1.

INTRODUCTION

1. Background

After the financial freedom in Pakistan, there is one sector in Pakistan that has seen rapid

growth is banking sector. There are many sectors that play an important role as a back bone in any

economy and banking sector is one of them, most important discussion for banking sector customer

satisfaction and retention is now in a play. As of now there is an immense rivalry among banking

sector in Pakistan and almost all of them are hunching for customer satisfaction and customer

retention. Within the country now days there are crucial dimension needs to be highlight which

have stronger impact on customer satisfaction. In 1990 enhancements has been made by Banking

Companies Ordinance to allowing the reforms of privatization in financial sector of Pakistan.

During the initial scratch of reform, the two main public sector banks, Allied Bank Limited and

Muslim Commercial Bank which are known as ABL and MCB respectively, were denationalized

in the middle of 1991 and 1993. The reformations practice was accordingly postponed for years &

and later on it get resumed very effectively in the early 2000s (Ahmed, 2010). During the process

of privatization, the third large bank of Pakistan, United Bank (UBL) has been privatized in 2002,

in September 2003 the dominancy of the government banks was finished; jointly the sharing of

assets of both local private and government bank was 47% and independently it was 41%. One of

the biggest state owned banks is, Habib Bank Limited (HBL), which has completed its

denationalization method in Feb, 2004. Because of this denationalization process, the banking

structure assets share of commercial banks has declined to less than 25 percent. The National bank

of Pakistan which is state owned bank, possess 20% of market share and its denationalization
forecasts are not finalized as of now, though the government disclosed its capital of 25 percent in

2001 to 2003.Thus the delivering of superior customer value has become vital for a company to

retain its everlasting relations and dealings with their clients. However, significant changes in both

economic environment and marketing thought have altered the customer value perception. From

customer perspective, whether or not the customers receive the value they expect will very much

depend on the many ever changing factors. In developed countries, switching behavior has been

studied by many researchers. (for example; (Clemes, Gan, & Zheng, 2007) (Hedge & Colgate,

2001) (Gerrard & Cunningham, 2000). However, very less number of studies has seen developed

countries on this aspect (Zhou, 2004). cultural differences have played an important role as clients

assessment of service quality and constructs as associated such as behavioral intention may be

significantly unusual (Smith & Reynolds, 2001); (Furrer, Liu, & Sudharshan, 2000). This research

helps to build a concept and broader view that how client switch their banks in Pakistan. The sector

of banking plays an integral fragment of the state services related to financial sector. It perceived

a remarkable enhancement in 2001-03 at that point of time the deposits increased by almost

hundred percent. Within in the Pakistan there are 39 overall banks (which include 11 international

banks) currently operating in Pakistan. Rivalry as comparison is extraordinary, specifically after

the challenging capital acceptability standards set by the Pakistan State Bank to sustain a consistent

system in banking. Appealing international investment and high profitability customers are the

single options have to banks for endurance. Prospects for banks which are international, especially

in retail and customer oriented banking, are immense than it was ever. In fiscal time span of 2004

to 2005, the financial and banking sector accomplished mounting rates of twenty-one and thirty-

six percent in its advances and deposits portfolio congruently, which in actual, has enlarged the

banks’ fidelity in comparison to the earlier year. A crucial attention of change to customer products
from industrial lending has given an option to the banks to enjoy massive spreads. With respect to

that, the developed sector is still relishing the biggest share volume in credit facilities and term

loans prolonged by the banking sector. New heights of rivalry in the banking sector and it will

increase additional strength. Numerous features are enhancing the boundaries of brawl in both

funding and usage of assets. On other side of, market burdens will oblige the banking institution

to have loans in unknown geographical areas slackening the ladder of management of risk. The

study will add a serious contribution towards the marketing sector of Pakistan related to the

banking sector from managerial and a theoretical point of view by gratifying the above discussed

research objectives. Initially, the study will be used for marketing literature by facilitating a

realistic inspection of most of the service marketing concepts. The study end results will be used

to facilitate an improved understanding of reputation, price, effective marketing competition,

service quality, and space, spontaneous switching and switching behavior in the retail market of

financial institutions in Pakistan. Secondly, the study will add on a great benefit towards

stakeholders in this sector and users and actors in this marketing field of retail banking. The

research will recognize the vital factors that influence the customers to shift or halt with a specific

bank. This can make an adhesive and crucial support to increase customer relationships for longer

period with bank clients. In addition to that, managers of bank and higher-ups can use the findings

of this research to prevent customers from switching to other rival banks while being in a

competition. Regardless of a small size and geographical location Lithuanian economy is an

emerging one. This study aims to find out various factors which have an effect on customer

