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Customer satisfaction is a significant issue for most marketers. Previous research has identified various factors that determine customer satisfaction in retail banking sector in Western countries. The current paper reports findings from a survey, which looked into determinants of customer satisfaction in the retail banking in Pakistan. A total of 300 questionnaires were randomly distributed to customers of a specific bank in Pakistan. Results indicate that there was a strong relationship between service quality and customer satisfaction. There was, however, no relationship between customer satisfaction and tangible aspects of the service environment. The paper discusses implications for hank management. INTRODUCTION Customer satisfaction is an important theoretical as well as practical issue for most marketers and consumer researchers (Churchill and Suprenant, 1982; Moutinho and Goode, 1995; Naser et al., 1999; Piercy, 1994). Customer satisfaction is a major outcome of marketing activity whereby it serves as a link with various stages of consumer buying behavior. For instance, if customers are satisfied with a particular service offering after its use, then they are likely to engage in repeat purchase and try line extensions (East, 1997). Customer satisfaction is widely recognised as a key influence in the formation of consumers' future purchase intentions (Taylor and Baker, 1994). Satisfied customers are also likely to tell others of their favourable experiences and thus engage in positive word of mouth advertising (File and Prince, 1992; Richens, 1983). This positive word of mouth advertising is particularly useful in collectivist Asian cultures like that of Pakistan where social life is structured in a way to improve social relationships with others in the society (see Hofstede, 1980; Hall and Hall, 1987). Dissatisfied customers, on the other hand, are likely to switch brands and engage in negative word of mouth advertising. A recent study conducted by Levesque and McDougall (1996) confirmed and reinforced the idea that unsatisfactory customer service could lead to a drop in customer satisfaction and willingness to recommend the service to a friend. This would lead to increase in switching by customers. So, the significance of customer satisfaction and customer retention in strategy development for a 'market oriented' and 'customer focused' firm cannot be underestimated (see Kohli and Jaworski, 1990 for further discussion). Customer satisfaction can be considered as the essence of success in today's highly competitive world of business. Customer satisfaction is increasingly becoming a corporate goal as more and more companies strive for quality in their products and services (Bitner and Hubbert, 1994). In this context, an understanding of 'determinant of customer satisfaction' (Churchill and Suprenant, 1982; Levesque and McDougall, 1996) is of great significance to marketers. The current paper reports findings from a recently conducted study which looked into the significance and importance of various determinants of customer satisfaction in retail banking in an Asian country--Pakistan. LITERATURE REVIEW
Taylor and Baker 1994. argued that there were two overriding dimensions to service quality. Further empirical research supports the notion that satisfaction is caused by expectations and requires considerable cognitive effort on the part of customers (Bearden and Teel. Customer satisfaction can thus be based not only on the judgement of customers towards the reliability of the delivered service but also on customers' experiences with the service delivery process. Gronroos (1982) argued that customers. On the basis of their review of service quality literature. 1993). compare the service they expect with perceptions of the services they actually receive. (1991a) argued that reliability was mainly concerned with the outcome of service whereas tangibles. assurance and empathy were concerned with the service delivery process.Determinants of Customer Satisfaction Customer satisfaction is generally described as the full meeting of one's expectations. 1993.e. That is. 1997. Parasuraman et al. A review of the existing literature indicates that there can be potentially many antecedents of customer satisfaction. Parasuraman et al. 1987).509).. 1993. 1982. as the dimensions underlying satisfaction judgements are global rather than specific (Taylor and Baker. Patterson and Johnson. Customer Satisfaction and Service Quality In the service literature. Rust and Oliver. McDougall and Levesque (1994). Cronin and Taylor. responsiveness. Parasuraman et al. It has been argued that the quality of service is not a unidimensional construct. service quality incorporates various dimensions that relate to both core and augmented service offerings (Bitran and Lojo. 1988) initially described five dimensions of service quality: reliability. 1983. Rather. Rust and Oliver. In an earlier study. The customers not only judge the accuracy and dependability (i. tangibles. Lewis. Service quality has been described as a form of attitude that results from the comparison of expectations with performance (Cronin and Taylor. assurance and empathy. disconfirmation refers to the differences between prepurchase expectations and post-purchase perceptions" (p.. 1982). 