Chapter 2

REVIEW OF RELATED LITERATURE AND STUDIES

This chapter presents the review of related literature and studies which are related
to the present study. The related literature and studies focused on the topic of service
quality and customers’ satisfaction of selected milk tea shops.

Related literature

Service quality

Service quality is the ability of the organization to meet or exceed customer

expectations .Customer expectation may be defined as the “desires and wants of
consumers” i.e. what they feel a service provider should offer rather than would offer
(Parasuraman et. al. 1988)
Otherwise, Grönroos (2004) said that the service are a continuous process of on-
going interactions between customers and service providers comprising a number of
intangible activates provided as premium solutions to the problems of costumers and
including the physical and financial resources and any other useful elements of the
system involved in providing these services.
In the contrary, Donabedian (1980) stated that usually customers do not have
much information about the technical aspects of a service; therefore, functional
quality becomes the major factor from which to form perceptions of service quality.
Service quality may be defined as customer perception of how well a
service meets or exceeds their expectations. Service quality can be measured in
terms of customer perception, customer expectation, customer satisfaction, and
customer attitude (Sachdev et. al. 2004).

Further more, Ekinci (2003) indicates that the evaluation of service quality
leads to customer satisfaction. Defining the concept of quality is the most important
criteria in the economic development of international companies, whereas under different
circumstances it has prevented the emergence of a universal definition.

Customers’ satisfaction

Customer satisfaction has long been recognized in marketing thought and practice
as a central concept as well as an important goal of all business activities (Anderson,
Fornell, and Lehmann 1994).
In fact, there are at least two different conceptualizations of customer satisfaction,
one is transaction-specific and other is cumulative. Transaction- specific satisfaction
provides specific diagnostic information about a particular product or service encounter
(Lam et. al. 2004).
In spite of, customer satisfaction in a retail setting has been linked to a number of
important outcomes, including sales performance, customer retention and loyalty (Darian,
et. al. 2001).
Related studies

Service quality

In addition, Stuart and Tax (1996) have found that service firms take little
effort in planning for service quality. The costs associated with poor service quality and
it's planning results in lower profit.

Customer satisfaction

Martin and Pranter (1989) likewise specified that in innumerable service

environments, customers possibly impact the satisfaction or disappointment of different.

Other than that Parasuraman et. al. (1985) stated in their review, recommended
that when seen service quality is high, then it will prompt increment in customer
satisfaction.

Some different authors comprehended with the thought raised by them and they
recognized that “customer satisfaction is based upon the level of service quality that is
given by the service providers “(Saravanan and Rao, 2007).

Synthesis

According to Parasuraman et. al. (1988), service quality is the ability of the
organization to meet or exceed customer expectations .Customer expectation may be
defined as the “desires and wants of consumers” i.e. what they feel a service provider
should offer rather than would offer. Otherwise, Grönroos (2004) said that the service are
a continuous process of on-going interactions between customers and service providers
comprising a number of intangible activates provided as premium solutions to the
problems of costumers and including the physical and financial resources and any other
useful elements of the system involved in providing these services.In the contrary,
Donabedian (1980) stated that usually customers do not have much information about
the technical aspects of a service; therefore, functional quality becomes the major
factor from which to form perceptions of service quality. Service quality may be defined
as customer perception of how well a service meets or exceeds their expectations.
Service quality can be measured in terms of customer perception, customer
expectation, customer satisfaction, and customer attitude (Sachdev, et. al. 2004).
Furthermore, Ekinci (2003) indicates that the evaluation of service quality leads to
customer satisfaction. Defining the concept of quality is the most important criteria in the
economic development of international companies, whereas under different
circumstances it has prevented the emergence of a universal definition.

In addition, Stuart & Tax (1996) have found that service firms take little
effort in planning for service quality. The costs associated with poor service quality and
it's planning results in lower profit. Martin and Pranter (1989) likewise specified that in
innumerable service environments, customers possibly impact the satisfaction or
disappointment of different. Other than that Parasuraman et al., (1985) stated in their
review, recommended that when seen service quality is high, then it will prompt
increment in customer satisfaction. Some different authors comprehended with the
thought raised by them and they recognized that “customer satisfaction is based upon the
level of service quality that is given by the service providers “(Saravanan & Rao, 2007).

Conceptual framework

Independent Variable Dependent Variable

SERVICE QUALITY CUSTOMER’S SATISFACTION

Figure 2. Paradigm of the Study

This diagram states that the service quality and customer’s satisfaction can be
related to each other. It shows the relationship between them just to determine if they are
connected in terms of buying a milk tea of consumers in different stores.

Theoretical framework

Customers satisfaction

Ronald Van Haaften MBA was composed the customers’ satisfaction model
wherein it’s a subject that personally intrigues him as a researcher and marketer, due to
its scientific deepening and pragmatic character. It is currently and relevant of the
management triangulation with angles from organizational strategy, business
development and marketing strategy. Obviously customer satisfaction is one of the
strategic objectives of the marketing strategy plan of many international corporations.

For him, customer satisfaction means; the relationship between the firm and its
customers, to create, build and maintain the right set of brand associations as an enabler
for future business and loyal customers. Obviously customer satisfaction is often one of
the strategic objectives of a marketing communication strategy plan.

In the playing field of business administration, customer satisfaction fits within

the sub-area of marketing management and communication strategy. For that reason
customer satisfaction should be one of the strategic objectives of the marketing strategy
plan of any organization.

Fornell et al. (1996) developed the American Customer Satisfaction Index (ACSI)
based on the Swedish Customer Barometer. The ACSI is an economic indicator based on
modelling of customer evaluations of the quality of goods and services produced and
purchased in the United States. Its main purpose according to Te-King Chein et al. (2003)
is to gain an insight into the interaction between the customers and businesses, to enable
better planning and decision making. The ACSI is a cause-and-effect model showing
drivers of satisfaction on the left side (customer expectations, perceived quality, and
perceived value), satisfaction in the center, and outcomes of satisfaction on the right side
(customer complaints and customer loyalty, including customer retention and price
tolerance).
The SERVQUAL model was developed by Zeithaml et. al. (1988) to measures the
quality of service on five identified quality dimension. This scale is designed to measure
the difference between customers’ expectations and perception (gap 5) on a 22-item
scale, representing five service quality dimensions. Reliability: how well can the
company deliver on its promises dependably and accurately? Assurance: knowledgeable
and courtesy of employees and their ability to inspire trust and confidence.
Responsiveness: willingness to help customers and provides prompt service. Empathy:
caring, individualized attention the firm provides its customers. Tangibles: appearance of
physical facility, equipment and staff.

Tse and Wilton (1988) proposed three definitions of customer expectations. The
first is equitable performance. A normative standard for performance based on implicit
relationships between an individual’s cost/investment and anticipated rewards. In this
instance, expectations are likely to be influenced by the price paid, the effort invested,
and previous product experiences. The second is ideal product performance. The ideal
product performance scenario from a customer’s perspective, such that expectations may
be based on previous product experiences, messages gleaned from advertisements, or
word-of-mouth communications. The third is expected product performance. A product’s
most likely performance.