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2nd INTERNATIONAL CONFERENCE ON MANAGEMENT (2nd ICM 2012) PROCEEDING

11th - 12th JUNE 2012. HOLIDAY VILLA BEACH RESORT & SPA, LANGKAWI KEDAH, MALAYSIA ISBN: 978-967-5705-07-6. WEBSITE: w w w . i n t e r n a t i o n a l c o n f e r e n c e . c o m . m y

A REVIEW OF SERVICE QUALITY MODELS

Ali Ramezani Ghotbabadi (Corresponding Author) Dr. Rohaizat Baharun and Setareh Feiz
Faculty of Management, University Technology Malaysia (UTM) zaosra@yahoo.com ABSTRACT In the world of business, customers are crucial. Companies must keep satisfying their customers to improve profitability and market share to survive in the competition. Companies need to find what their customers need, what they want, and what they value. In recent decades, scientists found that the quality of services has a significant influence on customer satisfaction and customer loyalty. There are many suggested models for Service Quality measurement but in this study, we focus on four particular models, which are most common in marketing researches and are the basis of other models. Reviewing these models shows that all of them have some advantages and disadvantages and Service quality models have improved day by day. In this study, we found the Hierarchical model as the comprehensive model. This model contains significant factors and works by researchers approving the validity and reliability of this model in different categories. It is an applicable service quality measurement for marketing managers.

Field of Research:

Service Quality, Hierarchical Model, SERVQUAL, Customer Satisfaction

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1. INTRODUCTION Having more profit and growth in a company needs customer loyalty and retention, because the cost of keeping current customers is lower than finding new customers (Kotler & Armstrong, 2007). Customer loyalty and repurchase intention need overall customer satisfaction. However, satisfied customers are not necessarily loyal but loyal customers are definitely satisfied customers. Therefore, customer satisfaction is the key factor and the most studied element in marketing researches. Some consequences of customer satisfaction is loyalty (Kotler & Armstrong, 2007) and repurchase intention (Anderson & Sullivan, 1993) which lead companies to more profit. One of the most important factors and antecedents of customer satisfaction is quality of services. Service Quality has a direct and strong effect on customer satisfaction and loyalty (Bowen & Chen, 2001; Brady & Cronin, 2001; Cronin & Taylor, 1992; Ganguli & Roy, 2011; Parasuraman, Zeithaml, & Berry, 1985; Parasuraman, Zeithaml, & Berry, 1988). High service quality has an impact on organizational outcomes such as improving profitability, high market share, customer loyalty and probability of purchase (Brady & Cronin, 2001).

2nd INTERNATIONAL CONFERENCE ON MANAGEMENT (2nd ICM 2012) PROCEEDING

11th - 12th JUNE 2012. HOLIDAY VILLA BEACH RESORT & SPA, LANGKAWI KEDAH, MALAYSIA ISBN: 978-967-5705-07-6. WEBSITE: w w w . i n t e r n a t i o n a l c o n f e r e n c e . c o m . m y

Customer satisfaction will come from the experience of consumers by comparing expected level of service and delivered level of service. In this relationship Perception has a direct effect on customer satisfaction but expectation does not have a direct effect on customer satisfaction (Anderson & Sullivan, 1993). Therefore, quality of service has an indirect effect on companys performance. It is crucial for companies to find out what their customers need, want and what they perceive. One of the most important elements in customer satisfaction and company profitability is quality of service (product). In addition, managers need to identify weaknesses and consider planning for improvement in quality, thereby improving efficiency, profitability and overall performance. Because of that, interest in this area has increased during recent decades and researchers have started to find the best way of measuring customer perspective.

2. LITERATURE REVIEW Researchers believe that the service quality theory is based on the literature of customer satisfaction and product quality (Brady & Cronin, 2001). There are many service quality models but scientists are not of one mind about these models and measurements. Service quality has different dimensions regarding the various service sectors (Pollack, 2009) Nevertheless, service quality measurement enables managers to recognize quality problems and enhance the efficiency and quality of services to exceed expectations and reach customer satisfaction. Service quality perception wildly has been studied in last three decades. Zeithaml (1988) define service quality as an assessment of customer from the overall excellence of service. It is because of service quality nature, which is intangible, heterogeneous and inseparable. In recent decades, many models have been developed for measuring service quality and the first attempt was by Gronroos in 1984. He believes in distinguish between technical quality as an outcome for performance of service and functional quality as a subjective perception of service delivered. Rust and Oliver have expanded Gronroos model in 1994 by adding service environment as a new dimension. In 1985 Parasuraman, Zeithaml, and Berry suggested the most used and famous model named SERVQUAL. At first, they suggested ten dimensions for service quality but after some initial study in 1988, they reduced to five dimensions for service quality model. The SERVQUAL model was based on difference between perception and expectation of quality of service through five dimensions. Some researchers believe measuring the gap between expectation and perception, psychometrically cannot obtain superior assessment of service quality. Hence, in 1992 Cronin and Taylor recommended the SERVPERF model that was based on performance in service quality measurement. SERVPERF was inclusive more of variance in overall service quality measurement than SERVQUAL. In addition, Dobholkar, Thorpe, and Rentz in 1996 tested SERVQUAL and reported that this measurement has not been adapted in some areas like retail store environment. They proposed a new model so called Retail Service Quality Scale (RSQS). Brady and Cronin proposed Hierarchical and Multidimensional model for service quality in 2001. They combined Rust and Oliver (1994) three components model and Dabholkar et al. (1996) the multilevel model.

