RELATIONSHIP BETWEEN SERVICE QUALITY AND PERCEIVED CUSTOMER SATISFACTION OF NATIONAL SAVINGS BANK IN WAR AFFECTED AREA OF SRI LANKA

The objective of this study is to examine the relationship between service quality and customer satisfaction in an extreme environment. Correlation and Regression Analysis were used to assess data collected from 117 National Savings Bank customers in war affected area of Sri Lanka. Data for this study were gathered by employing well designed questionnaire addressing the SERVQUAL measurement instrument with an overall response rate of 97.5 %. Findings of the study indicated that service quality and customer satisfaction variables are positively correlated significantly, i.e. service qualitywith five dimensions increase customer satisfaction also increases. Further, the findings of this study revealed that service quality has a greater impact on customer satisfaction; that is 98 % of the observed variability can be explained by this model. Analysis of the demographics variables revealed that gender; significantly contributed variations in the level of customer satisfaction. Research implication of this study is that the sample used in this study is specific in nature, it constituted of National savings bank. Thus, the results should be interpreted accordingly. On the basis of these findings, implication of the study was highlighted that nature of the relationship between service quality and customer satisfaction seems to be fairly constant across contexts. KEYWORD: Service Quality, National Savings Bank and Customer Satisfaction. _____________________________________________________________________________________ Introduction In Sri Lanka National Savings Bank (NSB) plays a major role in contributing much towards economic development. National Saving Bank is well performing bank in Sri Lanka. In the 2008 Annual Report of National Savings Bank it was mentioned that, The Bank‟s customers are the core of the institution. National savings bank in northern Region was an extreme environment, because of the domestic war situation. This study attempted to find out the relationship between service quality and customer satisfaction in such an extreme environment. In the intense of competitive pressures, firms are focusing their maximum effort on maintaining service quality to keep customers. This is particularly true in the financial services sector. Many banks are directing their strategies towards increasing customer satisfaction and loyalty through improved service quality (Levesque and Mc Dougall, 1996). To survive in highly competitive markets, organizations need to provide goods and services that yield highly satisfied and loyal customers (Gilbert, 2000). Service quality is commonly noted as a critical prerequisite for establishing and sustaining satisfying relationship with valued customers. In this way the association between service quality and customer satisfaction has emerged as a topic of Asia Pacific Journal of Marketing & Management Review__________________________________________ ISSN 2319-2836 Vol.2 (6), June (2013) Online available at indianresearchjournals.com 2 significant and strategic concern (Bolton and Drew, 1991; Cronin and Taylor, 1992; Taylor and Barker, 1994). In general, research in this area suggests that service quality is an important indicator of customer satisfaction. (Spreng and Mackoy,1996). Customer satisfaction has been identified as a major determinants customer loyalty and profitability. Also retails banks, like many other service providers, have discovered that that increasing customer retention rates can have a substantial impact on profits (Levesque and Mc Dougall, 1996). Research in the area of service marketing has recently begun to address whether or not service quality differentially affect satisfaction depending on particular service setting and situations (Mittal and Lassar, 1998). Thus, the main purpose of this paper is to examine the relationship service quality and customer satisfaction in an extreme environment. To accomplish this research work information was collected from 117 National Savings Bank Customers in Northern Region of Sri Lanka. The most prevalent and widely accepted perspective on service quality SERVQUAL model (Parasuraman et al., 1998) was used. Although this perspective has been repeatedly applied in the area of service marketing, this research intended SERVQUAL approach in a single service firm and single industry in an extreme environment. It would be beneficial for service managers to investigate measure of service quality for use in particular conditions and environments or industries. Related Literature Review Service quality The first attempt to describe and define service quality was the paradigm suggested by Gronroos (1983) who distinguished between technical quality (what the customer receives) and functional quality (how the service is provided). Parasuraman, Zeithaml and Berry (1985:42) extended in their study and argued that to fully understand service quality, the