International Bulletin of Business Administration ISSN: 1451-243X Issue 11 (2011) EuroJournals, Inc. 2011 http://www.eurojournals.

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Applying SERVQUAL Model and Factor Analysis in Assessing Customer Satisfaction with Service Quality: The Case of Mobile Telecommunications in Macedonia
Jusuf Zekiri Assistant Professor at South East European University Business and Economics Faculty, Ilindenska nn Tetovo-Macedonia E-mail: j.zekiri@seeu.edu.mk Tel: ++389 76 403 313 Abstract Service quality and customer satisfaction are very important concepts that companies must understand if they want to remain competitive and grow. In todays competitive environment delivering high quality service is the key for a sustainable competitive advantage. Customer satisfaction does have a positive effect on an organizations profitability. Satisfied customers form the foundation of any successful business as customer satisfaction leads to repeat purchase, brand loyalty, and positive word of mouth. A structured questionnaire was developed from the SERVQUAL model and was randomly distributed to the users of the three mobile operators to determine their satisfaction with service quality delivery in the Macedonian mobile telecommunication market. From the analysis carried out, it was found out that the overall service quality perceived by the customers was not satisfactory, that expectations were higher than perceptions. Customers were not satisfied with service quality in all 5 dimensions studied. Factor analysis revealed reliability to be as the most important factor for customer satisfaction with service quality. Reliability and responsiveness were shown to be as the most important factors for customers satisfaction with service quality, followed by assurance as a second factor, then empathy as a third factor component, and the tangible dimension as the last fourth factor. Reliability and responsiveness both combine the first underlying factor extracted from rotation (extraction sorts components according to their contribution to the variance), that holds 40.29% of Total Variances of 59. 29%, combined with other two responsiveness items. Keywords: SERVQUAL model, Factor Analysis, Customer service, Expectation, Perception

1. Introduction
In todays competitive environment delivering high quality service is the key for a sustainable competitive advantage. Customer satisfaction does have a positive effect on an organizations profitability. Satisfied customers form the foundation of any successful business because customer satisfaction leads to repeat purchases, brand loyalty, and positive word of mouth. There are numerous 86

studies that have looked at the impact of customer satisfaction on repeat purchases, loyalty and retention. Many researchers point out the fact that satisfied customers share their experiences with other people to the order of perhaps five or six people. On the contrary, dissatisfied customers are more likely to tell another ten people of their experience with product or service. Many researchers and academicians highlight the importance of customer satisfaction. The empirical evidence also shows the positive connection between customer satisfaction, loyalty and retention. According to Hansemark and Albinson (2004) satisfaction is an overall customer attitude towards a service provider, or an emotional reaction to the difference between what customers anticipate and what they receive, regarding the fulfillment of some needs, goals or desire . Customer loyalty on the other hand refers to a deeply held commitment to re-buy a preferred product or service in the future despite situational influences and marketing efforts having the potential to cause switching behavior (Oliver, 1997). There are many factors that affect customer satisfaction. Such factors include friendly employees, courteous employees, knowledgeable employees, helpful employees, accuracy of billing, billing timeliness, competitive pricing, service quality, good value, billing clarity and quick service (Hokanson, 1995). Customer satisfaction and retention are key issues for organizations in today's competitive market place. As such, much research and revenue has been invested in developing accurate wars of assessing consumer satisfaction at both the macro (national) and micro (organizational) level (O'Loughlin & Coenders, 2004). Nowadays all companies are realizing the significance of delivering and managing service quality, which leads to customer satisfaction. Service quality that is delivered can meet or exceed customers expectations are mainly influenced by customers prior expectations.

2. Service Quality Models and SERVQUAL

Many different models have been developed to measure service quality delivered by firms in many businesses. It is important to review service quality models because of its relation with customer satisfaction. Thus, service quality has become a major area of interest of practitioners, managers and researchers because of its impact on customer satisfaction, customer loyalty, and of course company profitability. The SERVQUAL conceptual model serves as a concise framework for understanding, measuring and improving service quality (Parasuraman et. al.1988). Service quality models provide companies with models on how to gather information on market demands in order to become more competitive in its operation in the market. Models not only help in learning the factors that play an important role to customer satisfaction but also provide directions for improvement. It is a simplified description of the actual situations. The conceptual models in service quality provide managers to identify problems with quality service and help them improving the efficiency, profitability and overall performance (Seith et al. 2006). The current measurement of service quality can be traced to the research of Parasuraman, Zeithaml, and Berry. These authors made a substantial contribution to the understanding the concept of service quality and the factors that influence it. They originally identified four gaps in the organization that can cause quality problems. These quality problems cause a fifth gap, which is difference between customer expectations of service and perceptions of the service actually received. The authors identified 10 determinants of service quality based on a series of focus group sessions (Parasuraman et al. 1988). They revealed in their exploratory research that the criteria used by customers in assessing service quality fit 10 determinants. In 1988, they developed the 10 determinants into five specific components: tangibles, reliability, responsiveness, assurance, and empathy. The authors proposed that the instrument has been designed to be applicable across a broad spectrum of services. As, such, it provides a basic skeleton through its expectations/ perceptions format encompassing statements for each of the five service quality dimensions. The skeleton, when necessary, can be adapted or supplemented to fit the characteristics or specific research needs of a particular organization (Parasuraman et al. 1988). 87

They developed and tested a multiple-scale called SERVQUAL dimensions for measuring the following five dimensions of service quality: 1. Reliability: The ability to provide the promised service dependably and accurately. Reliability is the customer expectation that the service is accomplished on time every time, in the same manner, and without errors. 2. Responsiveness: The willingness to help customers and provide prompt service. Keeping customers waiting, particularly for no apparent reason, creates negative perceptions o quality. In the event of a service failure, the ability to recover quickly with professionalism can create very positive perceptions of quality. 3. Assurance: the knowledge and courtesy of employees and their ability to inspire trust and confidence. The assurance dimension includes competence to perform the service, politeness and respect for the customer, and effective communication with the customer. 4. Empathy: The provision of caring, individualized attention the organization provides its customers. Empathy includes approachability, sense of security, and the effort to understand the customers needs. 5. Tangible:???????? The SERVQUAL instrument has been productively used for measuring service quality in many service organizations. It has been used in many contexts for example, service quality in banking, hospitals, telecommunications, insurance companies, etc.