2nd INTERNATIONAL CONFERENCE ON MANAGEMENT (2nd ICM 2012) PROCEEDING

11th - 12th JUNE 2012. HOLIDAY VILLA BEACH RESORT & SPA, LANGKAWI KEDAH, MALAYSIA ISBN: 978-967-5705-07-6. WEBSITE: w w w . i n t e r n a t i o n a l c o n f e r e n c e . c o m . m y

In this study, we are going to evaluate only four main, most used, and adopted models. These four service quality models are basis of other service quality measurements. By evaluating the expert opinion and secondary data, we are going to find which model is the most fruitful for service sectors to measuring quality of service and improve their customer satisfaction based on its result.

3. METHODOLOGY In this study, we used literature research method for finding the best model in service quality measurement. One of the useful methods (especially in review works) is literature survey. Using secondary sources and work of other researchers is base of this study. This paper critically reviews and discusses four different service quality models reported in literature. Objective of this study is finding the best and comprehensive model in measuring customer perception about quality of services for different industries. in the next section we are going to discuss about four models of service quality and finding of researchers about these four measurements.

4. DISCUSSION This section allocated to gathering and evaluating information and researchers work about four main models in service quality measurement, which are the most useful and famous in this area.

Service quality models During last three decades, a lot of scientists work on service quality measurement and many measurements suggested but only some of them were acceptable and more used by scientists. We are going to discuss about four major measurements of service quality in this part.

Nordic Model Early conceptualization of service quality was formed by Gronroos (1982, 1984), he defined service quality by technical or outcome (what consumer receive) and functional or process related (how consumer receive the service) dimensions (figure 1) (Gronroos, 1982, 1984, 1988). Image build up by technical and functional quality and effect of some other factors (marketing communication, word of mouth, tradition, ideology, customer needs and pricing). Nordic model is based on disconfirmation paradigm by comparing perceived performance and expected service. This was the first attempt to measure quality of service. Gronroos model was general and without offering any technique on measuring technical and functional quality. Rust & Oliver (1994) tried to refine the Nordic model by The Three-Component Model. They suggest three components: service product (i.e., technical quality), service delivery (i.e., functional quality), and service environment but they did not test their model and just a few support have been found.

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11th - 12th JUNE 2012. HOLIDAY VILLA BEACH RESORT & SPA, LANGKAWI KEDAH, MALAYSIA ISBN: 978-967-5705-07-6. WEBSITE: w w w . i n t e r n a t i o n a l c o n f e r e n c e . c o m . m y

Figure 1: The Nordic model by Gronroos (1984)

SERVQUAL model Based on disconfirmation paradigm, Parasuraman, Zeithaml, & Berry (1985) made the new model of service quality measurement. They try to cover the weakness of Nordic model by offering a new way for measuring service quality. In SERVQUAL model, they suggest to use the gap or difference between expected level of service and delivered level of service for measuring service quality perception with five dimensions: Reliability, Responsiveness, Assurances, Empathy, and Tangibility (Figure 2). SERVQUAL is an analytical tool, which can help managers to identifying the gaps between variables affecting the quality of the offering services (Seth, Deshmukh, & Vrat, 2005). This model is the most used by marketing researchers and scientists, although it is an exploratory study and does not offer a clear measurement method for measuring gaps at different levels. This model has been refined during the years and some believe that only performance needed to be measured as SERVPERF model in order to find perception of service quality (Cronin & Taylor, 1992). Finding in years of using this model shows SERVQUAL factors are inconsistent and it is not comprehensive for different applications (Dabholkar, et al., 1996; Shahin & Samea, 2010).

