DETERMINENTS OF CUSTOMER SATISFACTION AND … · Customer satisfaction is defined or explained as...

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DETERMINENTS OF CUSTOMER SATISFACTION

AND ORGANIZATIONAL EFFECTIVENESS

Rana Salman Anwar (Correspondence Author)

Department of Management Sciences, Abbasia Campus,

The Islamia University of Bahawalpur, Punjab, Pakistan.

E-mail: [email protected]

RahilaSaeed




Fatima Hanif




Raheel Abbas




Atzaz-ul-hassan




IkramZain


The Islamia University of Bahawalpur, Punjab, Pakistan

Humaira Gill

Lecturer, Department of Management Sciences, Abbasia Campus,



Abstract

This research is focused on those factors which are key success factors for

banking sector in the region of Bahawalpur, Pakistan. The purpose of this

study reveals how different factors affect Customer Satisfaction.

Customer satisfaction is affected by the Service quality, Price,

Perception/Expectation, Behavior/Relationship, Service recovery and

Promotion. The study is conducted from the population of Banks

Bahawalpur, Pakistan, and the sample size of 150 customers is selected to

analyze the influence of service quality, price, perception/expectation,

behavior/relationship, service recovery and promotion on customer

satisfaction. For this purpose we have used different techniques like

correlation, regression, Cronbach’s alpha etc. The study ensures that there

is an insignificant relationship between customer satisfaction and above

mentioned six independent variables. In this paper, we examine customer

satisfaction that is described as need fulfillment. And discussed how

mailto:[email protected]

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customer attitude change toward organization/product in terms of need

fulfillment factors that influence the customer satisfaction. Findings of the

study shows that service quality and promotion are the key factors for

satisfaction in banking industry in Bahawalpur Pakistan. Similarly

organizational environment further determines employee’s behavior and

customer’s satisfaction.

Key words:

Customer satisfaction, Service quality, Price, Perception/Expectation,

Behavior/Relationship, Service recovery, Promotion

1. Introduction

The purpose of this research is to explore how different factors influence

customer satisfaction in banking sector. In this research we examine the

customers of banks. Banking system occupies an important place in

national economy. It plays a vital role in the economic development of a

country. Banks have to deal with many customers every day and render

various types of services to its customer. So we explore those factors here

which are the base of customer satisfaction in banking sector. The

objective of this paper is to seek and measure the level of customer

satisfaction and services rendered in the banking Industry of Pakistan.

Researchers and academicians emphasize the importance of customer

satisfaction. Customer satisfaction is the outcome of need fulfillment.

Many researchers goes on that way the customer satisfaction has a

encouraging effect on organization’s productivity so, our research was

conduct to find out the factors for customer satisfaction.

Customers could best be explained as those who use the output or finish

good and services of work, or they are the end users of goods or services.

They may be inside to the organization such as the workers and director’s

or external like members of the public or peoples, other businesses, or

government (Akonai & Afi.E, 2011). Customer satisfaction can be

observed or sense as estimation where expectations and actual experience

is compared or matched (Tor & Andreasson.W, 2001). Consumer

satisfaction refers to an individual’s personally derived favorable

estimation or experience of any outcome or experience associated with

consuming a product (Westbrook.R.A, 1980). Customer Satisfaction can

be defined as an experience based appraisal made by the customer on how

far away his own expectations or perception about the personality

characteristics or in general functionality of the services obtained from the

provider have been fulfilled’(Coulson, July 2013). Satisfied customers

form the organization or any successful business leads to replicate

purchases, brand loyalty, and positive word of mouth because of there

personal need fullfilment (Biljana, 2011). Customer satisfaction is a key

cause in formation or generation of customer’s requirements for future

purchase (Mittal & Kamakura, 2001; Rahim, 2010).Customer satisfaction

is defined and explained here in Oliver’s (1997) terms that it is the

consumer’s need completion response. It is a Judgment that a product or

service attributes, or the product or service itself, provides a pleasurable

level of utilization related fulfillment or achievement. In other words or in

other sense, it is the overall level of satisfaction with a service or product

experience (Conway, 2006). According to Hansmark and Albinson

(2004) “satisfaction is an overall customer approach towards a service

provider, or an emotional response to the difference between what

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customers anticipate and what they receive, concerning the fulfillment of

some requirements, goals or desire “.Customer satisfaction is the way the

customer think about the company or organization or business and deals

with the gathering or exceeding of expectation over the duration of the

products and/or services (Eckert & Grant, 2007). In concepts or by

meaning satisfaction is a purchase outcome, whereby consumers evaluate

rewards and costs with anticipated consequences (Bolton.RN & Drew.JH,

17 march, 1991)(GA & C, 1982) (LaTour & Peat, 1979). According to

Jamier (2002), “Customer service is a chain of behavior considered to

develop the level of customer satisfaction – that is, the reaction that a

product or service has met the customer expectation”. “The customer’s

feeling concerning the space between his or her hope or expectation or

perception towards a company, product or service and the supposed

routine of the company, product or service” (Pezeshki & Vahid, March

2009)(Zeithaml et al., 1990).Customer satisfaction is at the feeling of

advertising. The ability to satisfy customers is critical for a number of

reasons. For example, it has been shown that unhappy customers tend to

criticize or degrade to the enterprise or seek out remedy from them more

often to lessen cognitive difference and failed consumption experiences

(Conway, Syed.S.A, & Carolyn, 2006) (Oliver, 1987; Nyer,

1999).Satisfaction is the consumer’s realization reply or feedback. It is a

conclusion that a product or service features, or the product or service

itself, provided (or is providing) a satisfying level of consumption related

achievement, as well as levels of less than or over fulfillment.

