A Thesis Proposal on

Impact of Service Quality on Customer Satisfaction on Educational Consultancies

of Kathmandu – Application of SERVQUAL Method

Submitted by:

Anup Manandhar

For Partial fulfillment of the degree of Masters of Business Administration

May 2016

CG Institute of Management
Limkokwing University of Creative Technology
July 2019
 TABLE OF CONTENTS
CHAPTER 1: INTRODUCTION ................................................................................................. 1

1.1 Background of the Study…………….....................................................................….1

1.2 Statement of the Problem………............................................................................….1

CHAPTER 2: Literature Review .............................................................................................. 3

2.1 Theoretical Review ........................................................................................... 4

2.1.1 Customer Service ……..............................................................................
2.1.2 Consumer Behaviour.................................................................................. 4
2.1.3 Consumer Switching……………………. ....................................................
2.2 Empirical Review on Consumer Switching Behaviour .............................................. 4
2.3 Research Gap........................................................................................................ 5

CHAPTER 3: RESEARCH QUESTIONS AND HYPOTHESES ................................ 6

3.1 Research Questions .............................................................................................. 6

3.2 Research Objectives ............................................................................................. 6
3.3 Theoretical Framework ........................................................................................ 7
3.4 Conceptual Framework ........................................................................................ 7
3.4.1. Independent Variable .................................................................................8
3.4.2. Dependent Variable ................................................................................ 8
3.5 Hypotheses ........................................................................................................... 8

CHAPTER 4: RESEARCH METHODOLOGY ........................................................... 9

4.1 Research Design ................................................................................................... 9

4.2 Population and Sample Data ................................................................................ 9
4.3. Instruments ........................................................................................................ 10
4.4 Methods of analysis
4.5 Limitations of the Methodology ........................................................................... 12

REFERENCES ....................................................................................................................... 13
ABBREVIATIONS
 CHAPTER 1: INTRODUCTION
1.1 Introduction
Service quality has gained a considerable amount of interest for researchers and practitioners in
the past two decades. The practitioners believe that service quality can increase the performance
of a firm (Black, Briggs, & Keogh, 2001; Caruana, Money, & Berthon, 2000; Cheruiyot & Maru,
2013; Haynes & Fryer, 2000; Yoo & Park, 2007). However, practitioners refer service quality
and customer satisfaction as interchangeable terms. Past studies relate the concept of service
quality and customer satisfaction to each other (Amin & Isa, 2008;). Further, a considerable
amount of work has been done in different service industries to better understand the dimensions
of service quality and customer satisfaction (Chumpitaz & Paparoidamis, 2004; Zhu et al.,
2002). This research tries to associate the relationship between service quality and customer
satisfaction in the educational consultancies of Kathmandu.

An Educational Consultancy is an organization which helps parents/students and organizations

with educational planning. It is established with an objective of catering proper information and
guidance to parents interested in sending their offspring for abroad studies. They are the chain
between the students and international universities/colleges. They provide the services such as
counselling, preparing financial documents and VISA processing. Some also do provide
preparation services of Language Efficiency Tests such as IELTS, TOEFL and PTE. It is one of
the emerging service sectors in Nepal as more students seek to aboard for their further study.

Outbound mobility of students has been booming since 2000, the number of Nepali students
enrolled in degree programs abroad soared by 835 percent and stood at 44,255 students in 2017
(UIS). Nepal’s outbound mobility ratio almost doubled over the past decade and is now more
than twelve times as high as in neighboring India. In 2016, Nepal’s mobility ratio was 12.3
percent, compared to 0.9 percent, 1.9 percent and 3 percent in India, China and Vietnam,
respectively (UIS).