satisfaction and switching behavior and to find out the relationship between these factors, customer

satisfaction and switching behavior. Price, effective advertisement, service quality, reputation and

switching cost on consumers' evaluative conclusions are being discussed. Clients’ swapping
conduct has examined the sector in which services are being done; though, some of realistic studies

on countries which are under the process of developing that afford conclusive proof on why

providers has been switched by customers. For instance, examines how customer anticipations and

fulfillment predict loyalty around customers of banking sector in Nigeria. Though, out comings is

not concrete for most of the countries which are under the process of development and there is

difference within the literature which is published in the Pakistani banking sector. Due to political,

social, economic, and differences in culture, it is crucial for the investigation related to the

customers’ switching behavior of customers in Pakistani industry like retail market, and testing

that findings and results would be alike to traditional examine (Au, Hui, & Leung, 2001). Current

research discovers important features which influence the customers switching behavior related to

the banks in the current retail banking sector of Pakistan. The main objectives are Determine

elements that have an impact on switching behavior of customers, discover the most and least

essential elements that have an influence customer satisfaction banking industry, to discover the

elements that have an influence on switching behavior with mediating role of customer satisfaction

and discover the effect of demographic elements on switching behavior. In Delegation of study

there are various factors which customers see while doing banking. In this study only those factors

have been taken that are most important and effective on switching behavior. This study is focusing

only on price, service quality, reputation, effective advertisement, and switching cost.
 2. LITERATURE REVIEW

2.1 Switching Behavior

Switching of customer actually means customers due to some issues left a company or an

organization that provide services for another one (Garland, 2002). (Keaveney, 1995) established

first comprehensive models to examine most of the aspects that prejudiced customers to switch.

Author also acknowledged eight instances which directly relate to the problems with the service

and no-service multiple elements that have an influence on clients to think about switching those

particular service providers, Core service failures, Service encounters failures, Pricing,

Inconvenience, Ethics, Response to service failure, Voluntary switching and Competition.

Although, simplifying outcomes totally based on different service sectors that probably will not

be suitable for industry of banking for testing of projected variable and further specification

(elements of switching) for detailed industries of services is required (Andreassen & Lindestad,

1998); (Keaveney, 1995); (Mittal, 1998). Though there is a possibility to suppose that due to any

serious reason customer can switch the services to other provider, most of the researchers propose

that due to multiple problem defection can also occurred seen time by time (Bejou, 1998); (Hocutt,

1998). Researches which unswervingly concentrated on one element or which be unsuccessful to

examine several elements which probably root to switch providers of service, make partial add-

on to the customer switch issue (Clemes, Gan, & Zheng, 2007); (Hedge & Colgate,

2001).Switching behavior is defined as the exit of customer or move towards other service

According (Boote, 1998) and (Bolton & Bronkhurst, 1995), due to switch customer stop using a

particular service and move towards other service to fulfill the desired needs. Customer now a days

are directly linked to the satisfaction in field of banking, either switching behavior tends to
minimize a bank’s market profit and share (Ennew & Binks, 1996), (Trubik & Smith, 2000)

researched the implications on financial sector related to the customer retention and also find out

there is a direct relation of satisfaction of customer on profitability of financial institutions and in

retail banking. It is really difficult now days to coupe up with the expectation of the customer and

though defection rate is reasonably high in most of the countries. For instance, rates of customer

defection within the United Stated banks were 20 % in year 1997 & 1998, and the European

countries had similar rate of defection in the mid of1990’s. As the way to decrease the impact of

negativity of defection and increases the long-term relation with the banking and with clients,

scholars have fixed their interest on numerous factors that excite customers to shift banks

(Matthews & Murray, 2007); (Gerrard & Cunningham, 2004); (Hedge & Colgate, 2001). There

are several factors which are investigated by the researches that due to which customer shift from

one bank to another, the bank management just to contribute to make a strategic plan to reduces

the false defection impact and to endure everlasting customer relationship (Clemes, Gan, & Zheng,

2007); (Hedge & Colgate, 2001)(Gerrard & Cunningham, 2004); (Matthews & Murray, 2007).