3. Mobile Telecommunication
Companies and organizations are facing new conditions of doing business because of the rapid development in technology. The 21st century consumer has seen many technological advances especially in the field of telecommunication and information technology. Globalization and deregulation process have enabled growth and an increase in competition. Thus, mobile telecommunication as a specific area has drawn a lot of interest within telecom sector. The growth in use of mobile telephones has been spectacular. From almost a zero base in the early 1980s, mobile penetration worldwide in 2002 was estimated at 15.57 mobile phones per 100 people worldwide. European countries were also the first to launch and commercialize mobile cellular networks, with the first mobile cellular subscriptions recorded in Finland as early as 1980, followed soon after by Sweden, Norway, and Denmark (ITU, 2009). Mobile cellular has been the most rapidly adopted technology in history. It is expected that the number of mobile phone subscribers globally will rise to billions. Today it is the most popular and widespread personal technology on the planet, with an estimated 4.6 billion subscriptions globally by the end of 2009 (ITU, 2009). Europe is the worldwide leader in mobile cellular subscriptions uptake. This is partly due to the adoption of a harmonized technological standard during the early stages, the enforcement of enabling policies and effective regulations to further promote competition. It is also worth mentioning that in most European countries citizens can afford to spend part of their disposable income for personal mobile communication. European countries were also the first to launch and commercialize mobile cellular networks, with the first mobile cellular subscriptions recorded in Finland as early as 1980, followed soon after by Sweden, Norway, and Denmark (ITU, 2009). Germany, Turkey, Italy and Poland, followed by the U.K, France, Spain, Romania, and Bulgaria are countries in the European region with the highest number of net added mobile cellular subscriptions, in the period 2000-2008 (ITU, 2009). Over the past decade (1999-2008), mobile telephony in E-42 has been growing annually by 11 per cent, reaching by the end of 2008, 118 per cent penetration (ITU, 2009).

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3.1. Mobile Telecommunications in Macedonia By the end of year 2004, Macedonia planned to end its fixed-line, and its initial phase of market reform involved opening mobile services to competition, along with certain value-added and Internet services. This often was implemented by issuing service specific licenses for each category of service as it became liberalized. The traditional monopolistic situation has changed for the Macedonian telecommunication during the past years. There is a completion with the deregulation of the telecommunication in Macedonia. Much of the structural reforms have been due to its bid to join the EU, which is progressing as noted by its status as an official EU candidate. The adoption of the new Law (MAY, 2005) on electronic communications and establishing of the Agency for electronic communications as independent supervisory body create framework for efficient liberalization of the telecommunication market in Macedonia. This lead to a keen competition between three mobile operators, T-Mobile, One and, VIP, that try to keep the existing customers satisfied and by trying to get new customers. Therefore, T-Mobile is the market leader with about 58% of market share, ONE is a market challenger with about 29% of market share, and VIP a market follower with about 13% of market share.

4. Problem Discussion and Research Questions

The problem statement is generated from the consideration that service quality is an important matter to bring more customers, retain the existing ones and create loyalty among customers. The problem of this study is driven by the need to empirically measure service delivery of mobile telecommunication operators in Macedonia. The position of customer satisfaction with service quality is not so clear, as to what extent customers are satisfied with the service quality they are delivered. Furthermore, there is not such evidence from documentation or any previously done research in measuring customer satisfaction with service quality in mobile telecommunication industry in Macedonia. Therefore, this study represents a first research in the area of customer satisfaction with service qualities provided by the three mobile operators in Macedonia. Therefore, the study is lead by answering the following research questions: 1. How are mobile customers satisfied with the customer service provided at mobile telecommunication in Macedonia? 2. With which element of service are customers satisfied or dissatisfied? 3. Which service elements are important for customer satisfaction? The Macedonian mobile telecommunication market has changed rapidly during the last years due to deregulation that made the market attractive for new entrants in the mobile sector industry. Due to these changes companies operating in this industry need to improve their service delivery in order to be competitive in the market. Therefore, the main objective of this research is to measure service quality delivered to customers of mobile telecommunication in the Macedonian market. The five SERVQUAL tools: Tangibles, Reliability, Responsiveness, Assurance and Empathy, are the main dimensions of the present research which will serve as a criteria for judging the service quality provided by mobile telecom companies. The study will provide a more reliable scientific measurement in order to describe and evaluate the level of customer satisfaction of the three mobile telecommunication companies (T-mobile, ONE, and VIP) in Macedonia, with the services that customers get. It will also provide companies in this sector with invaluable insights about what segments within their service delivery to improve in order to prevent customers intention to switch to other competitors network. The study will also help management in their marketing planning strategies to improve service delivery by strengthening the customer value, achieving customer satisfaction and loyalty, as well as building long-term relationship with the customers and achieve business growth. 89