It is likely that outbound student mobility from Nepal is going to increase further in the near
term. The country’s population is becoming more affluent and is growing – the government
expects the population to increase from 29 million to 33.6 million by 2031. Demographically,
Nepal is currently experiencing a “youth bulge phase”: World Bank data shows that the share of
university-age youths among the Nepali population (ages 20 to 29) stood at about 36 percent in
2016 and analysts expect Nepal to be among the countries with the fastest growing population of
18 to 22-year-olds in the coming years. With all this data, we can see that Educational
Consultancy business in Nepal is in booming phase and the increasing trend will continue to rise
in future. The major clients of this industry are the students who seek to pursue their career in
aboard. These students have large number of choices in case of Educational consultancies. Thus,
it is a challenge for the institutions to improve their service quality, so that they could provide
best services to their clients. This research aims to apply SERVQUAL method to determine the
factors that influence the customer satisfaction in Educational Consultancy industry.

1.2 Problem Statement

Previously, many studies have been conducted in the context of service quality and customer
satisfaction (Ahmed et al., 2010; Arasli et al., 2005; Caruana et. al., 2000; Peterson & Wilson,
1992; Rust & Oliver, 1994; Taylor & Baker, 1994). These studies suggest that service quality
and customer satisfaction are key factors of service industry. Parasuraman et al. (1985) argued
that the service quality concept is inconclusive in the context of customer satisfaction

Despite the existing literature on service quality, fewer studies have been conducted on service
quality and customer satisfaction in the Educational Consultancy sector. Up till now, to the best
of the authors’ knowledge, no such studies have been found relative to service quality
dimensions and customer satisfaction specifically in Educational Consultancy in Nepal.

This research tries to quantify the impact of service quality to the customer satisfaction through
SERVQUAL model.

1.3 Significance
1.4 Research Questions
 Does the Reliability (ability to perform services accurately) affect the customer
satisfaction of Education Consultancies of Kathmandu?
 Does the Tangibles (physical facilities, staff, equipment, building, appearance etc.) affect
the customer satisfaction of Education Consultancies of Kathmandu?
 Does the Responsiveness (willingness to help and respond to customer needs) affect the
customer satisfaction of Education Consultancies of Kathmandu?
 Does the Empathy (attention, caring and individual service is given to the customer)
affect the customer satisfaction of Education Consultancies of Kathmandu.
 Does the Assurance (staff ability to inspire, confidence, trust and courtesy) affect the
 customer satisfaction of Education Consultancies of Kathmandu?

1.5 Research Objectives

The objective of this research is to examine SERVQUAL factors affecting the customer
satisfaction in Educational Consultancies in Kathmandu:
 To examine the impact of Reliability (ability to perform services accurately) on
customer satisfaction of Education Consultancies of Kathmandu.
 To examine the impact of Tangibles (physical facilities, staff, equipment, building,
appearance etc.) on customer satisfaction of Education Consultancies of Kathmandu.
 To examine the impact of Responsiveness (willingness to help and respond to
customer needs) on customer satisfaction of Education Consultancies of Kathmandu.
 To examine the impact of Empathy (attention, caring and individual service is given to
the customer) on customer satisfaction of Education Consultancies of Kathmandu.
 To examine the impact of Assurance (staff ability to inspire, confidence, trust and
courtesy) on customer satisfaction of Education Consultancies of Kathmandu.

1.6 Hypotheses

Based on past empirical findings, the research hypotheses of the present study are as follows:
 H1: Reliability dimension of service quality will have a positive impact on customer
satisfaction.
 H2: Tangibility dimension of service quality will have a positive impact on customer
satisfaction.
 H3: Responsiveness dimension of service quality will have a positive impact on customer
satisfaction.
 H4: Assurance dimension of service quality will have a positive impact on customer
satisfaction.

 H5: Empathy dimension of service quality will have a positive impact on customer
satisfaction.

1.7 Scopes and Limitations

1.8 Definition of terms
Independent Variables
The Independent variables are briefly described below:

Reliability
Reliability refers to ability to perform the promised service dependably and accurately. It depicts
the answer for the questions like is the company reliable in providing the service? Does it
provide as promised? Reliability reflects a company’s consistency and certainty in terms of
performance. Reliability is the most important dimension for the consumer of services.