2.2 Switching factor

2.2.1 Price

Price is an aspect, factor, element or attribute that is used or spend to acquire certain goods

and services. Price that customers perceive normally combination of monetary and price which is

non-monetary together (Chen, Gupta, & Rom, 1998). concluded in his study that "pricing" factor

included fees, prices, rates, charges, surcharges, price deals, coupons, service charges, penalties,

and price elevations that involved as critical switching behaviors. In comparison with other service

industry, price has wider implications in the financial service business. For instance, price includes
fee accomplishment; charges of banks against services, interest rates charged for providing

services or product and interest paid in the financial sector. If we talk about the consumer’s

awareness and perception about the product price then there are two trends that are dealing with

it. The first trend shows that most of the client or majority of the people take high price as the

symbol of high quality and same as they take low quality as a symbol of low quality. (Dodds,

Monroe, & Grewal, 1991); (Teas & Agarwal, 2000) and the second trend or concept in comparison,

shows that low price can also acts as a symbol of good value for the product or services and either

for the money. In both cases in which customer or clients takes low price as a symbol of less quality

and they take high price as a symbol of offensive n abusive for the product or services, this simply

shows that if the customer is not satisfied with the product and services and the value of product

he is paying for it, then he will definitely go for another product as this concept will build his

intention to shift, so at the end it’s all about the value of money he gets in the form of money by

paying the value of product in the form of price. (Campbell, 1999); (Homburg, 2005).

(Athanassolpoulos, 2000) And (Bansal, Taylor, & James, 2005) also experimented and suggested

that price factor is one of the most important factor for consumers to shift to another product,

services or suppliers. If one product is charging high price then buyers will get more alert about

the different opportunities of saving that the competitors offer and it will make a severe chance to

think about savings and instant shift or switch as compare to spend money on invaluable products

(Wathne, Biong, & Heide, 2001).

2.2.2 Reputation

Reputation has been described a significant and the resource which cannot be touched, that

can vitally helps to a firm's presentation and its survival (Rao, 1994); (Hall, 1993). (Rust, V.A, &

K.N, 2001) And (Aaker, 1996) defined reputation as the quality and the trait of the brand and the
trait of customer which are combined with each other to form a faithful and credible organization.

The most important asset that a firm posse is its reputation as it is unavoidable, distinctive, un copy

able, and cannot be replaced, it gives the organization a healthy competitive edge. (Wang, Lo, &

Hui, 2003); (Hall, 1993). Moreover, (Gerrard & Cunningham, 2004) stated that in the Asian market

the bank’s reputation is identified as factor which forces the customers or clients to shift to some

other banks; moreover, they refer it as the financial stability and the honor of bank. Due to the

intense competition in the Asian market customer has a variety of choices. Therefore in the services

sector reputation is considered as a critical factor in the strategy development. Researchers have

been forced to analyze reputation with other elements due its intangible nature. For Example, it

has been analyzed relating to product quality and price by the economists. Benefits are produced

by service and product quality not only by cost reduction, but also by achieving competitive

advantage through formation of a good repute and retention and attraction of customers. In a

similar fashion, customer loyalty can be enhanced by the reputation, in the industry of banking

specifically, where quality of the product and services may only be assessed after the customer or

clients do purchase (Nguyen & Leblanc, 2001) (Andreassen & Lindestad, 1998) .

2.2.3 Service Quality

The services marketing literature has briefly defined the service marketing as a general

evaluation and assessment of services that have been assessed or evaluated by clients and

customers. Perceived service quality has been considered to be consequence by comparing client’s

prior or early anticipation about the products and services before experience and their anticipation

after using or having actual experience and understanding of the product and performance of

services (Asubonteng, McCleary, & Swan, 1996); (Parasuraman, Zeithaml, & Berry, 1985). There

is a need to include service delivery process and service outcomes in the process of service quality
conceptualization (Parasuraman, Zeithaml, & Berry, 1985), (Lehtinen & Lehtinen, 1991).

Likewise, (Lehtinen & Lehtinen, 1991) has presented another model which is three dimensional

service quality model: first dimension is physical, second dimension is interactive and the third

dimension is corporate. The first physical dimension is the physical quality which is about the

physical quality products that have been involved in consumption and delivery of services. The

second Interactive aspect is the interactive aspect that deals with the interaction between the clients

and the employees of services organization. The third aspect is corporate quality aspect that deals

with the corporate or business image that clients perceived. Normally organizations can build or

develop the customers or clients expectations by analyzing their past experiences with the firm,

the rivals of an organization, the usual marketing mix, or peripheral influence such as

communication which is through word of mouth (Parasuraman, Zeithaml, & Berry, 1994);

(Gronroos, 1984b). Service quality is the most important factor or element in service world that

enhance customer satisfaction. Indisputably service quality is a subject, topic or a matter that has

connected academics leading to debate extensively over its existence and on its conceptualization.

Though, no studies have been found relating particularly to monetary institutions. As a result, there

will be an addition of extra knowledge through this study by exploring this association within the

banking and automated service quality context.

