, for example in the Ha Nguyen Phuoc Bao & Nguyen Vo Giao Huong Page | 6 Business Research Methods decor and surroundings of the beauty salon, or from the qualifications and professional standing of the consultant (Robinson, 1999). ‒ Heterogeneity Invariability: Because a service is produced and consumed simultaneously, and because individual people make up part of the service offering, it can be argued that a service is always unique; it only exists once, and is never exactly repeated. This can give rise to concern about service quality and uniformity issues. The quality of services cannot be standardized. This is due to the difference in perception of individuals at the level of providers and users. Heterogeneity makes it difficult to establish standards for the output of service firm (Caruana & Pitt, 1997). ‒ Inseparability: Services are generally created or supplied simultaneously. They are inseparable. Such the entertainment industry, health experts and other professionals create and offer their service at the same given time. Services and their providers are associated closely and thus, not separable. Therefore inseparability is an important characteristic of services which proves challenging to service management industry (Svensson, 2002). ‒ Perishability: Services are perishable; they cannot be stored. Perishability does not pose too much of a problem when demand for a service is steady, but in times of unusually high or low demand service organisations can have severe difficulties. b. Quality concept: Quality has many different definitions and there is no universally acceptable definition of quality. They claim it is because of the elusive nature of the concept from different perspectives and orientations and the measures applied in a particular context by the person defining it. This means that the definition of quality differences between manufacturing and service industries and among scholars and practitioners.. Ha Nguyen Phuoc Bao & Nguyen Vo Giao Huong Page | 7 Business Research Methods These variations are caused by the intangible nature of its components since it makes it very difficult to evaluate quality which cannot be assessed physical implying other ways must be outlined in order to measure this quality. Some definitions of quality pointed out by Hardie & Walsh (1994, p.53) include: ‒ According to Juran, 1985: Quality is product performance which results in customer satisfaction freedom from product deficiencies, which avoids customer dissatisfaction. ‒ According to Gitlow et al., 1989: Quality is the extent to which the customers or users believe the product or service surpasses their needs and expectations. ‒ According to International Standards Organization (ISO): Quality: the totality of features and characteristics of a product that bear on its ability to satisfy stated or implied needs. ‒ According to Wicks & Roethlein, 2009: Quality is defined as the summation of the affective evaluations by each customer of each attitude object that creates customer satisfaction. The above definitions of quality shed light in understand quality concept. Quality is a perceptual, conditional and somewhat subjective attribute and may be understood differently by different people. Consumers may focus on the specification of a product/service, or how it compares to competitors in the marketplace. Organizations might measure the conformance, or degree to which the product/service was produced correctly. c. Service quality: There are many researchers who have defined service quality in different ways as service quality is the result of the comparison that customers make between their expectations about a service and their perception of the way the service has been Ha Nguyen Phuoc Bao & Nguyen Vo Giao Huong Page | 8 Business Research Methods performed (Gronroos, 1984; Parasuraman et al., 1985; 1988; Caruana, 2002). However, there are also many others define such as: According to Asubonteng et al. (1996) define service quality as the different between customers’ expectations for service performance prior to the service encounter and their perceptions of the service received. According to Gefan (2002) define service quality as the subjective comparison that customers make between the quality of the service that they want to receive and what they actually get. According to Parasuraman &ctg (1985, 1988) define service quality is determined by the differences between customer’s expectations of services provider’s performance and their evaluation of the services they receive. Service quality is a focused evaluation that reflects the customer‘s perception of elements of service such as interaction quality, physical environment quality, and outcome quality. These elements are in turn evaluated based on specific quality dimensions: reliability, responsiveness, assurance, empathy and tangibles. Satisfaction, on the other hand, is more inclusive: it is influenced by perceptions of service quality, product quality, and price as well as situational factors and personal factors. According to Parasuraman, Zeithaml and Berry (1988), five principal dimensions that customers use to judge service quality include reliability, responsiveness, assurance, empathy, and tangibles as shown below. ‒ Reliability: the ability to perform the promised services both dependably and accurately. Reliable service performed is a customer’s expectation and means that the service is accomplished on time, in the same manner, and without error every time. ‒ Responsiveness: the willingness to help customers and to provide prompt service. Keeping customers waiting particularly for no apparent reason creates unnecessary negative perceptions of quality. If a service failure occurs, the Ha Nguyen Phuoc Bao & Nguyen Vo Giao Huong Page | 9 Business Research Methods ability to recover quickly and with professionalism can create very positive perceptions of quality. ‒ Assurance: the knowledge and courtesy of employees as well as their