CHAPTER TWO: LITERATURE REVIEW

2.1 INTRODUCTION

In this chapter, some reviews will be made by referring to previous research done in the scope
service quality. The reviews are summary of the research done in the past. There were
numerous recognitions and prestigious awards for quality in product but not for service quality.
Quality is what organisations needed to avoid competition by price, building customers
relationships and improving work rate. Nowadays, customers and passengers demand quality in
bus services to improve. Service quality has been defined as the satisfaction of expectations.
This means that what they have perceived is fulfilled to the max. Therefore, researchers began
to conduct studies to understand more about service quality.

2.2 ORIGINS OF SERVICE QUALITY

Service quality is an essential component of organizational performance in the public sector. To

measure service quality, specific instruments were developed. The most dominant instrument in
measuring service quality is SERVQUAL. It was proposed by Parasuraman, Berry and Zeithmal
in 1985 which comprised of 10 dimensions with 97 items and later reduced to 5 dimensions with
22 items. The dimensions are tangibility, reliability, responsiveness, assurance and empathy (A.
G. A. Ilhaamie, 2010). The approach begins with the assumption that the level of service quality
experienced by customers is critically determined through a gap analysis between customer's
expectations for excellence and their perceptions of actual service delivered.

2.2.1 THE BASIC CHARACTERISTICS OF SERVICE

Service is often lauded by people as the opposite of product. None knew the exact definitions of
service. Service is defined through its characteristics. Services cannot be seen, felt, tasted, or
touched as tangible goods, which can be readily displayed and easily transferred to customers.
Therefore, tangible is a characteristic of service. Inseparability of the service itself from the
service provider highlights the role of people in the service transaction, and their influence on
quality levels. Therefore, it is difficult for the service providers to hide mistakes or quality
shortfalls of the service because the service provided is unique and perishable. As we know,
service blends with the needs and wants of ones customer. This tendency means that
standardizing services is quite difficult on many occasions as it is heterogeneous.

2.2.2 DIMENSIONS OF SERVICE QUALITY

NO DIMENSIONS ITEMS
.

1 Tangibles (4 items) Appearance of physical facilities, modern equipment;

Employees who have a neat, professional appearance;
Visually appealing materials associated with the service;
Convenient business hour

2 Reliability (5 items) Ability to perform the promised service dependably and

accurately. providing services as promised; Dependability
in handling customers' service problems; Performing
services right the first time; Providing services at the
promised time; Keeping customers informed about when
services will be performed

3 Responsiveness (4 items) Willingness to help customers and provide prompt service

and Readiness to respond to customers' request

4 Assurance(4 items) Knowledge and courtesy of employees and their ability to

inspire trust and confidence. Employees who instill
confidence in customers Making customers feel safe in
their transactions. Employees who are consistently
courteous. Employees who have the knowledge to answer
customer questions

5 Empathy (5 items) Caring, individualized attention the firm provides its

customers. Giving customers individual attention.
Employees who deal with customers in a caring fashion.
Having the customer's best interest at heart. Employees
who understand the needs of their customers

Source: Parasuraman et.al. (1991)

2.2.2.1 RELIABILITY

Reliability is a key dimension that customers can evaluate the quality between they received
and the provider promised during the delivery process (e.g. service provision, problem
resolution, and pricing). All firms need to be aware of customer expectations of reliability.

2.2.2.2 RESPONSIVENESS

Service providers should be active and voluntary to help their customers and to provide prompt
service. This dimension demands that the service provider should be more flexible in solving
their customers problems and requests. Firms even should have a capacity to customize
services for dealing with their customers special needs.

2.2.2.3 ASSURANCE

Assurance consists of four original determinants. Robledo (2001: 25) identifies assurance as
employees knowledge and courtesy and the ability of the firm and its employees to inspire trust
and confidence. Competence, courtesy, credibility and security.

2.2.2.4 EMPATHY

Empathy is closely related to communicating with the customer in the same voice. The basic
target of the dimension is to afford more facilities for the current or potential customers and
enhance the services capacity, through personalized or customized service. Curry and Sinclair
(2002: 200) defined empathy as caring and personalized attention to customers.

2.2.2.5 TANGIBLES

The tangible and visual elements of the site will be critical to efficiency as well as to overall
perceptions of the firm and the brand, service companies are likely to use tangibles to enhance
their image and convey quality service to customers. In another word, tangibles are related to
the existence of physical infrastructure, individuals and communication medium.
2.3 PREVIOUS RESEARCH OF SERVICE QUALITY

In 2011, Ji Cheng Zhu uses the SERVQUAL model and compare it with analytic hierarchy
process in Hewlett Packard service centre in China and found out later on that both model have
significance different in voicing out customers opinion. People nowadays preferred private
vehicle compared to public vehicle. Public transport should act as solution for sustainable
transport for times to come. However, in order to keep and attract more passengers, public
transport must to have high service quality to satisfy and fulfill more wide range of different
customers needs (Oliver 1980). We must be able to crunch down and dissect the information
about customer satisfaction and dissatisfaction for building an attractive and marketable public
transport. Sudin Bag et. al (2012) said that provider should not only satisfy customers but must
also delight them.