5. Literature Review
Service industries continue to grow in significant role in the overall Macedonian economy, and business organizations are increasingly placing more focus on service quality. Many businesses are trying to put more efforts on retaining existing customers rather than attracting new customers. Companies interest is arousing in the measurement of service quality in order to provide their customers a higher levels of service quality, as a strategy to position themselves more effectively in the marketplace (Parasuraman et al. 1988). Measuring service quality is quite different from measuring product quality, because of the inherent characteristics that services have, like: intangibility, inseparability, perishability, and variability. So, measuring the quality of a product can be a very difficult exercise. Product quality is easier to be measured because of product specifications, like: length, depth, width, weight, colour, package, etc. And on the other hand a service can have numerous qualitative specifications. Thus, the problem with management of service quality in service firms is that quality is not easily identifiable and measurable due to the inherent characteristics of services. 5.1. Previous Studies in Mobile Telecommunication Services In the last several years a lot of literature has emerged with the growth of the mobile telecommunication services around the world, and many researchers have tried to empirically investigate customer satisfaction with service quality in the mobile telecommunication sector. Woo and Fock (1999) also tried to investigate the Hong Kong mobile phone services sector in order to find out determinants of customer satisfaction with service quality. They conducted an exploratory factor analysis on 20 attributes followed by confirmatory factor analysis and obtained four determinants of customer satisfaction viz. transmission quality and network coverage, pricing policy, staff competence and customer service. Danaher and Gallagher (1997) studied the New Zealand's telecom services industry. They identified that certain attributes of the personnel delivering the service, such as friendliness, overall service quality, and competency more strongly influence the overall service quality. Negi (2009) tried to identify the role of service quality as perceived by mobile users while determining their overall satisfaction. He collected primary data through structured questionnaires from 250 mobile subscribers of Ethiopian Telecommunication Corporation. Service quality gaps were computed and found to be negative for all the service quality dimensions ranging from as low as -2.02 for Tangibles to as high as -3.23 for the added dimension of Network Quality. Overall service quality was found to be significantly associated with and contributed significantly to the overall satisfaction of mobile subscribers. The SERVQUAL as a service quality model was used by Wang et al., to measure the five SERVQUAL dimensions (reliability, tangibility, responsiveness, assurance and empathy) to measure service quality, by adding another dimension "network quality" as another antecedent of customers' perceived service quality. They used the structural equation modeling in China to investigate the impact of quality-related factors on customer value and customer. They found out that all service quality factors had significant and positive impact on customer satisfaction (Wang & Lo, 2002). Rahman (2006) used a sample of 1008 questionnaires to measure customer satisfaction in Indian Cellular Telecommunication industry. He found out that customer contact employees play an important role in affecting customer perception of service quality. The tangible dimension was seen as an aspect of service quality extremely important to customers. The SERVQUAL model was also used by Lai et al. (2007) in China's mobile telecommunication. They used exploratory and confirmatory factor analysis to test communication industry. The results showed that the SERVQUAL instrument is a valid means for measuring service quality. They also identified "service convenience" as an important additional dimension of service quality in China's mobile services sector. 90

In another study, Johnson and Sirikit used SERVQUAL in their study of Thai telecommunication mobile industry to test service quality users using the service quality dimensions (reliability, responsiveness, assurance, empathy and tangibles). From the empirical evidence, they found out that tangibles emerged as the most important factor (Johnson & Sirikit 2002). In a study by Gerpott et al. (2000) carried out in Germany through a structural equation modeling approach, researchers found that customer retention, customer loyalty and customer satisfaction are important goals for the telecommunications operators in the German mobile telecommunications market. Findings also showed that network quality, assessment of price and personal benefits had positive and significant effect on customer satisfaction. But mobile service price, personal service benefit perceptions and number portability had the strongest effects on customer retention as well. But et al. (2008) adopted a qualitative research to identify the factors contributing to customer satisfaction of mobile subscribers. The results confirmed a multidimensional construct of customer satisfaction in Pakistan mobile cellular industry. The findings suggest that customer satisfaction of mobile cellular users in Pakistan constitutes four factors: price, transmission quality, usage ease and service support. Kim et al. (2004) carried out a research in the Korean mobile telecommunication services sector. They investigated the effect of different service features and switching barriers on customer satisfaction and customer loyalty. The results indicated that customer satisfaction is significantly and positively affected by call quality, value added services and customer support. They also found that customer satisfaction and switching barrier had a significant and positive impact on customer loyalty. Aydin and Ozer (2005) used the SEM technique (structural equation modeling) to study the impact of service quality, perceived value, customer expectations and complaint handling on customer satisfaction in the Turkish mobile telephone market. The results showed that service quality, customer expectations and complaint handling had positive and significant effect on customer satisfaction. Service quality had the strongest effect than other constructs in their model. A similar study was conducted by Ling et al. (2009) to investigate the factors that influence customer satisfaction and customer loyalty in Malaysian telecommunication services. This is achieved by utilizing a questionnaire distributed to 125 respondents. They found that important variables for satisfaction included, supporting services, product (handy, reliable coverage, friends and family lines) and promotional efforts of the firm; while for loyalty, they refer to convenience, services, satisfaction and cost. The findings indicate that telecommunication service providers should look beyond price wars to keep their customers satisfied and loyal. Blery et al. (2009) in a study conducted to identify the influence of service quality on customer loyalty in the Greek mobile telephony sector. Repurchase intention and positive word of mouth were used as behavioral components to measure customer loyalty. The influence of perceived price on customers repurchase intention was also examined. Data were collected through survey research, and 180 mobile telephony users were personally interviewed. The findings showed that there are relationships between service quality and customers repurchase intention in mobile telephony. Eshghi et al. (2008) similarly found out from the empirical results, that reliability contributed the highest both to overall service quality and satisfaction. Out of the seven dimensions used in his study, three (reliability, empathy and network quality) proved to be significantly effective in contributing to overall service quality and overall customer satisfaction with mobile services of ETC. In a study carried out by a group of authors in Bangkok region, using SERVQUAL in order to find out about customer satisfaction with service quality. They found out that the issue of reliability in service aspect was the most important factor for customer satisfaction (KoobGrabe & Abbas, 2008). In another study, the Indian cellular telecommunication industry was analyzed by Rahman (2006), from the obtained results the tangible dimensions received strong ratings, particularly the employees neat and professional appearance; whereas empathy received low ratings, particularly 91