(Oliver.R.L, 1997). Customer satisfaction is the key factor shaping how

successful the organization will be in customer relationship (Mostaghal &

Rana, 2006). As a matter of reality, many banks subscribe to the fact that

high customer satisfaction will lead to greater customer loyalty (Yi, 1991;

Anderson and Sullivan, 1993; Boulding et al., 1993) which in turn leads

to future revenue or profit or worth of organization (Jayaraman.M,

Shankar.C, & Hor.W.M, 2010).

A definition provided by Kotler, et al. (1996) “A service is an act or

activity or benefit that one party can offer to another that is essentially

intangible and does not result in the ownership of anything. Its production

may or may not be tied to a physical product. Quality is seen as “a

satisfaction in maintaining the originality of the products” and

improvements in quality have a helpful impact on satisfaction, while

reductions in quality of the same magnitude have a significantly greater

chance of falling satisfaction (Gomez, 2004). It is a series of actions

designed to improve the level of customer satisfaction - that is, the feeling

that a product or service has met the customer belief (Turban, 2002). The

key point is that improving the presentation of service attributes will

generate satisfaction(Mousavi, 2001). The present customer satisfaction

concepts rely on customers‟ perception of quality(Storbacka, 1994).

Customer satisfaction can be viewed as an evaluation where expectations

and actual experience is compared (Andreassen W Tor, 2001). It has been

found that unhappy customer may relate his or her bad experience with

the service provider to 10 to 20 other people (Zemke, 1999). Thus

corroding potential sponsorship of the service provider it has therefore

been acknowledged that once a service failure occurs, it becomes vital

that service recovery, defined as the action taken by the service provider

to seek out frustration (Johnston, 1995). It has also been recommended

that effective service recovery had led to higher satisfaction in contrast to

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service that had been properly performed on the first time (Etzel, 1981). It

is a response to poor service quality (Gro¨nroos, 1988).

Customer satisfaction is defined or explained as heart or main factor in

customer service (Oliver and Millan.M , 1992) and occupies or cover a

vital position in advertising thought and perform, major conclusion or in

summary of selling activity and serves to association processes

culminating in acquire and utilization with post purchase phenomena such

as manner change, replicate purchase and brand loyalty (Aziz &

Sumiyah.B, MAY 2004) (Churchill & Suprenant, 1982).Oliver’s (1980)

working on customer satisfaction posits that satisfaction is a result or

outcome of customer hope and expectancy disconfirmation (IpkinA.W,

Leonardo, & A.N.Dioko, 2013).Not shockingly or surprisingly, firms

have invested extensive resources for growing customer satisfaction, and

as a result, the costs correlated to customer satisfaction report for the

major portion of their yearly or cycle marketing budget (Kyung & Dae,

2013) (Wilson, 2002).Customer satisfaction could increase companies

competitiveness classify or categorize possible market opportunities,

express new events to the excellence development of a invention or a

service and could also have a positive consequence on brand equity

(Silvia.A, Salvatore.C, Salvatore.G, & Roman.S, 2014). Customer

satisfaction is the consequence of the relationship among a customer’s

hypothesis or expectation and a customer’s feelings. In details, the

customer satisfaction is recognized as the difference between implicit

value of service and the customer’s connection or contact or position after

having supposed the service (Ghimire & Jibi.A, May 2012)(Bateson &

Hoffman 2000).According to Anderson, Fornell, and Lehmann (1994),

there is a positive association among customer satisfaction and financial

profit for the company. Arguably, customer satisfaction is a significant

element in categorize for the company to be beneficial. Improved overall

contest has lead to a greater emphasis on customer satisfaction (Ako.N &

Afi.E, JUNE, 2011) (Johnson and Fornell, 1991).Consumer satisfaction as

a response to an estimation process (Giese, Joa., & Cote, 2000, pp. 1-27).

Price sensitivity pass on to the change of consumer demand resulting from

the grow or fall of price. A firm that caters to customers with low down

price sensitivity gains superior competitive advantage in products and

services, thereby rising company profitability (Wakefield and Inman,

2003). Detiveaux and Rooney (2001) dispute that when products can

satisfy customer requires and a relationship with customers has been

recognized price becomes a much lower priority. (Wen.S, Jeng.D, &

Soo.M, 2013).Customer satisfaction is very important for every

organization; either they are service division or the privet sector. It’s not

every time to suit your customers. Since there are so many customers

using products. And every customer uses it in a different way, take it

differently, and speak it differently. (Shahzad.K, Syed.M.H, & Fahad.Y,

june ,2012).Customer satisfaction is explain in a business term, that how

products and services complete by a company meet or better customer

expectation. Customer satisfaction is an unclear and abstract concept and

the actual demonstration of the state of satisfaction will differ from person

to person and service to service. The position of satisfaction depends on a

number of both emotional and physical variables (Kanojia, 2012).

In this paper, we examine how customer attitude change towards

satisfaction in terms of factors that influence the customer satisfaction i.e.

service quality, service recovery, promotion, price, behavior/relationship

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and perception/expectation.

2. Research Objectives

Objectives of the study include:

1. To investigate the level of customers satisfaction at Bahawalpur.

2. To highlight the causes which affect the satisfaction of the

customers in Bahawalpur.

3. To find out the impact of service quality on customer satisfaction.

4. To find out the relationship between the price and customer

satisfaction.

5. To find out the impact of promotion on customer satisfaction.

6. To measure the relationship between behavior/relationship and

customer satisfaction.

7. To the measurement result of service recovery on customer

satisfaction.