Figure 2: The SERVQUAL model by Parasuraman et al., (1985)

2nd INTERNATIONAL CONFERENCE ON MANAGEMENT (2nd ICM 2012) PROCEEDING

11th - 12th JUNE 2012. HOLIDAY VILLA BEACH RESORT & SPA, LANGKAWI KEDAH, MALAYSIA ISBN: 978-967-5705-07-6. WEBSITE: w w w . i n t e r n a t i o n a l c o n f e r e n c e . c o m . m y

Multilevel model Because inconsistent reported in SERVQUAL factors, in 1996 Dabholkar, Thorpe and Rentz proposed the multilevel model for service quality. They suggest changing the structure of service quality models to a three-stage model: overall perceptions of service quality, primary dimensions, and Subdimensions (Figure 3). This model was for evaluating service quality in retail store. Although multilevel propose a new structure, it needs to generalize for different areas and consider the effect of some other factors such as environment, price, etc. In addition, there is lack of identifying attributes or factors that define the sub dimensions.

Figure 3: The Multilevel model by Dabholkar et al., (1996)

Hierarchical model In 2001 Brady and Cronin, suggested a new model by combining four models. They improved SERVQUAL (Parasuraman, et al., 1988) by specifying what needed to be reliable, responsive, empathic, assured and tangible. Brady and Cronin adopted service quality perception based on evaluation by customer in three dimensions: 1.Interaction Quality (i.e., functional quality) 2.Physical Environment Quality 3.Outcome Quality (i.e., technical quality) (Gronroos, 1984; Rust & Oliver, 1994). In addition, they accept multilevel service quality perceptions and multidimensional (Dabholkar, et al., 1996). Service quality has three primary level dimensions in this conceptualization such as interaction, environment and outcome with three sub dimensions for each one: Interaction (Attitude Behavior Expertise), Environment (Ambient Conditions Design Social Factors), and Outcome (Waiting Time Tangibles Valence. A new model conceptualized by this hierarchical model and SERVQUAL factors specified into sub dimensions. Brady and Cronin have improved service quality framework and solved the stalemate in this theory. It defines service quality perception and a clear form of service quality measurement. In SERVQUAL measurement, service outcomes were not clearly considered, but Brady & Cronins model seems to fill this void (Pollack, 2009).

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11th - 12th JUNE 2012. HOLIDAY VILLA BEACH RESORT & SPA, LANGKAWI KEDAH, MALAYSIA ISBN: 978-967-5705-07-6. WEBSITE: w w w . i n t e r n a t i o n a l c o n f e r e n c e . c o m . m y

Figure 4: The Hierarchical model by Brady & Cronin (2001)

In addition, it shows the customer experience at different levels and various dimensions of service (Figure 4). Some researchers work on the hierarchical model and found the reliability for this framework in various services. Like all the measurements, hierarchical model has difference in factors and importance of sub dimensions in regards to services such as Health care (Chahal & Kumari, 2010; Dagger, Sweeney, & Johnson, 2007), Sport (Ko, 2000), Mobile health (Akter, DAmbra, & Ray, 2010), hairdresser (barber) and phone service subscribers (Pollack, 2009). This model will able firms to recognize problems in primary stage of their delivered services - Interaction Quality, Physical Environment Quality, and Outcome Quality - (Pollack, 2009). It can help managers find customer needs and service weaknesses simultaneously in order to enhance service quality perception and service experiences of customer via high quality of service. This model shows better understanding about customer perception of service quality until today.

5. CONCLUSION Service quality is the best tool for marketing managers to find and analyze information about customer needs, wants, and perceptions about services. This information will help managers to identify problems and make strategic plans in order to improve efficiency, profitability, and overall performance by high quality. During recent decades, scientists attempted to find the perfect model in measuring service quality that cover all the factors and answer to this area of necessity. There are many models suggested by researchers and all models have their own advantages and disadvantages. Scientists are not unanimous about any of these service quality models. Service quality models have different dimensions regarding the field of service sectors. However, SERVQUAL is the most common model used by researchers but it is not comprehensive and suitable for different applications. The hierarchical model has covered weaknesses of other models. It has strong structure and specifies the factors of customer perspective as well. Moreover, Hierarchical measurement considers services outcomes, which were void in SERVQUAL. Validity and Reliability of this model has been tested and approved in different areas by other marketing researchers. Results show the hierarchical instrument as the most advantageous approach to service quality assessment to date (Pollack, 2009) . Finally, by this review of literature we

2nd INTERNATIONAL CONFERENCE ON MANAGEMENT (2nd ICM 2012) PROCEEDING

11th - 12th JUNE 2012. HOLIDAY VILLA BEACH RESORT & SPA, LANGKAWI KEDAH, MALAYSIA ISBN: 978-967-5705-07-6. WEBSITE: w w w . i n t e r n a t i o n a l c o n f e r e n c e . c o m . m y

can conclude that the Hierarchical Service Quality is the most suitable and helpful measurement for managers to collect the right information and make the right decisions.

ACKNOWLEDGMENT This paper is under the scholarship of University Technology Malaysia (UTM).

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