1997). Oliver 1989) and is generally related to habitual usage of products (East.. they were more satisfied (Churchill and Surprenant. The customer satisfaction literature has paid a great deal of attention to the confirmation paradigm. 1996). Cadotte et al. 1995. Churchill and Surprenant (1982) reported that disconfirmation positively affected satisfaction. Customer satisfaction is the feeling or attitude of a customer towards a product or service after it has been used. 1995). Peter and Olson. 1991a). (1985. Moutinho and Goode. The first one being the core or outcome aspects (contractual) of . 1994). 1992. 1985). 1994. while evaluating the quality of a service. strong emphasis is placed on the importance of service quality perceptions and the relationship between customer satisfaction and service quality (see for example Bitner and Hubbert. reliability) of the delivered service but they also judge the other dimensions as the service is being delivered (Parasuraman et al. Gronroos. when subjects perceived the product performing better than expected. which concerns the comparison of product or service performance expectations and evaluations (Goode and Moutinho. The confirmation model treats satisfaction as a meeting of customer expectations (East. 1984. "prepurchase expectations are beliefs about anticipated performance of the product. 1994. According to Peter and Olson (1996). However. research on customer satisfaction has moved towards the disconfirmation paradigm which views satisfaction with products and brands as a result of two cognitive variables: prepurchase expectations and disconfirmation (Churchill and Surprenant. however. 1992. 1994). responsiveness.
al. Customer Satisfaction and Service Features Factors related to service offerings are also related to customer satisfaction (Levesque and McDougall. both service quality and customer satisfaction share a close relationship. Taylor and Baker. The current paper aims to fill this gap in the literature. and the second being the relational or process aspects (customer-employee relationship) of the service. Woodside et al. the physical layout etc. Services are often characterized by their intangibility. Because of the intangible nature of services. LeBlanc and Nguyen. and perishability. physical surroundings of the service environment can have a significant impact on customers affective responses and their behavioural intentions (Wakefield and Blodgett. 1993. (1996) reported similar findings that the tangible aspects of department stores do influence customers' perceptions of service quality. 1988. Levesque and McDougall. 1993.) that surround the service environment. though they are normally conceptualise as unique (or separate) constructs (Bitner and Hubbert. 1997).. 1994. Zeithaml and Bitner. 1993. 1989). 1994). Levesque and McDougall 1996 found that the performance of the service provider on core and relational dimensions of service was an important driver for customer satisfaction in retail banking in the UK. al. Support for this argument comes from empirical evidence suggesting that the tangible. 1996).the service. Moreover. The implications of these characteristics are that it is often difficult for customers to evaluate services at preconsumption. Dabholkar et al. convenience and competitiveness of the bank are two important factors which are likely to influence the overall « . 1992. Cronin and Taylor. heterogeneity. the link between core and relational dimensions of service and customer satisfaction is yet to be established empirically. However. There is some empirical evidence suggesting that service quality is a causal antecedent of customer satisfaction (see for example. it becomes difficult for an organization to understand how its customers perceive and evaluate the quality of its services (Parasuraman et. Parasuraman et. However. Thus. in a non-Western context. however. 1996). the literature dealing with services outlines some major characteristics of service that make them unique and different from physical products (Bitran and Lojo. 1985. inseparability.. According to Levesque and McDougall (1996). 1999). Levesque and McDougall. Cronin and Taylor. 1985. there is very little empirical research demonstrating the importance of service quality dimensions in determining customer satisfaction (Fisk et al.. 1993. 1992. It is generally accepted that customer satisfaction often depends on the quality of product or service offering (Anderson and Sullivan. Hence. research on customer satisfaction is often closely associated with the measurement of quality (East. make inferences about the service quality on the basis of tangibles (the buildings. Zeithaml. In a recent study. For this reason. 1981). 1996). consumption and post consumption stages of the consumer decision-making (Legg and Baker.. 1996). Patterson and Johnson. there are reasonable grounds to assume that customer satisfaction is also related to customers' evaluation of physical surroundings of the service environment. Customers. 1996).