Tangibility
Tangibility refers to physical facilities, equipment, and appearance of personnel. It depicts the
answer for the questions like how are the service provider’s physical installations, equipment,
people and communication material? Since there is no physical element to be assessed in
services, clients often trust the tangible evidence that surrounds it when making their assessment.

Responsiveness
Responsiveness refers to willingness to help customers and provide prompt service. It depicts the
answers to the questions like are company employees helpful and capable of providing fast
service? It is responsible for measuring company and employee receptiveness towards clients.

Assurance
Assurance refers to knowledge and courtesy of employees and their ability to inspire trust and
confidence. It depicts the answers to the questions like are employees well-informed, educated,
competent and trustworthy? This dimension encompasses the company’s competence, courtesy
and precision

Empathy
Empathy refers to caring, the individualized attention the firm provides its customers. This is the
capacity a person has to experience another’s feelings. It depicts the answer to the question of
Does the service company provide careful and personalized attention?

3.4.2 Dependent Variable

Customer Satisfaction
It is a measure of how products and services supplied by a company meet or surpass customer
expectation. Customer satisfaction is defined as "the number of customers, or percentage of total
customers, whose reported experience with a firm, its products, or its services (ratings) exceeds
specified satisfaction goals."

1.9 Summary

CHAPTER 2: LITERATURE REVIEW

2.1 Introduction

2.1.1 SERVQUAL Model

The SERVQUAL scale was developed based on a marketing perspective with the support of the
Marketing Science Institute (Parasuraman, Zeithaml, and Berry 1988). Its purpose was to
provide an instrument for measuring service quality that would apply across a broad range of
services with minor modifications in the scale. SERVQUAL provides a foundation for a growing
body of research that pertains to the creation of quality among service industries. The developers
of the scale contend that, while each service industry is unique in some aspects, there are five
dimensions of service quality that are applicable to service-providing organizations in general.
These dimensions are: (1) tangibles-physical facilities, equipment, and appearance of personnel;
(2) reliability-ability to perform the promised service dependably and accurately; (3)
responsiveness/willingness to help customers and provide prompt service; (4) assurance-
knowledge and courtesy of employees and their ability to inspire trust and confidence; and (5)
empathy-caring, the individualized attention the firm provides its customers (Parasuraman,
Zeithaml, and Berry 1988). The scale was developed and tested across four service
environments: banking, credit card services, repair and maintenance, and long-distance
telephone services. In its final form, SERVQUAL contains 22 pairs of items. Half of these items
are intended to measure consumers) expected level of service for a particular industry
(expectations). The other 22 matching items are intended to measure consumer perceptions of
the present level of service provided by a particular organization (perceptions). Both sets of
items are presented in seven-point Likert response format, with the anchors "strongly agree" and
"strongly disagree." Service quality is measured on the basis of the difference scores by
subtracting expectation scores from the corresponding perception scores. Putting service quality
into operation as a difference or "gap" score is a consistent extension of the theoretical work of
Parasuraman and his colleagues on the determinants of service quality. It is unique in the sense
that the definition of the construct is based on the difference between expectations and
perceptions. The construct is differentiated from consumer satisfaction in a way that defines the
expectations/ perceptions "gap" as an enduring perception about the overall excellence of a
particular firm. While it should be pointed out that SERVQUAL is intended to measure
functional quality rather than technical quality, this limitation is inherent in the fact that the
technical aspects of the delivery process. Hence, SERVQUAL can help researchers to identify
general principles of functional service quality and to test the effectiveness of a given model
among service-providing industries.