8. To find out relationship between perception/expectation on


3. Literature review

3.1 Consumer Satisfaction

Customer satisfaction can be observed as an estimation where

expectations and actual experience is compared (Tor & Andreasson.W,

2001). Consumer satisfaction refers to an individual’s personally derived

favorable estimation of any outcome or/and experience associated with

consuming a product (Westbrook.R.A, 1980).By meaning satisfaction is

a purchase outcome, whereby consumers evaluate rewards and costs with

anticipated consequences (Bolton.RN & Drew.JH, 17 march, 1991) (GA

& C, 1982) (LaTour & Peat, 1979). The customer’s evaluation of a

product or service is also explained in terms of whether the product or

service has met customer’s needs or expectations (Loov & Ziethmal.,

2003). Customer satisfaction is a individual feeling of either pleasure or

disappointment resulting from the assessment of services provided by an

organization to an individual in relative to expectations (Oliver R. , 1980)

(B. Leisen, 2001). The customer satisfaction is an evaluation of a products

or services by custpmers with regards to their needs and expectations. So

from above mentioned definitions we conclude that customer satisfaction

is overall measurement of performance of product/service v/s expectation

of an individual about product/service (Oliver R. , 1980). The completion

of pleasure and expectation is called Satisfaction (Ziari, 2000).Customer

satisfaction has overall response of expectation of use of product or

service on the base of perception, evaluation and psychological reaction

(Churchil & Supernat, 1982).

3.1.1 Service Quality

A definition provided by Kotler et al. (1996) is that “A service is an

activity or benefit that one party can offer to another that is essentially

intangible and does not result in the ownership of anything. Its production

may or may not be tied to a physical product”. Service quality and

satisfaction as: “perceived service quality is a global judgment, or attitude,

relating to the superiority of the service, whereas satisfaction is related to

a specific transaction” (Kotler, 1996) (Parasuraman, Zeithaml, & Berry,

1988) . Customer satisfaction is an approach like a judgment following a

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purchase act or based on series of consumer-product interactions (Yi,

1989). “Meeting or exceeding customer expectations, or as the difference

between customer perceptions and customer expectations of services is

called service quality” (P.Hernor, 2000). Service quality in theshape of

attitude shows long runs overall evaluation (Taylor, 1994). Service quality

is an elusive concept that is difficult to define and measure. From study of

past researches we are able to define quality as conformance to

conditions, implying that the features set of a product should match the

standards determined by the management (REEVES, 1994).

Without any hesitation, service quality is very vital component in any

business related activity. This is specially so, to marketer a customer’s

evaluation of service quality and the resulting level of satisfaction are

perceived to affect bottom line measures of business success (lacobucci et

al., 1994). The satisfaction school holds the opposite view that

assessments of service quality lead to an overall attitude towards the

service they call satisfaction and customer retention – customer’s

perception of Service and Quality of product will determine the success of

the product or service in the market. (Deepti & Yadav, June 2012).

Quality is seen as “a satisfaction in maintaining the originality of the

products” and improvements in quality have a helpful impact on

satisfaction, while reductions in quality of the same magnitude have a

significantly greater chance of falling satisfaction by (Gomez, 2004). It is

a series of actions designed to improve the level of customer satisfaction -

that is, the feeling that a product or service has met the customer belief

(Turban, 2002). The key point is that improving the presentation of

service attributes will generate satisfaction (Mousavi, 2001). The present

customer satisfaction concepts rely on customer’s perception of quality

(Storbacka, 1994). Service quality affects customer satisfaction by

providing performance For example if we take an example of Mac Donald

restaurants, then the consumers will get food service here, high quality

everywhere the same they like to be in Mac Donald‟s restaurants. It

happens because of the high quality services. (Kandampully. J, 2001).

3.1.2 Service Recovery

It is a response to poor service quality (Gro¨nroos, 1988). Customer

satisfaction can be viewed as an evaluation where expectations and actual

experience is compared (Andreassen W Tor, 2001).

It has been found that a unhappy customer may relate his or her bad

experience with the service provider to 10 to 20 other people (Zemke,

1999). It has been acknowledged that once a service failure occurs, it

becomes vital that service recovery, defined as the action taken by the

service provider to seek out frustration (Johnston, 1995). It has also been

recommended that effective service recovery had led to higher satisfaction

in contrast to service that had been properly performed on the first time

(Etzel, 1981). A service disappointment is when the service delivery does

not handle to meet customer expectations. Often service recovery begins

with a customer objection. The aim with service delivery is to shift

customers from a state of dissatisfaction to a state of satisfaction. An

effective service recovery could result in a win and win condition for the

customer and the association (Ngai, 2007). Some researchers argue that a

firm’s recovery attempt can either reinforce customer relationships or

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compound the failure (Hoffman, Kelley, & Rotalsky, 1995). The results

could include specific recovery method used such as cash repayment,

admission of guilt, replacement, and so on. The results must be perceived

to be fair or just by the customers in order for them to be satisfied with the

service recovery. There are many benefits of rewarding customer

complaints. Among them one of the main benefits is satisfied customer.

When every customer’s complaints are solved, the first thing is that it will

help to satisfy the customer (Kurtus, 2007).

3.1.3 Perception/expectation

Customer expectations are beliefs about a service that serve as standards

against which service performance is judged (Zrithaml et al., 1993);

which customer thinks a service provider should offer, rather than on what

might be on offer (Parasuram et al., 1988). The concept of customer

perception is built up by customer experiences, how they perceive the

service they are offered and ultimately by whether they actually are

satisfied with their experiences or not. One way of competing more

successfully for small businesses today is by offering true customer

service and service quality (Wilson, 2008).