intangible, heterogeneous and inseparable nature of services must be acknowledged and that perceived service quality can be defined as the consumers‟ overall impression of the relative inferiority/superiority of the organization and its services (Bitner & Hubbert, 1994) or as the customer's assessment of the overall excellence or superiority of the service (Zeithaml, 1988). In these terms service quality means conforming to customer expectations (Lewis & Booms, 1983) and implies, from a consumer perspective, the comparison of customer expectations with customer perceptions of actual service performance (Parasuraman et al., 1985). Five Dimensions of the Service Quality The results of the initial published application of the SERVQUAL instrument indicated that five dimensions of service quality emerged across a variety of services (Parasuraman et al., 1988). These dimensions include tangibles, reliability, responsiveness, assurance and empathy (Brensinger and Lambert, 1990; Crompton and Mackay, 1989; Parasuraman et al., 1985, 1988, 1991). Tangibles are the physical evidence of the service (e.g. physical facilities, appearance of personnel, or tools or equipment used to provide the service), reliability involves consistency of performance and dependability (i.e. a firm performs the service right the first time and honors its promises), responsiveness concern the willingness or readiness of employees to provide service (e.g. timeliness of service), assurance corresponds to the knowledge and courtesy of employees and their ability to inspire trust and confidence , and , finally, empathy pertains to caring, individualized attention/service that a firm provides its customers. Asia Pacific Journal of Marketing & Management Review__________________________________________ ISSN 2319-2836 Vol.2 (6), June (2013) Online available at indianresearchjournals.com 3 Definition of Customer satisfaction Attempting to understand the nature of customer satisfaction is not easy. It is a complex concept that can mean a variety of things for different people. There is sufficient evidence to suggest that customer satisfaction can and should be viewed as an attitude (Yi, 1990). For example, in retail banking there is an ongoing relationship between the service provider and the customer. Here, customer satisfaction is based on an evaluation of multiple interactions. For this investigation, satisfaction is considered as a composite of overall customer attitudes towards the service provider that incorporates a number of measures. According to Hausknecht, 1990; Heskett et al., 1994; Jones and Sasser, 1995 Three frequently used measures are overall service quality, meeting expectations and customer satisfaction. The term "satisfaction" is generally understood to be an individual's emotive or affective response, either in a positive or in a negative direction, to some experience or situation. Relationship between service quality and customer satisfaction Research in the area of service marketing has recently begun to address whether or not service quality differentially affect satisfaction depending on particular service setting and situations (Mittal and Lassar, 1998). This subject is continued and considerable debate in the marketing literature, the distinction and association between service quality and customer satisfaction remains at the front position of many academic and practitioner oriented research activities (e.g. Anderson and Fornell, 1994; Brown and Swartz, 1989; Spreng and Mackoy, 1996). Studies of consumer satisfaction conducted in service settings (e.g. Fornell, 1992), and generally, researchers agree that the two constructs are conceptually distinct (Bitner, 1990; Boulding et al., 1993, Oliver, 1993). Cronin and Taylor, (1992); and Spreng and MacKoy, (1996) argued and empirically supported that perceived service quality leads to customer satisfaction. Although the direction of the quality/ satisfaction relationship (i.e. quality leads to satisfaction) is fairly well understood for services, the question of whether or not (and how) this relationship varies depending on particular settings and/ or situations is not. Research objectives The objective of this study is to examine the relationship between service quality and customer satisfaction in an extreme environment. More specifically, an attempt was made to assess how five dimensions of service quality influence the customer satisfaction in such excrement environment in Northern Region, Sri Lanka. Conceptualisation For the purpose of this study, it is conceptualised that five dimensions of service quality (Tangible, Reliability, Assurance, Responsiveness and Empathy) leads to customer satisfaction so as to assess the relationship in an extreme environment. Hypothesis for this study To assess the relationship between service quality and perceived customer satisfaction in an extreme environment, the following hypothesis were developed H1: Service quality dimensions are positively correlated with perceived customer satisfaction H2: Service quality