ability to convey trust and confidence. The assurance dimension includes the following features: competence to perform the service, politeness and respect for the customer, effective communication with the customer, and the general attitude that the server has the customer‘s best interests at heart. ‒ Empathy: the provision of caring, individualized attention to customers. Empathy includes the following features: approachability, sensitivity and effort to understand the customer‘s needs. ‒ Tangibles: the appearance of physical facilities, equipment, personnel, and communication materials. The condition of the physical surroundings is tangible evidence of the care and attention to detail that are exhibited by the service provider. This assessment dimension also can extend to the conduct of other customers in the service. Without any doubt, service quality is very important component in any business related activity. This is especially so, to marketer a customer’s evaluation of service quality and the resulting level of satisfaction are perceived to affect bottom line measures of business success. 2.1.2. Customer satisfaction Kotler (1996) defined customer satisfaction as the level of a person felt state resulting from comparing a product’s perceived performance or outcome in violation to them own expectations. Therefore, customer satisfaction can be regarded as an act of comparison between input before hand and all obtainments. As the research focuses on the satisfaction survey of library use, customer satisfaction is defined as the level of quality of service performance meets user expectations. Ha Nguyen Phuoc Bao & Nguyen Vo Giao Huong Page | 10 Business Research Methods Substantial research has been done in the field of customer satisfaction. Various researchers have defined customer satisfaction in different ways: ‒ Customer satisfaction is a person’s feelings of pleasure or disappointment that result from comparing a product’s perceived performance to their expectations. (Oliver, 1980) ‒ Satisfaction is the consumer’s response to and evaluation of the perceived discrepancy between prior expectations and the actual performance of the product as perceived after its consumption. (Tse & Wilton, 1988) ‒ Satisfaction can be broadly characterized as a post-purchase evaluation of product quality given pre-purchase expectations. (Anderson & Sullivan, 1993) As evidence from the above definitions of customer satisfaction, in order to measure satisfaction, it is necessary to measure the expectations at the time of purchase and at a reaction time after purchase. If actual consequences equal or exceed expected consequences, the customer is satisfied, but if actual consequences fall short of expected consequences, the customer is dissatisfied. From the above, satisfaction by their definition seems to be attitude. For that it is necessary to measure the customer expectations and their consequences. It is important to understand the ranges of customer expectations and consequences which need to be assessed. 2.1.3. Relationship between service quality and customer satisfaction The relationship between service quality and customer satisfaction has received considerable academic attention in recent years. Many researchers have operationalized customer satisfaction by using a single term scale and many others have used multiple item scales. Service quality and customer satisfaction have been investigated, and results have shown that the two constructs are indeed independent, but are closely related, implying that an increase in one is likely to lead to an increase in another. According to Sureshchandar et al., (2002, p. 363), customer satisfaction should be seen as a multi dimensional construct just as service quality meaning it can occur at Ha Nguyen Phuoc Bao & Nguyen Vo Giao Huong Page | 11 Business Research Methods multi levels in an organization and that it should be operationalized along the same factors on which service quality is operationalized. Parasuraman et al., (1985) suggested that when perceived service quality is high, then it will lead to increase in customer satisfaction. He supports that fact that service quality leads to customer satisfaction and this is in line with Saravana & Rao, (2007, p.436) and Lee et al., (2000, p.226) who acknowledge that customer satisfaction is based upon the level of service quality provided by the service provider. According to Zineldin (2000), customer satisfaction brings many benefits as satisfied customers are not price sensitive, buy additional products, are less influenced by competitors and stay loyal longer. Rust and Subramanian (1992) stated that customer satisfaction has been deemed directly to affect customer retention and companies’ market share (Rust and Subramanian, 1992). In banks, service quality, service features, and customer-complaint handling determine customer satisfaction (Hansemark and Albinsson, 2004). Some factors that affect satisfaction are extended hours of operation and competitive interest rates as confirmed by the study of Levesque and McDougall (1996). In addition, there are researchers who discuss the links between satisfaction, loyalty, and profitability (Heskett et al, 1994; Anderson and Fornell, 1994; and Rust et al, 1995). They are proponents of the theory called service management, which argues that customer satisfaction is the result of the customer's perception of value received in a transaction or relationship relative with the value expected from transactions or relationships with competing vendors. Pertaining to this theory, Hansemark and Albinsson (2004) stated: “Loyalty behaviours, including relationship continuance, increased scale or scope of relationship, and recommendation (word of mouth advertising) result from customers’ beliefs that the quantity of value received from one supplier is greater than that available from other suppliers” (p.28). They continued: “Loyalty, in one or more of the forms noted above, creates increased profit through enhanced revenues, reduced costs to acquire Ha Nguyen Phuoc Bao & Nguyen Vo Giao Huong Page | 12 Business Research Methods customers, lower customer-price sensitivity, and decreased costs to serve customers familiar with a firm’s service delivery system” (Hansemark and Albinsson, 2004, p.28). Customer satisfaction and service quality are related to each other. The higher the service quality, the higher is the customer satisfaction. Many people agree that in the banking sector, there is no recognized standard scale to measure perceived quality of banking services. Thus, competitive advantage through high quality service is an increasingly important weapon to survive. Measuring service quality seems difficult for service providers because of the unique characteristics of services: intangibility, heterogeneity, inseparability and perishability (Bateson, 1985). 