Customer satisfaction is equals to perception of performance separated by

belief of performance. Customer satisfaction is a collective outcome of

perception, evaluation, and psychological response to the utilization

prospect with a product or services (Yi, 1990). Customer satisfaction is

the consequence of the connection between a customer “supposition and a

customer’s feelings. By way of defining, customer satisfaction is

identified as the difference between understood quality of service and the

customer’s involvement or feelings after having perceived the service

(Bateson, 2000). “Satisfaction is taken as a whole customer attitude

towards a service donor, or an emotional reaction to the difference

between what customers predict and what they receive, regarding the

fulfillment of some needs, goals or desire” (Hansemark, 2004).Service

quality is like beauty in the eyes of the beholder and hence a matter of

perception (Rhoades & Waguespack, 2004). Swans and Combs (1976)

were first between them they argue that customer satisfaction is related

with performance that fulfills the expectations, while frustration occurs

when performance falls below the expectations.

3.1.4 Promotion

Customers want to see for what they are looking for and what they have in

advertisements (Athanassopoulos, March, 2000).

Myers (1998) says that promotion is for reducing the emotion of guilt

which is associated with the consumption of different products or service

which outcome to customer satisfaction. Another general factor which is

helpful to derives customer satisfaction is website (advertising). Website

is the advanced way use for the promotion, to awake the consumer and to

satisfy them with offering vast array of features and functions (Schefter,

2000). Furthermore, by producing moral and motivating values, CSR

actions can strengthen loyalty and customer satisfaction (Green, 2006).

Kim studied the role of promotion and product attributes on customer

perception. They outlined that performed promotions about definite

product would affect both customer view connected to product and his/her

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image about product attributes and it also generates more customer

satisfaction about product (Kim, 2002).

3.1.5 Price

Price is the amount of money one must pay to acquire the right to use the

product. Pricing that relates to the quality delivered (Ree & Hermen,

2009). There are millions of products in this world having different prices.

Pricing a product is complex thing to do. Prices are set according to the

value of the product (Khan.S, Majid, & Fahad, june 2012). Recent studies

consistently report that price is among the most important criteria in

organizational purchasing. Difficult economic conditions increase price's

importance as well as growing production outsourcing to low-cost

countries rising competitive intensity (Christian, Jan, & Martin, 2013).The

price of the items on the menu can also significantly influence customers

because price has the capability of attracting or repelling them (Conway,

2006), especially since price functions as an indicator of quality (Lewis

and Shoemaker,1997).Price importance is defined as the price's relative

influence as a decision making factor in the buying decision process and

captures the customer's focus on paying a short purchasing price (Kujala

& Johnson, 1993).While industrial buyers consider a variety of aspects in

their buying decision the price importance special effects via external and

internal price search to price best.. Price offering for the café needs to be

in accord with what the market expects to pay by avoiding negative

difference (i.e.when actual price is higher than the predictable price). We

propose the less the agreement of the actual price with opportunity

(negative deviation), the lower the level of customer approval. Price

consciousness refers to a variety of price-related cognitions (Christian;

Jan; Martin, 2013) .Price refers to the change of consumer demand

resulting from the rise or fall of price. A firm that caters to customers with

low price sensitivity gains greater competitive advantage in products and

services, thereby increasing company profitability (Wen.S, Jeng.D, &

Soo.M, 2013) .Lichtenstein and Ridgway (1993) define price

consciousness as “the degree to which the consumer focuses exclusively

on paying low prices”. This definition implies a concern for price as a key

criterion in decision-making and internal limits on willingness to pay

(Pervaiz & Sudha, 2010).

Trappey & Lai (1997) stated that offering lower prices is an important

reason for consumers to shop and increase their satisfaction level (Azhar,

Salehuddin, Faeez, & Syaquif, 2010). The term “satisfaction” refers to the

quality of products and services, ongoing business relationships, price-

performance ratios with respect to products and services, and meeting and

exceeding the customer’s expectations(Eckert & Grant, 2007).The future

of services will depend on the ability of providers to produce services that

satisfy the needs of all customers at prices they can afford (Halsel,

1993).Retailers create value for customers by offering the right

merchandise, creating a pleasant atmosphere, decreasing shopping risks,

increasing shopping convenience and reducing price by controlling costs

(Kent, 2003). The term “satisfaction” refers to the quality of products and

services, ongoing business relationships, price-performance ratios with

respect to products and services, and meeting and exceeding the

customer’s expectations (Grant, 2007). Skindaras (2009) there are

millions of products in this world having different prices. Pricing a

product is difficult thing to do. Prices are set according to the value of the

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product. Price from marketing mix Han (2009) state that one of the most

expandable element that changed rapidly. In the literature of Khan (2011)

marketing the most important reason indicated for customer satisfaction is

price, because most of the customers estimation the value of the product

or obtained service through price. Customer satisfaction is dependent

variable while price is independent variable in which Price has significant

positive relationship on customer satisfaction (Shahzad.K, Syed.M.H, &

Fahad.Y, june ,2012).Research on the subject of price understanding aims

to discover which marketing tools, or which variables, would affect price

sensitivity, allowing for the set up ment of different market segments.

However, the internal thought processes of consumers are difficult and

difficult to understand; customer satisfaction is one of these reflection

processes.