2.2.4 Effective Advertising

In a new time and period of very grown-up and complex stresses, operational publicity may

enhance the connection among institutions and customers that increases the probability related to

victory. Study of (Cengiz, Ayyildiz, & B, 2007) explains that, advertisement relates with the

doings which assumed or considered to boost up the level of sales or to boost service shape,

organization or firms, and the initial and basic or initial point of advertisement is to steer the clients
or customers and its potential of the traits of the services and the products. Suggest that

advertisement acts as a vital role player in enticing clients to trade in launch stage & upholding

traffic of the client’s heights through sluggish phases. Define similar fallouts where advertisement

can progress utilization during deliberate periods it can bid occasion to instruct clients nearby that

deal with businesses, features and process of the procedure that probably enhance efficiency from

previously existed ability or capacity. Publicity probably gifts the statement among organizations

and clienteles, and perceived risk that has been effectively reduces, related to the customers. More

of that, advertising can touch customer’s behavior the reason behind it can deliver information to

leader customer’s buying decisions. Customer oriented leading and trending behavior find that

well-organized advertisement could boost up customers that are loyal in retail bank and help

towards retaining clients and consumers. Though, (Blanchard & Galloway, 1994) found out that

advertisement give and produce a disinfected shape. Advertisement initially can strengthen

resemblance of financial institution service or product providers rather than the changes (Balmer

& Stotving, 1997); (Blanchard & Galloway, 1994).

2.2.5 Switching Cost

Switching costs are distinct as the cost that customers comrade with the progression of

switching from a contractor to other one (Burnham, Frels, & Majahan, 2003); (Wathne, Biong, &

Heide, 2001).The perceived hindrances to switching to substitutes is a factor that make consumers

clear that it is not sensible to switch. These of all can have or could include penetrating, operation

and costs involved in trading the immense power of bilateral aptitude among other than issuances

related and low rates for reliability, costs related to emotions and efforts collectively with financial

sectors as defined in the company criteria, common and spiritual risk. Precisely, illustrate three

different kinds of switching cost directly or indirectly: the switching costs that are incurred through
different procedures are the costs which include the risk of economy and cost related to the

evaluations, and may have costs of effort and time; The loss and benefits of the financial resources

are included in the financial switching cost, the relationship with brand and the individual

relationships loss is relational cost of switching, which directly includes emotional and

psychological uneasiness because of the loss of uniqueness and the breaking of the bonds The

incapability to travel to new dealers is characterized as switching cost. To the height that people

notice costs or hindrance to switching, they will be biased to stick to their provider (Burnham,

Frels, & Majahan, 2003), (Lee & Cunningham, 2001). If the switching costs are lowered,

discontent with the quality of service or firm will enhance the intention to switch providers. Unlike

this, if they are big, many dissatisfied customers are likely to show a “false loyalty”. Many

researchers have exposed that switching costs as cutting variable that effects the relation between

satisfaction and intent to uphold relationship very damagingly. (Burnham, Frels, & Majahan,

2003); (Jones, Mothersbaugh, & Beatty, 2002); (Oliva, Olivier, & MacMillan, 1992); (Sharma &

Patterson, 2000). The costs and the influence of satisfaction on the intention to continue the

relationship are inversely proportional. For instance, sum up switching cost into five main

categories, hunt, transaction, knowledge gaining, and loyal consumer price-cut and emotional cost.

In his research investigated the relationship between customer satisfaction and repeat business and

customer loyalty. He found that the link between customer satisfaction and customer loyalty rely

on issues like market parameter, switching charges, and brand equity, existence of loyalty

programs and the product disparity at a bigger level like the whole industry. Moreover, (Hauser,

Simester, & Wernerfelt, 1994) has also noticed that consumers are prone to forget the level of

satisfaction they are getting if the switching cost is increased. Switching costs is the main factor

that makes it hard for a customer to change service providers. In addition, (Andreassen &
Lindestad, 1998) in their study, after investigating the selected companies, also support the notion

that switching costs affect the average satisfaction and retention of a customer In their study they

showed that as quality business increases the average satisfaction decreases. Their study supported

this relationship only in case of airlines and banking industry, not for retailers. This is due to the

fact that the switching costs are high in airlines and banking industry, but very low in the retail

markets. The results from the study support the significance of switching costs on customer’s

resistance for quality.

2.2.6 Customer Satisfaction

Many researchers have tried to investigate the factors that act as antecedents to retention

to the product or service, or to switching to another product. Many researchers have found that the

level of satisfaction or dissatisfaction greatly influences the customer switching behavior. A

relationship between customer satisfaction and switching behavior, and found that customer

retention is highly influenced by customer satisfaction, and on the other hand dissatisfaction makes

the customer to switch to other products and services.