2.1.2 Customer Satisfaction

In 1980, Oliver referred customer satisfaction to the complete fulfilment of one’s expectations. It
is an attitude or feeling that results from having used some product or service. Marketing
activities are directly linked to customer satisfaction and sometimes it is associated with
consumer buying behavior. If a customer is satisfied with a service or product after having used
it, then the chances are increases in repeat purchase of that service or product (East, 1997). The
intentions to repeatedly purchase the product rely heavily on customer satisfaction (Taylor &
Baker, 1994). Not only this, the satisfied customer shares his positive experience with others and
becomes a source of word-of-mouth advertising. On the other hand, a dissatisfied customer
results in negative word-of-mouth advertising and is more likely to switch the brand or product.

2.1.2 Service Quality

Past research findings validate the fact that service quality is a better measurement of customer
satisfaction (Anderson & Sullivan, 1993; Cronin Jr & Taylor, 1992; Levesque & McDougall,
1996; Taylor & Baker, 1994). Most of the empirical investigations have tried to propose a causal
relationship between service quality and customer satisfaction. This means that service quality is
viewed at the global level (Bitner, 1990; Oliver, 1981; Parasuraman et al., 1998), while customer
satisfaction is treated at the experimental level. Bitner (1990) study investigated the linkage
between customer satisfaction judgement and service quality of travelers. Evidence suggests that
customer satisfaction judgements are antecedents of service quality. In addition, the study further
proposed a research dimension for the causal linkage between customer satisfaction and service
quality. The performance of a company in the long run is dependent on the quality of a good
product and services. A business can grow by improving its quality, which leads to increase in
market share and market expansion as well (Buzzell & Gale, 1987). For a service business,
issues related to the delivery of services and customers’ experience are the key factors to
improve the quality of services. Past literatures on service quality paid much attention to quality
perception and customer satisfaction (Cronin Jr & Taylor, 1992; Taylor & Baker, 1994).
Evidences provided in the literature suggest that good service quality increases customer
satisfaction and helps attract new customers and also retain existing ones (Keiser, 1993).
Similarly, the majority of the service sector believe that service quality should refer to service
excellence in order to gain customer satisfaction. One study of Madsen (1993) suggested a brief
definition of service excellence that firms can exceed customer satisfaction to delight and retain
them. He further explains service excellence as listening, and allowing customers to be a part of
action, innovation and empowerment. Previous studies suggest that service quality is not
associated with a unidimensional construct. However, most of the researchers support service
quality as a multidimensional construct such as tangibles, responsiveness, reliability, empathy
and assurance (Bitran & Lojo, 1993; Carman, 1990; Parasuraman et al., 1985, 1988). Generally,
service quality has two overriding dimensions (Gro ¨nroos, 1984; Levesque & McDougall,
1996b; McDougall & Levesque, 1994; Parasuraman, Berry, & Zeithaml, 1991). The first
dimension is referred to as the core aspect of the service (reliability), whereas the second
dimension is referred to as process aspects of the service (tangibles, responsiveness, empathy
and assurance). More precisely, reliability is mainly associated with the service outcome, while
tangibles, responsiveness, empathy and assurance are associated with the deliverance of service
(Parasuraman et al., 1991). Supporting these facts, this study suggests that both the aspects are
essential and interactive dimensions of service quality and can be antecedents of customer
satisfaction.

2.2 Introduction

2.3 Literature Review

2.4 Summary and Research Gap

2.5 Theoretical Framework

Reliability

Tangibles

Customer
Satisfaction Responsiveness

Empathy

Assurance

Fig. 1 Dependent and Independent variables according to SERVQUAL Method

CHAPTER 3: METHODOLOGY

This chapter will discuss the methodology opted for the study. A brief discussion on research
design will follow first, and then sample will be determined, followed by an examination of the
data collected, namely closed ended and structured questions. This chapter will also discuss the
data analysis process and ends with the limitations of the methodology opted.