service providers interest differences. Tangible dimension has been shown to be an aspect of service quality that is extremely important to customers. Similarly, reliability and empathy were rated as the most important factors for customer satisfaction with service quality. This was found out by Shishavi (2006) on her study, of satisfaction level of Hotel customers in Iran. The empirical results from a study carried out by Sattari (2007) in Iran, showed that from six dimensions of service quality in mobile telecom, four dimensions (reliability, assurance, empathy, and network quality) had a significant role in determining customer satisfaction with perceived performance. Manjunatha and Shivalingaiah (2004) in their study of customer satisfaction with services in libraries, found out that that reliability- the most important dimension from customers' eye received the most negative score (mean -0.63). Responsiveness, the second most important dimension had the second most negative score (-0.55). Empathy (-0.53) and Tangibles (-0.43) too had significant negative scores. Assurance had the least negative score (0.26). Ruiqi and Adrian (2009) used the SERVQUAL scale proposed by Parasuraman et al., to investigate the service quality of travel agents in Guangzhou, South China from a customer perspective. The instrument proved to be valid and reliable with the results of the survey showing that there is a gap between expected service and perceived service. The item scale within this dimension showed large negative gaps between expectation and perception in the ability of travel agents to perform the service right first time and complete their promised tasks. The largest gap was in the dimension of reliability. 5.2. Customer Satisfaction Customer Satisfaction has been a central concept in marketing literature and is an important goal of all business activities. Today, companies face their toughest competition, because they move from a product and sales philosophy to a marketing philosophy, which gives a company a better chance of outperforming competition (Kotler, 2000). Overall customer satisfaction translates to more profits for companies and market share increase. The importance of customers has been highlighted by many researchers and academicians. The principal concern of marketing is to connect with customers by building a strong customer relationship in order to meet their expectations. Researchers have tried to define customer satisfaction and in general they have defined it as transaction process. Oliver (1981) defined satisfaction as a summary of psychological state resulting when the emotion surrounding disconfirmed expectations is coupled with the consumer's prior feelings about the consumption experience" (pp. 24). Kotler (2000) defined satisfaction as: a persons feelings of pleasure or disappointment resulting from comparing a product perceived performance (or outcome) in relation to his or her expectations. According to Hansemark and Albinsson (2004) satisfaction is an overall customer attitude towards a service provider, or an emotional reaction to the difference between what customers anticipate and what they receive, regarding the fulfillment of some need, goal or desire. Parasuraman et al. (1988) distinguish service quality and satisfaction: perceived service quality is a global judgment, or attitude, relating to the superiority of the service, whereas satisfaction is related to a specific transaction. Customer satisfaction as an attitude is like a judgment following a purchase act or based on series of consumer-product interactions (Yi, 1989). Customer satisfaction leads to repeat purchases, loyalty and to customer retention (Zairi, 2000). Satisfied customers are more likely to repeat buying products or services. They will also tend to say good things and to recommend the product or service to others. On the other hand dissatisfied customers respond differently. Dissatisfied customers may try to reduce the dissonance by abandoning or returning the product, or they may try to reduce the dissonance by seeking information that might confirm its high value (Kotler, 2000). 92

Expectations also play an important role in the satisfaction formation. The extent to which a product or service fulfills a customers need and desire may play an important role in forming feelings of satisfaction because of the impact of confirmation or disconfirmation that have on satisfaction. Consumers expect to be delivered quality products and services; therefore companies try to offer quality products and services. The term expectations really matters to companies because they want to know what customers expectations are. The term expectations has different uses, in the satisfaction literature, it is viewed as a prediction made by a consumer about what is likely to happen during an exchange or transaction. According to Oliver (1981) " expectations are consumer-defined probabilities of the occurrence of positive and negative events if the consumer engages in some behavior" (pp.25-48). Perception is an opinion about something viewed and assessed and it varies from customers to customers, as every customer has different beliefs towards certain services and products that play an important role in determining customer satisfaction. Customer satisfaction is determined by the customers perceptions and expectations of the quality of the products and services. In many cases, customer perception is subjective, but it provides some useful insights for organizations to develop their marketing strategies. Satisfied customers provide recommendations; maintain loyalty towards the company and customers in turn are more likely to pay price premiums (Reichheld, 1996). Customer loyalty is a crucial factor in companies growth and their performance. Loyalty is linked with the repeat business. Thus, a customer is loyal when he is frequently repurchasing a product or service from a particular provider. Oliver defines loyalty as A deeply held commitment to re-buy or re-patronize a preferred product or service in the future despite situational influences and marketing efforts having the potential to cause switching behaviour (cited by Kotler, 2000). Customers that are very satisfied with a company are very likely to remain with that company that leads to future revenue for the company.It is now a widely accepted business theory that customer retention optimizes profitability; the cost of acquiring new customers is higher than the cost of retaining existing customers. Therefore, the aim of a service company is to satisfy their customers in order to stimulate them to retain and to repeat their service purchase. 5.3. Service Quality Service industries are playing an increasingly important role in the overall economies of the countries of developed and developing countries. The 21st century is considered to be as the service industry. Researchers have tried to define service and to explain what service constitutes. There are many definitions regarding the concepts of service. Services are deeds, processes, and performances (Parasuraman et al. 1985). Gronroos (1983) defined service as: An activity or series of activities of more or less intangibles nature that normally, but not necessarily, take place in interactions between the customer and service employees and/or physical resources or goods and I or systems of service provider, which are provided as solutions to customer problems". Sasser et. al,(1978) defined another meaning for service: "A service is a package of explicit and implicit benefits performed with a supporting facility and using facilitating goods". Service is: "Any primary or complementary activity that does not directly. Produce a physical product - that is, the nongoods part of the transaction between customer and provider" (Payne, 1993). Whereas Kotler et. al.(1999) defined service as any activity or benefit that one party offers to another which is essentially intangible and does not result in the ownership of anything, and it may or may not be tied to a physical product. Services include all economic activities which are intangible, not physically apparent like products, which provide value to the customer. Service has become very crucial in all business industries due to globalization and the IT developments. Services are now seen almost to every part of our life, starting from the most essential demands, like eating to other entertainment activities, such as: 93