The customer satisfaction and customer retention are directly proportional, which means

the higher the customer satisfaction, the higher will be the chances of customer retention and the

lesser the degree of customer satisfaction, the more likely it is that the customer will switch to

other services. The concept of Service quality and customer satisfaction is sometimes mixed. The

overlap between these two concepts have been addressed by many the researchers. The literature

clearly differentiates between the characteristics of each concept. The definition of customer

satisfaction is the feeling or the conclusion about the product or service by the customer, after

using them. Customer satisfaction has been categorized in two main types in the services industry;
satisfaction in terms of disconfirmation, and in terms of perception. The most important target of

a services firm today is achieving customer satisfaction. As it causes the firm to higher its profit

margins, achieve better higher profit margins and reduces the marketing costs. (Yeung, Ging, &

Ennew, 2002) Several empirical researchers have found that customer satisfaction and financial

performance are directly proportional. (Wiele, Boselie, & Hesselink, 2002); Like (Yeung, Ging,

& Ennew, 2002) found that there is a mediating role of customer satisfaction between service

quality and service loyalty. Moreover, reveals in his study that service quality is an important

input for customer satisfaction and customer satisfaction plays a mediating role.

2.3 Gap analysis

Banking literature has limited consideration within Pakistan, switching behavior and

customer satisfaction relation is missing. Unique measures of customer satisfaction for banking

sector need to be research (Caruana, 2002). The study of (Caruana, 2002) has also highlighted the

importance of reputation, this study has argued that reputation should be research in context that

it has any impact on customer satisfaction or not? Switching cost is another issues raised by

(Caruana, 2002) to be researched with relation to customer satisfaction. As suggested by (Clemes,

Christopher, & Dongmei, 2010) according to the different researches, the research on bank

switching behavior is really lesser in number so the gap in this field is really drastic especially in

the developed countries and the research space is really thin in developing countries the study that

have been done them, gives future scholars with a useful methodological framework to investigate

switching behavior. Several significant factors that contribute to bank switching in developing

countries have also been identified empirically and these factors can be refined in new studies on

bank switching. This is particularly important for developing countries to investigate cross-cultural

comparisons of switching behavior.

 1. THEORETICAL FRAMEWORK

Price

Reputation

Service Quality Customer Switching

Satisfaction Behavior

Switching cost

Effective
Advertisement

3.1 Hypothesis

H1: Price has significant impact on customer satisfaction.

H2: Reputation has significant impact on customer satisfaction.

H3: Service Quality has significant impact on customer satisfaction.

H4: Switching Cost has significant impact on customer satisfaction.

H5: Effective Advertisement has significant impact on customer satisfaction.

H6: Price has significant impact on Switching Behavior

.H7: Reputation has significant impact on Switching Behavior

H8: Service Quality has significant impact on Switching Behavior

H9: Switching Cost has significant impact on Switching Behavior

H10: Effective Advertisement has significant impact on Switching Behavior

H11: Customer Satisfaction has significant impact on Switching Behavior.

1. RESEARCH METHODOLOGY

4.1 Research Design

To see the Impact of factors on customer satisfaction and switching behavior in Pakistani

retail banking user, closed ended questionnaire was developed according to literature review. Items

for Questionnaire were adapted. The survey reported here was conducted in May 2013 and

restricted to shopping centers located in and around Islamabad and Rawalpindi cities of Pakistan.

4.2 Design of survey instrument

Relevant literature was reviewed for the measure of each construct. Items were adapted

from the studies of (Ganguli & Roy, 2011), (Matzler, rtele, & Renzl, 2006), (Mohsan, Nawaz, &

Khan, 2011); (Clemes, Gan, & Zhang, 2010). The questionnaire was divided into two parts. The

first part contained 2 items regarding demographics such as age and gender. The second part of
the questionnaire contains 28 items regarding variables of study service quality, reputation, and

price, customer satisfaction, switching cost, effective advertisement and switching behavior. Items

were measured on the 5 Liker scales ranging from 1 that represents strongly disagree to 5 that

represents strongly agree.

4.4 Sample

The lack of published research in the Pakistan banking industry that focus on customers’

bank switching behavior made it necessary to collect primary data to test the hypotheses and

satisfy the research objectives. The primary data was collected through a survey questionnaire.

The sample was drawn from bank customers in, Rawalpindi and Islamabad cities to examine the

factors affecting their bank switching behavior. The data was collected from a convenience

sample of individuals, irrespective of their banking use, gender, profession or income. Sample

size was taken as 150. Respondents aged less than 18 years were excluded from the survey, as it

was perceived they might have encountered difficulties interpreting the survey questions. The

population of this study included all the people who doing banking in Pakistan.