3.1.6 Behavior/Relationship

Berry (1986) thinks that "Relationship marketing is the desirability,

maintaining and enhancing customer relationships. Behavior standards

(such as repetitive purchase) have been criticized, due to the lack of a

conceptual basis of a active process (Caruana, 2002).Schiff and Kanuk

(1996)"Consumer behavior refers to the behavior that consumers display

in searching for, purchasing, using, evaluating, and disposing of products

and services that they suppose will satisfy their needs’’. This view is

reproduced by Cant, Brink and Brijball (2002:2). Cant et al (2002) also

line Sheth, Mittal and Newmann (1999) who define consumer behaviors:-

" The mental and physical actions undertaken by household and business

customers that result in decisions and actions to pay for procure and use

products and services."The finding that can be drawn from these

definitions is that they include certain common basics. These elements

concern how people make decisions to expend their resources that

aretime, money and effort on items of using up to satisfy their needs. It

involves what they buy, why they buy, when they buy, how they obtain,

how often they buy and use them and how they order of these items after

consumption..Lim (2010) Customer’s eventual satisfaction may have

significant affect of atmosphere. Physical background is helpful to create

figure in the mind of customer and to pressure their behavior. Consumer

behavioral intentions are also influenced by the standards of service

excellence (Bitner, 1990; Cronin and Taylor, 1992, 1994; Choi et al.,

2004).

Customer satisfaction is vital to the success of any business. In a recent

article it is proven that the costs of retaining current customers are much

lower than the costs of acquiring new ones. In order to reveal the mystery

of how to keep customers satisfied we must also be knowledgeable about

the drivers of our employees’ behavior (West & Jan, 2006). Gronroos

(1994) defined it: “Relationship marketing is to identify and establish,

maintain and enhance relationships with customers and other

stakeholders, at a profit, so that the objectives of all parties are met; and

that this is done by mutual exchange and fulfillment of promises".

Customer satisfaction is the key factor shaping how successful the

organization will be in customer relationship (Mostaghal & Rana, 2006).

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4. Hypothesis

1. Service Quality has significant and positive impact on customer

satisfaction.

2. Service Recovery has significant impact on customer satisfaction.

3. Price has significant impact on customer satisfaction.

4. Promotion has a significant and positive impact on customer

satisfaction.

5. Perceptions or expectations have a significant relation with


6. Behavior and Relationships have a significant impact on customer

satisfaction.

5. Conceptual Model

6. Research Methodology

6.1 Data Collection

The research is primary data based. The study is of descriptive statistics.

The respondents of the study are peoples of Bahawalpur, Punjab,

Pakistan. The study measured the customer satisfaction phenomenon by

the respondent’s price, promotion, service quality, perception/expectation,

behavior/relationship and service recovery.

Customer Satisfaction

Service Recovery

Service Quality

Perception

Promotion

Price

Behavior/ Relationship

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6.1.1 Population

Population of the study was comprised of all the bank account holders of

Bahawalpur.

6.1.2 Sample

The sample of the study consists of 150 respondents in total; respondents

were from five different banks of Bahawalpur. Convenience Sampling

Technique was used for data collection. The sampling procedure used was

as follows:

Our response rate for data collection is 93.75% because from 160

questionnaires we get back 150 questionnaires.

We analyzed through the demographics results that the respondents are

not equal amount of male and female. We can evaluate that 70.7%

respondents are male due to 106 numbers of respondents and 29.3%

respondents are female which is 44 in actual number of respondents . It

can be concluded that with the change in environment for businesses/jobs

in Pakistan female starts participating in all fields of life with their male

fellows.

We analyzed that 20.0.7%(30peoples) respondents are belongs to

ALLIED BANK, 24.7%(37peoples) respondents are from HBL,

14.0%(21peoples) respondents from MCB, 19.3%(29peoples) respondents

are from ASKARI BANK, 16.0%(24peoples) respondents from NBP and

6.0%(9peoples) respondents are from OTHER BANKS. If we summarize

these results we can conclude that high contribution from HBL displayed

due to its extra number of branches, that’s why it bears large number of

population as compared to the other banks.

If we analyze the age group information the results received are age of 20-

30 (years) are contributing 53.3% and they are 80 peoples, 42 peoples of

age group of 30-40 are paying their contribution of 28.0% and the age

group of 40-50 contributes 8.7%(14peoples), 13 peoples from age group

of 50-60 are paying their contribution of 9.3% and the age group of one

person from above-60 contributes 7.0% of whole age group model. It can

be concluded as the results discussed in prior paragraph are the reflecting

the results of age group 20-30. Because the young generation is

contributing more in businesses and in other sort of fields due to large

number of respondents in every field.

If we analyze these groups on the basis of salary (Rs/month) then we find

that below the salary of 15000rs/month are contributing 28.7% because

the numbers of peoples are 43, from 15000-35000 are 28 peoples and

their contribution is 18.7%, between 35000-45000 32 peoples lies and

their contribution is 21.3%, from 45000 to 55000 36 peoples lies and

24.0% contributing, between 55000-75000 numbers of peoples is 8 and

5.3% is contribution and above 75000rs has 2.0% contribution due to 3

peoples.

The information is also given in the form of table in the appendix 4 of

paper in table one and table 5.

6.1.3 Research Instrument

Data used in our research questionnaire was collected through structured

questionnaire. Questionnaire used five-point Likert scale, whereas

questionnaire was adopted from the studies conducted by Westbrook and

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Peterson (1998) for customer satisfaction variable which includes 4

elements in it (This bank provides a good value for money. etc) and its

cronbach’s alpha is 0.619, study by Gronroos(1982) is also helped in

collection of service recovery scale which is based on 3 questions(The

employees have empowered to provide compensation for inaccurate

service. etc) and its cronbach’s alpha is 0.507, from Dabholkar, Dayle and

Joseph (1996) research paper we collected the scale of service quality

which includes 4 items in it(Error-free transaction and record.etc) and its

cronbach’s alpha is 0.660, Rust, Lemon, and Zeithaml (2004) study scale

of perception/expectation was also used for questionnaire which is based

on 3 elements(Before my experience with this bank, I expected that its

ability to perform the promised service reliably and accurately would be

high.etc) and its cronbach’s alpha is 0.639, questionnaire was adopted

from the studies conducted by Westbrook and Peterson (1998) for price

variable which includes 4 elements in it (The bank services price does not

relate to the quality delivered.etc) and its cronbach’s alpha is 0.760,

Ekinci (2001) developed scale of behavior/relationship was also selected

for questionnaire which includes 3 elements in it(Employees of this brand

listen to me.etc) and its cronbach’s alpha is 0.699, Lau, M. M., Chang, M.