sport, travelling, etc. Nowadays products heavily rely on its services to acquire competitive advantage, and to satisfy customers needs. It is very important to understand the overall characteristics of services and what actually characterizes services. In general there are some service characteristics which can be generalized, even though many service industries are heterogeneous. According to Parasuraman et al. (1985) there are a number of unique characteristics that separate services from tangible goods: The most common characteristics that have been found and described by researchers are the following: 5.2.1. Intangibility Services are not tangible; when you buy a service there is nothing to be shown as tangible. Services are not things, but they are deeds or efforts. In essence the performances of most services are supported by tangibles. In general, companies offer a combination of tangible and intangible elements; the product is in many cases associated with service delivery. 2.2.2. Inseparability Another characteristic of services is that production is inseparable from consumption. Inseparability is taken to reflect the simultaneous delivery and consumption of services. Customers participate in the production process or delivery process; there is an interaction between the service provider, the service environment and the customer. This enables consumers to affect or shape the performance and quality of the service (Gronroos, 1978). Goods are first produced, then sold and then consumed; services are first sold, then produced and consumed simultaneously. Customer must be present during the production of many services, for example in haircuts, airplane trips, restaurants etc. Thus, inseparability forces the buyer into intimate contact with the production process. As a result, other customers are a part of the service consumption. 2.2.3. Heterogeneity Services are not homogeneous and are less standardized and uniform. Heterogeneity reflects the potential for high variability in service delivery. For example: the quality and essence of a service can vary from producer to producer, from customer to customer, and from day to day, and people's performance fluctuates up and down. Service industries tend to differ regarding the extent to which they people based or equipment based (Thomas, 1978). People-based services vary depending to those that deliver the service whether they are skilled or professional workers as the service performance is delivered by different people and the performance of people can vary. It also varies the service delivered that is equipment based depending from the operators itself. 2.2.4. Perishability The fourth characteristic of services highlighted in the literature is perishability. In general, services cannot be inventoried and carried forward to future time. For example: motel rooms not occupied, empty tables in a restaurant, airline seats not purchased, and telephone line capacity not used can be seen a revenue opportunity lost forever. Services depend on time which makes them very perishable. The perishability of services is not a problem when the demand is steady, because it is easy to staff the services in advance, when demand fluctuates, service companies have difficult problems. Thus, service marketers need to manage the demand but also the supply in order to obtain a profitable equilibrium. Because services are performances that cannot be stored, service businesses frequently find it difficult to synchronize supply and demand. Sometimes too much demand exists, for example: a popular restaurant on a Saturday night. The characteristic discussed above constitute the four traditional characteristics of services; however, in business marketing two additional characteristics can be added: Specialization and 94

technology. The literature suggests that each unique characteristic of services leads to specific problems for service marketers and necessitates special strategies for dealing with them.

6. Methodology Used in this Study

In order to answer the core of the research problem, Customer Satisfaction with Service Quality of Mobile Telecommunication, the information from the customer perspectives play an important role. Quantitative data collection methods were used to collect all the necessary data needed for answering the core research questions and problems of the research. Therefore, a structured questionnaire was conducted with the close-ended questions to customers of the three mobile operators in Macedonia, TMobile as a market leader, One as a market follower, and VIP as a market challenger. All the empirical findings were collected from the Primary data and Secondary data. Primary data is the data collected from the use of questionnaires. The Secondary data was collected from the directories of the companies that were used from this study, online articles and journals. Then, the main findings came from the SERVQUAL model for measuring satisfaction with service quality. A structured questionnaire was designed with 22 questions related with the pre-purchase phase and then with 22 questions related with post- purchase phase. Participants privacy was protected, because respecting participants rights and privacy is one of the main research ethics. The quantitative data collection method was used to collect primary data from customers. The design of questionnaires respected completely the anonymity of participants. First of all, there was an informed consent from participants before they took part. This means that they should have known exactly what they were being asked to do, and what the risks were, before they agreed to take part. Participants were informed that this study was for academic purposes only. The secondary data was accessed from the websites, files, and publications of the three mobile telecommunication companies: T-Mobile, One, and VIP. In depth interviews were carried out with focus groups in order to design a valid and reliable questionnaire, and finally a pre-test tried to find out whether the structured questionnaire was reliable. The sample population of the three mobile telecommunication companies was related proportionally according to their market share, i.e. out of the sample of 1250 respondents, about 60% will be T-Mobile customers (because of 58% of market share of T-Mobile), 29% will be of ONE, and 13% will be of VIP company. 4.5. The Importance of Service Dimensions 5.4. Factor Analysis Factor analysis is a technique that is used to reduce a large number of variables into fewer numbers of factors. Factor analysis was used to explain the dimension of importance of expectation and perception toward service quality. The number of factors is determined by Eigenvalues. If Eigenvalues is greater than one, we should consider that a factor and if Eigenvalues is less than one, then we should not consider that a factor. According to the variance extraction rule, it should be more than 0.7. If variance is less than 0.7, then we should not consider that a factor. Before conducting factor analysis, Bartlett's Test of Sphericity and the Kaiser Meyer Olkin Test was used to examine whether the sample data was suitable for factor analysis. The 2 of Bartlett's Test of importance of expectation and perception toward service quality reveals high relativity and P values are 0.000. The KMO values are all higher than 0.9. This indicates that the sample data is suitable for factor analysis. 4.5.1. The Expectation Survey In order to find out the underlying factors that have their most effect on customer expectation, factor analysis was used. First of all, KMO and Bartletts Test to check the appropriateness of factor analysis 95