4.5 Data collection

About 150 questionnaires were distributed in different shopping areas and universities of

twin cities; of those 143 questionnaires were received with the response rate of 95.45%. Responses

were used for data analysis and interpretation.

4.6 Analyses Methods

SPSS has been used for the data analysis of reliability, correlation and regression analysis.

For the demographic analysis frequency distribution was used. For descriptive analysis mean and

standard deviation of all variables were formulated. Finally regression analysis was employed to

test the hypothesis of the study.

4.7 Data Analysis

For analysis of data four methods were used; demographic, descriptive, correlation and

hypothesis testing through hierarchical regression method.

4.12.1 Pilot Study:

4.12.2 Reliability Analysis

Reliability Analysis ……………….

Variable Name Number of items Cronbach's Alpha
Service Quality 5 .839
Price 4 .701
Reputation 5 .937
Customer Satisfaction 4 .715
Switching Cost 3 .750
Effective Advertisement 4 .906
Switching Behavior 3 .619
Cronbach alpha of all items 28 .859
 Initially pilot testing of reliability conducted and 0.859 Cronbach’ alpha was recorded for

28 items.

4.12.3 Demographic Analysis

4.12.3.1 Bank Type

Constructs Frequency Percent

Public 44 30.7
Private 99 69.3
Total 143 100.0

Out of 143 respondents, 69.3% were private and 30.7% were public.

4.12.3.2 Occupation

Constructs Frequency Percent

Salaried 99 69.2
Businessman 27 18.9
Students 17 11.9
Total 143 100.0

Out of 143 respondents, 69.2% were salaried, 18.9% were businessman and 11.9% were

students.
4.12.3.3 Qualification

Constructs Frequency Percent

Graduation 82 57.3
Master 38 26.5
Other 23 16.2
Total 143 100.0

Out of 143 respondents, 57.3% were graduated, 26.5% were master and 16.2% were others.

4.12.3.4 Gender

Constructs Frequency Percent

Male 127 88.8
Female 16 11.2
Total 143 100.0

Out of 143 respondents, 88.8% were male and 11.2% were female.

4.12.3.5 Age

Constructs Frequency Percent

Less than 20 24 16.8
20-30 89 62.2
30-40 30 21
Total 143 100.0

Out of 143 respondents, 16.8% were less than 20, 62.2% were 20-30 and 21% were 30-40.
4.12.4 Correlation Analysis
To find out the relationship between the variables the Pearson product-moment correlation

method is used. The results shown in table 3 demonstrate the relationship between each of the

success factors on switching behavior and customer satisfaction.

Correlations
Effective Switchin
Service Reputatio Switching Advertisemen g Customer
Quality Price n Cost t Behavior Satisfaction
Service Pearson 1
Quality Correlation

Price Pearson .812** 1

Correlation
Reputation Pearson .010 -.018 1
Correlation
Switching Pearson .159** .212** .563** 1
Cost Correlation

Effective Pearson .737** .876** .089 -.018 1

Advertisemen Correlation
t
 Switching Pearson .395** .475** .613** .919** .337** 1
Behavior Correlation

Customer Pearson .603** .604** .387** .588** .524** .727** 1

Satisfaction Correlation
**. Correlation is significant at the 0.01 level (2-tailed).
*. Correlation is significant at the 0.05 level (2-tailed).

4.12.5 Regression Analysis

Step 1: IV to DV

As a result of analyses a significant model for learning organization appeared. From the

value of R2 (0.969) generated by the model we can conclude that about 96 % variation. The beta

coefficient of reputation, switching cost and effective advertisement are significant as their p-

values are less than 0.05. According to (Pallant, 2001) beta coefficient is significant if p-

value<.005.

Model Summary
Adjusted R Std. Error of the
Model R R Square Square Estimate
1 .984a .969 .968 .08039
a. Predictors: (Constant), EFTICAD, SWTCHCS, REPUTATION,
SQ, PRICE

ANOVAb
Sum of Mean
Model Squares Df Square F Sig.
1 Regression 65.868 5 13.174 2038.683 .000a
Residual 2.132 330 .006
Total 68.000 335
a. Predictors: (Constant), EFTICAD, SWTCHCS, REPUTATION, SQ,
PRICE
b. Dependent Variable: SWBHV
 Coefficientsa
Standardize
Unstandardized d
Coefficients Coefficients
Model B Std. Error Beta t Sig.
1 (Constant) 3.498 .004 787.246 .000
SQ .015 .008 .032 1.888 .050
PRICE -.016 .014 -.037 -1.127 .260
REPUTATIO .040 .007 .086 5.491 .000
N
SWTCHCS .398 .008 .880 50.984 .000
EFTICAD .153 .013 .344 11.748 .000
a. Dependent Variable: SWBHV