S., Moon, K. and Liu, W. S. (2006) scale of promotion which is based on

3 questions was also selected(Window displays are attractive.etc) and its

cronbach’s alpha is 0.649. Questionnaire included 25 items about the

subject study and 4 were about demographic data. A pilot survey was also

conducted before data collection.

Detail of items selection is also given in the end of paper in table 6. And

also Questionnaire is given in appendix 2

7. Statistical Data analysis

The data was entered and further edited and analyzed by using Software,

SPSS version 20 and Microsoft Excel 2010 by applying following

techniques: Cronbach’s alpha, Correlation and Regression to compute the

relationship, reliability and significance between service quality,

promotion, service recovery, price, behavior/relationship,

perception/expectation and Customer Satisfaction.

7.1 Cronbach’s Alpha

To check the internal reliability of the instrument, Cronbach’s alpha was

used. The value of Cronbach’s Alpha comes to 0.619. Which is above the

recommended reliability of 0.6 (according to social science) which

illustrates that instrument that is being tested is reliable. So, we can surely

apply different statistical tests and analyze the results with confidence.

Complete detail about cronbach’s alpha is available at the end in appendix

1 in table 7.

7.2 Results and regression analysis

The following results were obtained after fitting the multiple linear

regressions.

Table 1

Model Summary

Mode

l

R R Square Adjusted R

Square

Std. Error of

the Estimate

1 .479a .229 .197 .41674

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a. Predictors: (Constant), AVG.sr, AVG.P, AVG.prom,

AVG.pe, AVG.sq, AVG.br

The adjusted R-square in the table shows that the dependent variable,

(Satisfaction) is affected by 19.7% by independent variables (Promotion,

Service quality, Customer expectations, employee’s behavior, Price, and

service recovery of the service/product). It shows that Promotion, Service

quality, Customer expectations, Service recovery, Employees behavior

and Price of the service/product factors are responsible for satisfying

customers. The overall model was also significant, tested with the help of

ANOVA. The results are given in the following table.

Table 2

ANOVAa

Model Sum of

Squares

Df Mean

Square

F Sig.

1

Regression 7.384 6 1.231 7.086 .000b

Residual 24.835 143 .174

Total 32.219 149

a. Dependent Variable: AVG.CS

b. Predictors: (Constant), AVG.sr, AVG.P, AVG.prom, AVG.pe, AVG.sq, AVG.br

ANOVA table is showing the level of significance. Through the table it is

clear that all sub factors Promotion, Service quality, Customer

expectations, Service Recovery, Employees Behavior and Price the

service/product are related to satisfaction and that the relationship

between them is significant as compared to alpha value=0.05. Table III

shows the coefficients of all independent variables included in the model

along with their respective P-values.

Table III: Regression Co-efficient mostly the sub factors in the inventory

of services under the heading of “Customer Satisfaction in banking

Industry” are significant. In the table, un-standardized coefficient shows

that the sub-factors are positively and negatively affecting the satisfaction

and is showing comparative figures of the satisfaction and the factors

causing satisfaction in the purchase of services.

Table 3 Coefficientsa

Model Unstandardized Coefficients

Standardized Coefficients

t Sig.

B Std. Error Beta

1

(Constant) 1.453 .270 5.390 .000

AVG.P -.086 .050 -.131 -1.729 .086

AVG.prom .039 .057 .054 .689 .492

AVG.sq .357 .074 .407 4.832 .000

AVG.pe -.031 .067 -.036 -.459 .647

AVG.br -.086 .068 -.115 -1.268 .207

AVG.sr .131 .074 .169 1.775 .078

a. Dependent Variable: AVG.CS

As it clear from the table, each and every factor is significantly and

insignficantly related to „Customer satisfaction‟. Under the standardized

coefficients it is evident that: „Service Quality and service recovery‟ are

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the two majors and most important factor causing customer satisfaction in

banking sector customers of Bahawalpur Pakistan with a standardize

coefficient of 0.407 and 0,169 respectively in order of importance second

important variable is „Promotion‟ with a standardize coefficient of 0.054.

The third important variable is „perception‟ with a standardize coefficient

with negative impact of -0.36. Hence there are three main factors that are

responsible in order for customer satisfaction in banking sector in region

of Bahawalpur Pakistan. Other factors of the study has weak and negative

impact on customer satisfaction like „behavior and relationship‟ (b =-

0.115), „price‟ (b = -0.131). As the table shows positive and negative

values and sub factors are significant at value=0.05 and insignificant

when value>.05 it is concluded that the entire list of hypothesis is not

endorsed but some hypothesis are accepted.

8. Discussion

There are five independent variables including price, promotion, service

quality, perception/expectation, behavior/relationship, service recovery

and one dependent variable customer satisfaction in the model. The

reliability test for the model is .619 that is greater than the standard value

of .60. So, we can conclude that the model is reliable.