for the purpose of research. The results of reliability should be bigger than 0.7. Also, the results of Bartletts Test of Sphericity should be less than 0.05.
Table 4.23: KMO and Bartlett's Test
Kaiser-Meyer-Olkin Measure of Sampling Adequacy. Bartlett's Test of Sphericity Approx. Chi-Square Df Sig. .913 7341.106 231 .000

According to results obtained from table 4.23, KMO for expectation is .913 which is above the acceptable level, which approves the appropriateness of this analysis for the study. The null hypothesis here is that the group variances are all equal, and the alternative hypothesis is that they are not. A big K2, with a small p-value, means that the null hypothesis is discredited, and we would assert that the group variances are significantly different (while a small K2, with a big p-value indicates that they are not significantly different). Using Rotated Component Matrix and Total Variance, SERVQUAL items were divided into 5 main factors. The Rotated Component Matrix showed the most factors for expectation survey. Loading factors showed the importance of the specific factor for the customers. Looking at table 4.24, we can see that the bold items under component 1, starting with Empathy 3 with .764, and ending with Empathy 2 with .601, from the first underlying factor which accounts 31.31 % of Total Variances according to Table 4. 25. The items on component 2, starting with Reliability 4 from .713 and ending with Reliability 1 with .415, which accounts 8.18 % of Total Variances according to Table 4. 25. Likewise, the items on component 3, starting with Tangible 2 from .772 and ending with Tangible 4 with .668, which accounts 6.78% of Total Variances according to Table 4. 58. The items on component 4, starting with Assurance 2 from .692 and ending with Assurance 4 with .481, which accounts 4.94% of Total Variances according to Table 4. 58. Finally, The items on component 5, starting with Responsiveness 2 from .700 and ending with Responsiveness 4 with .555, which accounts 8.18 % of Total Variances according to Table 4. 25. We can conclude that the first underlying factor extracted from rotation holds 31.31 % of Total Variances of 55. 88%, combined with other factors. According to Table 5.10, Empathy was shown as the most important for customers expectation with service quality, followed by Reliability as a second factor, then Tangible component, and Assurance, and at the end Responsiveness underlying factor.
Table 4.24: Rotated Component Matrixa
Component 3 .111 .142 .183 .211 .177 .124 .129 .395 .772 .712 .699 .688

E-Empathy 3 E-Empathy 4 E-Empathy 5 E-Empathy 1 E-Empathy 2 E-Reliability 4 E-Reliability 2 E-Reliability 3 E-Reliability 5 E-Responsiveness 1 E-Reliability 1 E-Tangible 2 E-Tangible 3 E-Tangible 1 E-Tangible 4 E-Assurance 2

1 .764 .749 .738 .608 .601 .141 .140 .154 .204 .101 .167 .111 .103 .227

4 .134

5 .185 .187 .186 .104 .138 .146 .205 .453 .112 .128 .166

.228 .161 .713 .697 .697 .613 .480 .415 .100 .112 .125 .149 .133

.282 .199 .285 .125 .389 .151 .151 .692

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Table 4.24:

Rotated Component Matrixa - contonued

.262 .303 .228 .266 .113 .118 .176 .113 .651 .617 .481 .222 .409 .436 .700 .621 .555

E-Assurance 3 .222 E-Assurance 1 .135 E-Assurance 4 .454 E-Responsiveness 2 .227 E-Responsiveness 3 .120 E-Responsiveness 4 .198 Extraction Method: Principal Component Analysis. Rotation Method: Varimax with Kaiser Normalization a. Rotation converged in 8 iterations.

Therefore, customers of the three mobile telecommunication operators in Macedonia expect Empathy as a service dimension as the most important factor which can be defined as the provision of caring, individualized attention the organization provides to its customers. Empathy includes approachability, sense of security, and the effort to understand the customers needs. According to the Kaiser Criterion, Eigenvalues is a good criteria for determining a factor. If Eigenvalues is greater than one, we should consider that a factor and if Eigenvalues is less than one, then we should not consider that a factor. According to the variance extraction rule, it should be more than 0.7. If variance is less than 0.7, then we should not consider that a factor. For the expectation part of the questionnaires 5 loading factors were identified.
Table 4.25:
Componen t 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22

Total Variance Explained

Initial Eigenvalues % of Cumulative Variance % 31.310 31.310 8.179 39.489 6.774 46.263 4.941 51.204 4.678 55.882 3.836 59.718 3.602 63.320 3.485 66.805 3.337 70.142 3.110 73.252 2.908 76.160 2.784 78.945 2.623 81.568 2.431 83.999 2.356 86.354 2.245 88.600 2.215 90.815 2.051 92.866 1.887 94.754 1.875 96.629 1.735 98.363 1.637 100.000 Extraction Sums of Squared Loadings % of Cumulative Total Variance % 6.888 31.310 31.310 1.799 8.179 39.489 1.490 6.774 46.263 1.087 4.941 51.204 1.029 4.678 55.882 Rotation Sums of Squared Loadings % of Cumulative Total Variance % 3.018 13.719 13.719 2.722 12.374 26.092 2.500 11.364 37.456 2.196 9.983 47.440 1.857 8.442 55.882