Step 2: IV to MV

As a result of analyses a significant model for learning organization appeared. From the

value of R2 (0.667) generated by the model we can conclude that about 66 % variation. The beta

coefficient of service quality, switching cost and effective advertisement are significant as their p-

values are less than 0.05. According to (Pallant, 2001) beta coefficient is significant if p-

value<.005.
 Model Summary
Adjusted
R Std. Error of
Model R R Square Square the Estimate
1 .817a .667 .662 1.62939
a. Predictors: (Constant), EFTICAD, SWTCHCS,
REPUTATION, SQ, PRICE

ANOVAb
Sum of Mean
Model Squares Df Square F Sig.
1 Regression 1756.280 5 351.256 132.304 .000a
Residual 876.121 330 2.655
Total 2632.401 335
a. Predictors: (Constant), EFTICAD, SWTCHCS, REPUTATION, SQ,
PRICE
c. Dependent Variable: CUSSAT
 Coefficientsa
Standardize
Unstandardized d
Coefficients Coefficients
Model B Std. Error Beta t Sig.
1 (Constant) 13.421 .090 149.006 .000
Service .926 .159 .319 5.827 .000
Quality
Price -.392 .288 -.144 -1.363 .174
Reputation .078 .147 .027 .528 .598
Switching 1.578 .158 .561 9.979 .000
Cost
Effected 1.173 .264 .423 4.443 .000
Advt.
a. Dependent Variable: CUSSAT

Step 3: MV to DV

As a result of analyses a significant model for learning organization appeared. From the

value of R2 (0.528) generated by the model we can conclude that about 52 % variation. The beta

coefficient of customer satisfaction is significant as its p- value is less than 0.05. According to

(Pallant, 2001) beta coefficient is significant if p-value<.005

 Model Summary
Adjusted R Std. Error of
Model R R Square Square the Estimate
1 .727a .528 .527 .30998
a. Predictors: (Constant), CUSSAT

ANOVAb
Sum of Mean
Model Squares Df Square F Sig.
1 Regression 35.908 1 35.908 373.705 .000a
Residual 32.092 334 .096
Total 68.000 335
a. Predictors: (Constant), CUSSAT
d. Dependent Variable: SWBH

Coefficientsa
Standardize
Unstandardized d
Coefficients Coefficients
Model B Std. Error Beta T Sig.
1 (Constant 1.914 .083 23.068 .000
)
CUSSAT .117 .006 .727 -19.331 .000
a. Dependent Variable: SWBHV

Step 4: IV and MV to DV
 As a result of analyses a significant model for learning organization appeared. From the

value of R2 (0.969) generated by the model we can conclude that about 96 % variation. The beta

coefficient of reputation, switching cost and effective advertisement are significant as their p-

values are less than 0.05. According to (Pallant, 2001) beta coefficient is significant if p-

value<.005.

Model Summary
Adjusted R Std. Error of
Model R R Square Square the Estimate
1 .984a .969 .968 .08050
a. Predictors: (Constant), CUSSAT, REPUTATION,
EFTICAD, SWTCHCS, SQ, PRICE

ANOVAb
Sum of
Model Squares df Mean Square F Sig.
1 Regression 65.868 6 10.978 1693.995 .000a
Residual 2.132 329 .006
Total 68.000 335
a. Predictors: (Constant), CUSSAT, REPUTATION, EFTICAD, SWTCHCS, SQ,
PRICE
b. Dependent Variable: SWBHV
 Coefficientsa
Unstandardized Standardized
Coefficients Coefficients
Model B Std. Error Beta t Sig.
1 (Constant) 3.506 .037 95.344 .000
SQ .015 .008 .033 -1.860 .064
PRICE -.016 .014 -.037 1.138 .056
REPUTATI .040 .007 .086 5.487 .000
ON
SWTCHCS .399 .009 .882 44.724 .000
EFTICAD .154 .013 .345 11.445 .000
CUSSAT .169 .003 -.004 1.213 .042
a. Dependent Variable: SWBHV

With the help of coefficient and beta value

H1: Price has significant impact on customer satisfaction. (Rejected)

H2: Reputation has significant impact on customer satisfaction. (Rejected)

H3: Service Quality has significant impact on customer satisfaction. (Accepted)

H4: Switching Cost has significant impact on customer satisfaction. (Accepted)

H5: Effective Advertisement has significant impact on customer satisfaction. (Accepted)

H6: Price has significant impact on Switching Behavior. (Rejected)

H7: Reputation has significant impact on Switching Behavior. (Accepted)

H8: Service Quality has significant impact on Switching Behavior. (Accepted)

H9: Switching Cost has significant impact on Switching Behavior. (Accepted)

H10: Effective Advertisement has significant impact on Switching Behavior. (Accepted)

H11: Customer Satisfaction has significant impact on Switching Behavior. (Accepted)

4.13 Discussion

A number of studies have been carried out to find out the factors that influence the decision

to retain with the same product or service or to adopt another product or service. Various studies

revealed that customer switching behavior greatly depends on the level of satisfaction or

dissatisfaction. This study has revealed different aspects of customer satisfaction and

dissatisfaction and their impact on customer switching behavior.