The correlation analysis shows relationship between the dependent and

independent variables. Price and customer satisfaction are negatively and

weekly related with each other with r = -.131, p>.05.The relation between

promotion and customer satisfaction is also positively but weekly related

with each other with r = .054, p> 0.05. Service quality and customer

satisfaction relationship is positive and they are strongly related with each

other with r = .459, p=00.The relation between perception/expectation

and customer satisfaction is also negatively and weekly related with each

other with r = -.036, p> 0.05. The relation between behavior/relationship

and customer satisfaction is also negatively and weekly related with each

other with r =-.115, p> 0.05. Service recovery and customer satisfaction

are positively and weekly related with each other with r = .169, p>05.

The regression analysis displays if the variables are statistically

significant or statistically insignificant and shows the hypothesis is

negative or positive in terms of beta coefficient value. The hypothesis one

is statistically significant with greater than +2 t-value and p= .05. And the

hypothesis two is statistically insignificant with less than +2 t-value and

p> .05. Also hypothesis three is insignificant due to greater than +2 t-

value and p> .05. Results of hypothesis four is also insignificant because

it has more than +2 t-value and p> .05. Hypothesis five and six are also

insignificant due to more than +2 t-value and p> .05.

9. Conclusion

With concerning all types of businesses and organizations customer

satisfaction is the most important issue, and considered as most reliable

toll for feedback, for the excellence of any business organization.

Customer satisfaction is the element of marketing and play important role

in the markets. And in estimation of customer satisfaction this study was

conducted and to examine the relationship between the customer

satisfaction to Promotion, Service quality, Customer expectations,

Employees behavior, Price, and service recovery of the service/product.

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Service quality, service recovery and promotion are the key determinant

of customer satisfaction in the services sector. At the end it could be

concluded that, there is a significant positive relationship between the

Service quality, service recovery and promotion of the services to

customer satisfaction. The object of this study is to investigate the

customer’s satisfaction in Bahawalpur, highlight the causes which affect

the satisfaction of the customers at Bahawalpur, to find out the impact of

price, service quality and service recovery on customer satisfaction and to

find out the relationship between the promotion, behavior/relationship,

perception and customer satisfaction. The focus of the study is to

determine customer satisfaction phenomenon in terms of their interaction

and how customer satisfaction influenced by price, behavior, perception,

service quality, service recovery and promotion. Cronbach‟s alpha value

0.619 is greater than the standard value of 0.60.

The relationship between price and customer satisfaction are negatively

and weekly related with each other with r = -.131, p>.05.The relation

between promotion and customer satisfaction is also positively but weekly

related with each other with r = .054, p> 0.05. Service quality and

customer satisfaction relationship is positive and they are strongly related

with each other with r = .459, p=00.The relation between

perception/expectation and customer satisfaction is also negatively and

weekly related with each other with r = -.036, p> 0.05. The relation

between behavior/relationship and customer satisfaction is also negatively

and weekly related with each other with r =-.115, p> 0.05. Service

recovery and customer satisfaction are positively and weekly related with

each other with r = .169, p>05.

The regression analysis in Table 9 is showing that Hypothesis one is

significantly related with each variable and other hypothesis are

insignificantly related with each variable.

10. Recommendations:

Following recommendations are implemented on our study:

The banks must majorly focus on customer satisfaction with the

help of service quality, service recovery, promotion, price,

behavior/relationship and expectation/perception because it

enhances the satisfaction of customers. Provide service quality in

banks include Wi-Fi connectivity, personal account on personal

computers using Internet. etc.,

The focus of customers and banking institutes must be on

performance first and then on services, because better performance

is firstly important which reflects the individual’spersonality and

then satisfaction is being examined.

Government should check the banking institutes whether they are

using competitive services, techniques and other factors which

influence customer’s satisfaction or not. Because Government has

a great control on country and can influence the banking sectors to

enhance satisfaction of customers to get better output.

Employee’s behavior for its customers must be positive, because

they are the only persons who built effective environment, and

when the environment is good then it will built a better

opportunities for customers to get services effectively.

Promotions and online banking effect customer’s behavior and

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their attitude. To build confidence in customer’s it is highly

adopted that the promotions must be conducted.

Other than these variables that are discussed in this study there are

some other factors that also effect satisfaction, so they must also

be considered e.g. product quality, production, presentation style

etc.

11. Limitations Firstly, the variables which effect customer satisfaction were limited and

specified hence could not be revealed broadly, whereas there are also

other factors which influence the satisfaction of customers. Secondly, it

was time consuming to gather the data from the customers of all banks of

Pakistan. So, it is limited only in Bahawalpur. Thirdly, the sample size

was limited by 150 which have a great influence on the findings; the

broader the sample size the more accurate may be the findings. Fourthly,

this study is only bounded to the customers of Bahawalpur; there may be

a difference in cultures of other cities and provinces.

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APPENDIX 1:

Table 4: Response rate

Questionnaire delivered Questionnaire

received

Response rate

160 150 93.75%

Table 5: Profile of the Respondents

Demographic information of the respondents is presented in tabular form

below:

No. of respondent Percentage

Gender

Male

Female

106

44

70.7

29.3

Total 150 100%

Salary (Rs/month)

Below 15000

15000-35000

35000-45000

45000-55000

55000-75000

Above 75000

43

28

32

36

8

3

28.7

18.7

21.3

24.0

5.3

2.0

Total 150 100%

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Age

20-30

30-40

40-50

50-60

Above-60

80

42

13

14

1

53.3

28.0

8.7

9.3

7

Total 150 100%

Bank

Allied Bank

HBL

MCB

Askari Bank

NBP

Other banks

30

37

21

29

24

9

20.0

24.7

14.0

19.3

16.0

6.0

Total 150 100%

Table 6: Scales of study

Sr.No. Constructs Items Reference

1. Customer

Satisfaction

1. This bank has good quality

services.