But, the dimensions of Parasuraman et al. (1994) are adapted to service situations dominated
by individual contact between customers and providers.

2.4 MEASURING SERVICE QUALITY

In the past, many researches designed to attempt and create models in measuring service
quality for companys improvement and sustainable growth. One of the outstanding models is
the SERVQUAL (SERVices QUALity) measure, which originally developed in 1985 by
Parasuraman et al. and refined in 1988, 1991 and 1994. Also, to explain service quality,
researchers had come up with a model known as the gaps model that relates how expectations
meet what is perceived by customers.

2.4.1 THE GAPS MODEL

The gaps model of service quality, defines the difference between customers expectations of a
service and their perceptions of the real service provided. (Grnroos, 2000: 101) stated that the
external gap (gap 5) has a relationship with all 4 internal gaps. The Gaps model consisted of 5
gaps as one gap is called the external gap of service quality because this gap does not
necessarily make customers contact with service providers. Another four gaps were described
as the internal gaps which reflect those service interface problems, are proposed as the
provider gaps. The internal gaps are also known as the management gap. Zeithaml et al (2006:
35),identify four main factors for the four the provider gaps, namely, management do not
understand customer expectations, the service specification of management is not right, the
right specification is not delivered to customer, and finally, the external communication is not fit
to the service demand.

2.4.1.1 THE MANAGEMENT PERCEPTION GAP

Gap 1 indicates that managers do not fully understand how customers create expectations from
previous experience with the providers and similar companies in the industry, word of mouth
and individual needs (Zeithaml et al., 2006: 35).There are four main factors that cause the
management perception gap to exist. First, the service providers are short of the accurate and
seasonable marketing research. Secondly, there are too many layers of management that
interfere with the flow of objective information. Most top managers never communicate with their
frontline employees and customers. They may just acquire some insufficient and fuzzy
information about their customers actual requirements. Thirdly, due to lack of marketing
relationship, causes management and empowered employees to ignore and lose their potential
customers. Finally, slow recovery causes an increase in customer dissatisfaction. Observably,
the more inaccurate the information about customers expectations managements, the larger is
the provider gap 1 (Hensley and Dobie, 2005: 89).

2.4.1.2 QUALITY SPECIFICATION GAP

In gap 2, Grnroos (2001: 102) refers to this gap as the quality specification gap which means
the service quality specification cannot display and meet customer expectations which the
service provider has identified. There are many factors that give influence to the gap. First, the
service provider is lacking in creating formal quality programme to describe service quality.
Second, management possibly to focus more on cost saving and quick profitability rather than
the requirements set by customers. Third, physical evidence or the existence of infrastructure
could not meet the customer requirements. Grnroos (2001: 103) also indicates that the
promise of service providers may fill up a part of the quality specification gap.

2.4.1.3 SERVICE DELIVERY

Service delivery refers to the process of transferring available service products for consumption
or use. The service delivery gap will occur when employees cannot correctly translate service
standards into actions. The service delivery gap explained that there are four factors
contributing to this gap. Human resources are one of the critical factors that support the
appropriate service standards. The customer is another factor influencing service delivery.
Users do not just play a key role, but impact each other in the whole service delivery process.
Intermediaries are the third factor in delivering service process. Intermediaries find it difficult to
offer the same quality, even if they have the same service standards. The fourth possible factor
is that providers could not overcome situations such as excessive demand and low demand due
to bad resources management. Furthermore, Grnroos (2001: 103) indicates the inadequacy of
tools or technology will widen the gap.

2.4.1.4 MARKET COMMUNICATION

Grnroos (2001: 105) stated that the market communication gap will occur when the service
providers external communications does not meet the actual service delivery. Four factors are
proposed by Zeithaml et al. (2006: 43). First, the internal and external communications are not
effectively integrated in the service delivery by the service provider. Second, the customers
expectations are not effectively employed and managed by management. Third, the service
providers often deliver over promise for keeping competitive advantage during the company's
external communications process. Fourth, horizontal communication between those responsible
for the company's external communications and the front office employees is ineffective.

2.5 THE ROLE OF INTERNAL GAPS IN SERIVCE QUALITY

According to Qi Pan 2008, customer expectations are an external gap in the gaps model. In
order to deliver excellent service quality and pull the customer gap closer, it is necessary to
narrow all four internal gaps between service providers and their customers (Silvestro, 2005:
217-218). If gaps 1 to 4 are reduced, service quality can be improved.
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