 The main objective of this study was to check mediating role of customer satisfaction. To

find out result for query, four tests were run on SPSS. First test was to check the relationship of

Dependent and independent.

Step 1: IV to DV

Price for services and its impact on switching behavior was negative with (B -.016) and β

value of -.037, sig value of .260 this is due to minimum difference of price charged for services

with in banking industry of Pakistan (Bilal, 2013).

Service Quality was positive with (B 0.015) and β value of .032 sig value of .051, in

Pakistan banking industry and mostly private banking service quality is playing it significant role

in switching behavior.

Reputation of bank or branding in banking industry of Pakistan was also found significant

with (B .040) (β value of .086) (sig value of .000) which shows positive relation towards switching

behavior. It can be elaborated that if Reputation of bank is damaged customer tend to switch to

other bank,

Switching Cost in this study has been defined as combination of transaction and services

cost incurred due to switch to other bank. This study has found that switching cost play a positive

role with (B.398) (β value of .880) (sig value of .000) in switch behavior.

Effective Advertisement of banking is playing retention role, customers are not switching

due to emotional and effective projection of its product and services, effective advertisement was

significant with (B.153) (β value of .344) (sig value of .000)

 As a result of analyses a significant model for learning organization appeared. From the

value of R2 (0.969) generated by the model we can conclude that about 0.96% variation.

Step 2: IV to MV

As a result of analyses a significant model for learning organization appeared. From the

value of R2 (0.667) generated by the model we can conclude that about 66 % variation.

Price for services and its impact on Customer Satisfaction was negative with (B -.392) ( β

value of -.144)( sig value of .174) this is due to minimum differences of price charged for

services with in banking industry of Pakistan (Bilal, 2013).

Service Quality was positive with (B .926) and (β value of .319) (sig value of .000), in

Pakistan banking industry and mostly private banking service quality is playing it significant role

in Customer Satisfaction.

Reputation of bank or branding in banking industry of Pakistan was also found negatively

with (B 078) (β value of .027) (sig value of .598) which shows negative relation towards

Customer Satisfaction behavior. It can be elaborated that if Reputation of bank is damaged

customer tend to switch to other bank,

Switching Cost in this study has been defined as combination of transaction and services

cost incurred due to switch to other bank. This study has found that switching cost play a positive

role with (B 1.578) (β value of 9.979) (sig value of .000) in customer satisfaction.

Effective Advertisement of banking is playing retention role, customers are satisfy due to

emotional and effective projection of its product and services, effective advertisement was

significant with (B. 1.173) (β value of 4.443) (sig value of .000)

Step 3: MV to DV

Customer Satisfaction of banking is playing retention role, Customer Satisfaction was

significant with (B .169) (β value of 1.213) (sig value of .042)

Step 4: IV and MV to DV

As a result of analyses a significant model for learning organization appeared. From the

value of R2 (0.969) generated by the model we can conclude that about 0.96% variation.

Price for services and its impact on switching behavior was negative with (B -.016) ( β

value of -.037),( sig value of .056) this is due to minimum difference of price charged for

services with in banking industry of Pakistan (Bilal, 2013).

Service Quality was negative with (B .015) (β value of -1.860) (sig value of .064), in

Pakistan banking industry and mostly private banking service quality is playing it significant role

in switching behavior.

Reputation of bank or branding in banking industry of Pakistan was also found significant

with (B .040) (β value of 5.487) (sig value of .000) which shows positive relation towards

switching behavior. It can be elaborated that if Reputation of bank is damaged customer tend to

switch to other bank,

Switching Cost in this study has been defined as combination of transaction and services

cost incurred due to switch to other bank. This study has found that switching cost play a positive

role with (B.398) (β value of 44.724) (sig value of .000) in switch behavior.
 Effective Advertisement of banking is playing retention role, customers are not switching

due to emotional and effective projection of its product and services, effective advertisement was

significant with (B.154) (β value of 11.445) (sig value of .000).

Customer Satisfaction of banking is playing retention role, Customer Satisfaction was

significant with (B .169) (β value of 1.213) (sig value of .042).