2. This bank offers products with excellent features.

3. This bank has the right

merchandise selection. 4. This bank provides a good value

for money.

Westbrook and Peterson

(1998).

2. Staff

Behavior/ Relationship

1. Employees of this brand listen to

me. 2. Employees of this brand are

helpful.

3. Employees of this brand are friendly.

Ekinci (2001),

3. Service Quality

1. Performs the service right the first time.

2. Providing service at the time it

promising to do so. 3. Availability of merchandise.

4. Error-free transaction and record.

Dabholkar, Dayle and

Joseph (1996).

4. Price 1. The bank services price does not

meet your budget objectives. 2. The bank services price is not

competitive compared to other banks.

3. The bank services do not secure

multiple competitive bids. 4. The bank services price does not

relate to the quality delivered.

Westbrook and Peterson

(1998),

5. Promotion 1. Ads of the bank are attractive.

2. Ads of the bank attract me to

purchase policy. 3. Window displays are attractive.

Lau, M. M., Chang, M. S.,

Moon, K. and Liu, W. S.

(2006).

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6. Perception/Ex

pectation

1. Before my experience with this

bank, I expected that the overall

service performance would be high.

2. Before my experience with this

bank, I expected that its ability to perform the promised service

reliably and accurately would be

high. 3. Before my experience with this

bank, I expected that its ability to

meet my personal needs would be high.

Rust, Lemon, and Zeithaml (2004),

7. Service

Recovery

1. The employees have empowered

to provide compensation for

inaccurate service. 2. Employees apologized quickly.

3. Alternative arrangements by staff.

Gronroos (1982).

Table 7: Reliability of Measurements Instrument

variable ItemsNo. Items Cronbach’s alpha

Promotion 03 0.649

Price 04 0.760

Service Quality 04 0.660

Perception/Expectation 03 0.639

Behavior/Relationship 03 0.699

Service Recovery 03 0.507

APPENDIX 2: Questionnaire used for study

Questionnaire

Satisfaction among Bank Customers of Pakistan

Dear Reader

This study is being conducted by BBA(hons) students at Islmia University Of

Bahawalpur ,Ranger Campus. The major objective of the study is to explore the reasons

behind the Customer Satisfaction. I assure you that any response you make will remain

confidential and only used for study purpose.

Section-I

Gender Male Female

Age 20-30 years 30-40 Years 40-50 Years

50-60 years above 60 years

Salary (Rs/month) below 15000 15000-35000

35000-45000

45000-55000 55000-75000

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Above 75000

You are customer of which bank? Allied Bank HBL

MCB

Askari Bank NBP

Other

Select only one option for the response of each statement below

Customer Satisfaction S

tro

ng

ly

Ag

ree

Ag

ree

Neu

tra

l

Dis

ag

ree

Str

on

gly

Dis

ag

ree

1. This bank has good quality services. 1 2 3 4 5

2. This bank offers products with

excellent features. 1 2 3 4 5

3. This bank has the right merchandise

selection. 1 2 3 4 5

4. This bank provides a good value for

money. 1 2 3 4 5

Price

Str

on

gly

Ag

ree

Ag

ree

Neu

tra

l

Dis

ag

ree

Str

on

gly

Dis

ag

ree

1. The bank services price does not

meet your budget objectives. 1 2 3 4 5

2. The bank services price is not

competitive compared to other

banks.

1 2 3 4 5

3. The bank services does not

secure multiple competitive bids. 1 2 3 4 5

4. The bank services price does not

relate to the quality delivered. 1 2 3 4 5

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Promotion

Str

on

gly

Ag

ree

Ag

ree

Neu

tra

l

Dis

ag

ree

Str

on

gly

Dis

ag

ree

1. Ads of the bank are attractive. 1 2 3 4 5

2. Ads of the bank attract me to

purchase policy. 1 2 3 4 5

3. Window displays are attractive. 1 2 3 4 5

Service Quality S tr o n gl y

A g re e A g re e N e u tr al

D is a g re e S tr o n gl y

D is a g re e

1. Performs the service right the first

time. 1 2 3 4 5

2. Providing service at the time it

promising to do so. 1 2 3 4 5

3. Availability of merchandise. 1 2 3 4 5

4. Error-free transaction and record. 1 2 3 4 5

Perception/Expectation Ex

tr e m el y

Ce

rt ai n

ce rt ai n

Ne

ut

ra l un

ce rt ai n

Ex

tr e m el y

U nc

er tai

n

1. Before my experience with this bank, I

expected that the overall service performance

would be high.

1 2 3 4 5


expected that its ability to perform the promised

service reliably and accurately would be high.

1 2 3 4 5


expected that its ability to meet my personal needs

would be high.

1 2 3 4 5

Behavior/Relationship E x t r e m e l y

C e r t a i n

c e r t a i n

N e u t r a l u n c e r t a i n

E x t r e m e l y U n c e r t a i n

1. Employees of this bank listen to me. 1 2 3 4 5

2. Employees of this bank are helpful. 1 2 3 4 5

3. Employees of this bank are friendly. 1 2 3 4 5

Service Recovery

Str

on

gly

Agre

e

Agre

e

Neu

tr

al

D is a gr

ee

St

ro n gl y

D is a gr

ee

1. The employees have empowered to provide compensation for

inaccurate service. 1 2 3 4 5

2. Employees apologized quickly. 1 2 3 4 5

3. Alternative arrangements by staff. 1 2 3 4 5

Thanks for your precious time!

Date post:	06-Apr-2018
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