Total 6.888 1.799 1.490 1.087 1.029 .844 .792 .767 .734 .684 .640 .613 .577 .535 .518 .494 .487 .451 .415 .413 .382 .360

According to table 4.25, using Rotated Component Matrix and Total Variance, SERVQUAL items were divided into 5 main factors. The Rotated Component Matrix showed the most factors for expectation survey. Loading factors showed the importance of the specific factor for the customers. Eigenvalues show variance explained by that particular factor out of the total variance. From the commonality column, we can know how much variance is explained by the first factor out of the total variance. For example, our first factor explains 31.31% variance out of the total.

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4.5.2. The Perception Survey The same procedure has been carried out to find the underlying factor of perception. First, a KMO and Bartletts Test has been done which results are shown in Table 4. 26. KMO for perception is .939 which is above the acceptable level.
Table 4.26: KMO and Bartlett's Test
.939 10784.504 231 .000

Kaiser-Meyer-Olkin Measure of Sampling Adequacy. Bartlett's Test of Sphericity Approx. Chi-Square Df Sig.

Table 4.27 shows SERVQUAL items divided into 4 main factors using Rotated Component Matrix and Total Variance. The Rotated Component Matrix showed the most factors for perception survey. Loading factors showed the importance of the specific factor for the customers.
Table 4.27: Rotated Component Matrixa
Component 3 P-Reliability 3 .192 P-Reliability 4 .225 P-Reliability 2 .176 P-Reliability 1 .119 P-Reliability 5 .274 P-Responsiveness 1 .227 P-Responsiveness 2 .216 P-Assurance 2 .105 P-Assurance 3 .248 P-Assurance 1 .142 P-Assurance 4 .307 P-Responsiveness 4 .360 .196 P-Responsiveness 3 .441 .225 P-Empathy 3 .190 .819 P-Empathy 4 .259 .154 .771 P-Empathy 5 .234 .208 .714 P-Empathy 2 .167 .354 .624 P-Empathy 1 .233 .348 .621 P-Tangible 2 .105 .151 .198 P-Tangible 1 .176 .139 P-Tangible 3 .141 .171 .126 P-Tangible 4 .334 .105 .133 Extraction Method: Principal Component Analysis. Rotation Method: Varimax with Kaiser Normalization a. Rotation converged in 6 iterations. 1 .767 .697 .690 .625 .595 .574 .502 .232 .199 .295 2 .154 .245 .217 .183 .219 .355 .391 .698 .694 .681 .650 .543 .495 4 .133 .120 .198 .391 .153 .155 .183 .161 .152 .102 .211 .153 .102 .149 .137 .156 .834 .746 .736 .654

Using Rotated Component Matrix and Total Variance, SERVQUAL items were divided into 5 main factors. The Rotated Component Matrix showed the most factors for perception survey. Loading factors showed the importance of the specific factor for the customers. Looking at table 4.26, we can see that the bold items under component 1, starting with Reliability 3 with .767, and ending with Responsiveness 2 with .502, from the first underlying factor which accounts 40.29% of Total Variances according to Table 4. 27. The items on component 2, starting with Assurance 2 from .698 and ending with Responsiveness 3 with .495, which accounts 7.83 % of Total Variances according to Table 4.27. The items on component 3, starting with Empathy 3 from .819 and ending with Empathy 1 with .621, which accounts 6.16% of Total Variances according to Table 4. 27. Finally, The items on 98

component 5, starting with Tangible 2 from .834 and ending with Tangible 4 with .654, which accounts 4.99 % of Total Variances according to Table 4. 27. We can conclude that the first underlying factor extracted from rotation holds 40.29% % of Total Variances of 59. 71%, combined with other two Responsiveness items. According to Table 5.11, Reliability and Responsiveness were shown as the most important for customers satisfaction with service quality, followed by Assurance as a second factor, then Empathy as a third factor component, and Tangible dimension as the last fourth factor. Therefore, customers of the three mobile telecommunication operators in Macedonia expect Reliability as a service dimension as the most important factor which can be defined as the provision of caring, individualized attention the organization provides to its customers. Empathy includes approachability, sense of security, and the effort to understand the customers needs. Table 4.28 explains the criteria for determining a factor. According to the Kaiser Criterion, Eigenvalues is a good criteria for determining a factor. If Eigenvalues is greater than one, we should consider that a factor and if Eigenvalues is less than one, then we should not consider that a factor. According to the variance extraction rule, it should be more than 0.7. If variance is less than 0.7, then we should not consider that a factor.
Table 4.28:
Component 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22

Total Variance Explained

Initial Eigenvalues % of Cumulative Variance % 40.290 40.290 7.834 48.125 6.169 54.293 4.996 59.289 4.009 63.298 3.381 66.679 3.116 69.795 2.930 72.725 2.842 75.567 2.746 78.313 2.492 80.805 2.176 82.981 2.145 85.126 2.064 87.190 1.870 89.060 1.807 90.867 1.774 92.641 1.704 94.346 1.591 95.937 1.444 97.381 1.319 98.699 1.301 100.000 Extraction Sums of Squared Loadings % of Cumulative Total Variance % 8.864 40.290 40.290 1.724 7.834 48.125 1.357 6.169 54.293 1.099 4.996 59.289 Rotation Sums of Squared Loadings % of Cumulative Total Variance % 3.803 17.286 17.286 3.290 14.955 32.242 3.205 14.570 46.812 2.745 12.477 59.289