2.2. Related research In 1997, in working paper Efficiency, profitability and Quality of banking service, Andreas Soteriou and Stavros A. Zenios coming from The Wharton School, University of Pennsylvania, developed general framework for combining strategic benchmarking with efficiency benchmarking of services offered by bank branches. Dissatisfaction is the major reason why customers switch banks (Manrai & Manrai, 2007). In turn, satisfaction is positively related to share of wallet and company’s market value (McDonald & Rundle-Thiele, 2008). Many researchers discuss the relationships between customer satisfaction, customer loyalty, and profitability of a company (Dumond, 2000; Payne et al., 2000; Jamal & Anastasiadou, 2009; Beerli et al., 2004). Satisfaction is a result of a product related experience. The most important determinant of customer satisfaction is service quality perceived by bank clients. Providing superior service quality contributes to profitability due to enhanced customer loyalty, and as consequence, higher customer retention. Provision a high quality service helps to attract new customer through word-of-mouth recommendations, leads to higher market share, lowers operating cost, improves productivity and enhances company’s image (Julian & Ramaseshan, 1994). The key to building a competitive Ha Nguyen Phuoc Bao & Nguyen Vo Giao Huong Page | 13 Business Research Methods advantage is a bank’s ability to deliver a high-quality service that meets the needs and expectations of customers (Ennew & Waite, 2007). Thus, customer satisfaction and service quality are two highly correlated constructs (Jaiswal, 2008; Vilares & Coehlo, 2003). Based on the viewpoint of experts from Boston Consulting Group, retail banks today face significant challenges to growth and profitability. According to Leichtfuss et al. (2010) in the post-crisis period, banks have come to rely on their retail operations as an invaluable source of funding for the asset side of the balance sheet. Besides, customer relationships are critical to generating high quality assets. Research has also been conducted by various other researchers to determine the factors affecting customer satisfaction in retail banking. Some of the notable investigations are by Lassar, Manolis, and Winsor (2000), Johnston (1997), Levesque and McDougall (1996) and Moutinho and Brownlie (1989). These literatures reveal that there is a positive relationship between quality of services and customers’ satisfaction. Improving service quality banks can enhance customer satisfaction and loyalty, and, as a consequence, achieve sustainable revenue stream. The above information shows that so far, there has not been any research on customer satisfaction assessment on card service quality of bank at the area in HCM city. This paper, hopefully, could contribute to completion of theory on customer satisfaction assessment on bank card service quality and to make recommendations on what banks should do to increase customer satisfaction toward its card services which may reflect the whole picture of Vietnam. Ha Nguyen Phuoc Bao & Nguyen Vo Giao Huong Page | 14 Business Research Methods 2.3. Related model in an analysis There are many study models service quality toward customer satisfaction such as: ‒ Servperf model: According to Cronin and Taylor in 1992, service quality in this case is equal to customer perception of service attributes, also known as SERVPERF model. RATER is still used to develop a system of criteria to measure service quality. The higher the level of customer perception of service attributes, the higher the service quality. The Servperf model implies that service provider should maximize customer perception of service attributes. ‒ Kano model: Quality is defined as “the totality of quality characteristics or level of performance that determines whether a product or service satisfies the purpose of use” (Kano, 1996, p.114). Quality concept is divided into 2 components, performance and satisfaction. According to this model, service attributes can be classified into basic needs, performance needs and excitement needs. As stated earlier service quality has been defined differently by different people and there is no consensus as to what the actual definition is. We have adopted the definition by Parasuraman et al., (1988, p.5), which defines service quality as the discrepancy between a customers’ expectation of a service and the customers’ perception of the service offering. Measuring service quality has been one of the most recurrent topics in management literature, Parasuraman et al., (1988), Gronroos, (1984), Cronin et al., (1992). This is because of the need to develop valid instruments for the systematic evaluation of firms’ performance from the customer point of view; and the association between perceived service quality and other key organizational outcomes, Cronin et al., (2010, p.93), which has led to the development of models for measuring service quality. Ha Nguyen Phuoc Bao & Nguyen Vo Giao Huong Page | 15
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