3.1 Research Methods

3.2 Population and Sample data

3.3 Data reliability and validity tests

3.4 Data analysis models

3.5 Resource Requirements

3.6 Summary

4.1 Research Design

Quantitative methods emphasize objective measurements and the statistical, mathematical, or

numerical analysis of data collected through polls, questionnaires, and surveys, or by
manipulating pre-existing statistical data using computational techniques. Quantitative research
focuses on gathering numerical data and generalizing it across groups of people or to explain a
particular phenomenon.

Therefore, based on this approach, this study will examine impact of service quality on customer
satisfaction through SERVQUAL method on Educational Consultancies of Kathmandu.

4.2 Sources of Data

This study will use primary data, the source of which will be a structured questionnaire,
delivered to students who are currently processing through various consultancies of Kathmandu
valley and those who have already been to aboard. Hence a purposive sampling technique is
used to select the respondents (students seeking aboard studies) within Kathmandu valley.

4.3 Methodology

Figure 1 shows the conceptual model of the study. The SERVQUAL measurement model
comprises five dimensions such as reliability, tangibility, responsiveness, assurance and
empathy. These dimensions are used to measure service quality in Educational consultancies in
Kathmandu. In addition, based on the past literature, Figure 1 further illustrates the relationship
between service quality and customer satisfaction.

4.4 Data Analysis

The SERVQUAL five dimensions are suggested by Parasuraman (1998), Jabnoun and Hassan
Al-Tamimi (2003) and Othman and Owen (2001, 2002), which are further modified and adapted
by this study. Questionnaire items were modified and substituted carefully in the service
industry, specifically Educational Consultancies of Kathmandu.. A pilot study is to be conducted
and the questionnaire is to be distributed to students who are currently processing and who have
gone to aboard for higher studies through educational consultancies. It is therefore confirmed
that all items are relevant and it is convenient to understand the instrument. A 5-point Likert
scale ranging from (1) ‘strongly disagree’, (2) ‘disagree’, (3) ‘neutral’, (4) ‘agree’ and (5)
‘strongly agree’ is to be used to measure the perception of service quality.

Data collection is to be done via survey method – questionnaires and Google Forms. This study
aims to target those students who are processing and who have gone to aboard for higher studies
through educational consultancies. Data collection will be based on a 5-point Likert scaling
questionnaire which was adopted in the previous literature. The present study is to be conducted
in August– November 2019, and a non-probability sampling technique (convenience sampling)
is to be applied.

During the data collection time, all respondents and their information will be kept confidential.
In addition, the questionnaire will be based on service quality dimensions (independent
variables) such as reliability, tangibility, responsiveness, assurance and empathy, whereas
customer satisfaction (dependent variable) will be tested with these service quality dimensions.

The basic regression model service quality dimensions and customer satisfaction are written as
follows:

y n = α + β x n + εn

where y denotes a dependent variable (customer satisfaction) and α denotes the intercept term. x
represents explanatory variables (reliability, tangibility, responsiveness, assurance and empathy),
while b represents the regression coefficient. The basic functional form of the study model is as
follows:

Customer satisfaction = f (reliability, tangibility, responsiveness, assurance and empathy).

From the above discussion, the following regression model is used in this study:

CSn = α + β1 RELn + β2 TANn + β3 RESn + β4 ASRn + β5 EMPn + εn,

where CS represents customer satisfaction, REL is reliability, TAN shows tangibility, RES
denotes responsiveness, ASR represents assurance, EMP reflects empathy, while ε is the error
term. The conceptual model of this study is presented in Figure 1.

4.5 Limitations of the Methodology

This study will have some limitations. This study will primarily limit to its small sample size (i.e.
few responses in Kathmandu district will be studied). A larger sample with a greater number of
participants would have benefitted results and enhanced the generalizability of the study.
However, results fit with those of other researchers. Further, over the time, perceptual and
actual performance may change so the findings of the study may vary.

CHAPTER 4: Expected Results

4.1 Anticipated benefits

4.2 Expected Outcomes

4.3 Constraints and Limitations of the study

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