Total 8.864 1.724 1.357 1.099 .882 .744 .686 .645 .625 .604 .548 .479 .472 .454 .411 .398 .390 .375 .350 .318 .290 .286

Table 4.28 shows SERVQUAL items divided into 4 main factors. The Rotated Component Matrix showed the most factors for expectation survey. Loading factors showed the importance of the specific factor for the customers. From the commonality column, we can know how much variance is explained by the first factor out of the total variance. For example, if our first factor explains 31.31% variance out of the total, this means that 68.69% variance will be explained by the other factors. 6.2.1. Conclusions We can conclude in general that the users of the mobile operators in Macedonia were not satisfied with the perceived services. Thus, this dissatisfaction condition warns management of mobile operators to try to improve their service. Factor analysis revealed reliability to be as the most important factor for customer satisfaction with service quality. As it was previously mentioned, Reliability consists of doing services on-time, having interest in solving customers problems, performing the services right on time, error free on check-in processes, and keeping promises when they are due to. This means that the customers of 99

mobile operators in Macedonia fully expect that the service will be performed dependably and accurately as promised. Furthermore, customers appreciate any service to be performed right at the planned time. When customers have any problems, the customers expect from mobile operators staff to be sympathetic and supportive in service. In addition, all the records at mobile operators are expected to be kept right at the first time. Factor analysis was also employed to find out the most important factor for customers expectations with service quality dimensions. The data obtained from customers expectations rated empathy as the most important factor for customers expectations with service qualities. Empathy dimension can be defined as the provision of caring, individualized attention the organization provides to its customers. Empathy includes approachability, sense of security, and the effort to understand the customers needs. Therefore, customers expect from mobile operators to be personally cared, to be attentive, to understand their wants and needs, and to be put as the heart of the organization. Also, the customers expect from mobile operators in Macedonia to have convenient opening hours suitable for their lifestyle. 6.2.2. Recommendations The findings suggest that all customers regardless of their demographic characteristics put Reliability as the most important factor for their satisfaction with service quality delivery. Therefore, the reasons for these customers opinions need to be analyzed by the management of the three mobile operators thoroughly in order to make their customers more satisfied and to close their expectation gaps with perceived quality. Furthermore, companies need to be more effective and efficient in order to do services on time, as promised and right on the first time. This can be done if the management increases their employees performance regarding service delivery, by monitoring, coordinating and controlling their activities. The staff that is directly linked to service delivery should be trained in order to tackle routines and varying situation. Furthermore, mobile operators can improve reliability by changing the system of their work in order to be more effective with customers services. During the changing of working practices employees need to understand that change brings positive things to their customers, and indirectly this translates to more loyal customers, which brings to the companys performance improvements in long run. Statement RS1, RS2, RS3, and RS4 represented the responsiveness dimension expressed in table 4.19. Zeithaml defined responsiveness as the willingness to help customers and to provide prompt service. This dimension underlines the attentiveness and promptness in dealing with customers requests, inquiries, complaints and problems. From the opinion of respondents of the three mobile telecommunication operators, the average score of this dimension was shown as 4.40 of customers expectation and 3.80 of perception which resulted in -0.60 of the discrepancy between expectation and perception. Thus, the result for customer satisfaction towards responsiveness could be, analyzed as Unsatisfactory. From results obtained, it is very evident that mangers have to pay more attention to customers needs. They can secure satisfaction from services by increasing their capacity to respond promptly to customers problems. The third priority expected is Empathy. Customers expect to be personally cared, be individually attentive, be understood with their desire and be set by the policy level as the heart of the organization. Also, the customers expected from mobile operators to have convenient opening hours suitable for their lifestyle. The average score of this dimension was shown as 4.29 of customers expectation and 3.71 of perception which resulted in -0.58 of the discrepancy between expectation and perception. This means that the total respondents rate Empathy dimension service as unsatisfactory. Managers of the mobile operators in Macedonia should study their target market more thoroughly and carefully in order to recognize their customers requirements and needs. Target 100

segmentation is very important in order to find out requirements of all segments of market, since in many occasions there are different needs and wants between target groups. Moreover, continuous care for customers can be reassured through trainings and monitoring employees performances. Customers can also feel cared through loyalty programs. Thus, companies need to be very sincere and transparent while designing and offering training programs. The average score of Assurance dimension was equaled to 4.43 of customers expectation and 3.91 of perception. That meant difference score between expectation and perception was at -0.52. From the opinion of respondents of the three mobile telecommunication operators, and from the based definition stated by Parasuraman, staffs of three mobile operators had not much knowledge and courtesy an ability to inspire trust and confidence covered all travelling information provided to their customers. This means that the total respondents rated this dimension of service as unsatisfactory. The last priority is Tangible. Provided by the information gained by the SERVQUAL Likert Scale, the customers at mobile operators in Macedonia expected that the shop design, brochure and related material will be visually appealing, the equipment at the office will be modern and up-to-date. Customers also expected the staff to be in neat and nice clothing. The weighted average of customer expectation for the tangible dimension is 4.34, whereas for customer perception is 3.93, which represent a gap score of -0.41. Thus, the result for customer satisfaction towards assurance could be, like the other dimensions, analyzed as unacceptable. Managers should pay more attention also on tangible aspect; they can modify the facilities, pay attention to employees wear. They should try to create a more appealing environment by replacing the worn out equipments with new equipments. In conclusion, service quality dimensions are all directly related with the behavior of staff that is directly in contact with customers. Therefore, the staff needs to have proper knowledge, communication skills, or willingness to help in giving prompt services on time and accurately. Training the staffs concerning service quality and knowledge in service quality dimensions should be regularly exercised in order for the staff to feel more professional and confident while servicing customers.

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