IJCM Vol. 13, No. 2, 2003 29

FACTORS INFLUENCING CUSTOMER SATISFACTION IN THE RETAIL BANKING SECTOR

IN PAKISTAN

Ahmad Jamal Kamal Naser

Customer satisfaction is a significant issue for most marketers. Previous research has identified various factors that determine customer satisfaction in retail banking sector in Western countries. The current paper reports findings from a survey, which looked into determinants of customer satisfaction in the retail banking in Pakistan. A total of 300 questionnaires were randomly distributed to customers of a specific bank in Pakistan. Results indicate that there was a strong relationship between service quality and customer satisfaction. There was, however, no relationship between customer satisfaction and tangible aspects of the service environment. The paper discusses implications for bank management.

INTRODUCTION

Customer satisfaction is an important theoretical as well as practical issue for most marketers and consumer researchers (Churchill and Suprenant, 1982; Moutinho and Goode, 1995; Naser et al., 1999; Piercy, 1994). Customer satisfaction is a major outcome of marketing activity whereby it serves as a link with various stages of consumer buying behavior. For instance, if customers are satisfied with a particular service offering after its use, then they are likely to engage in repeat purchase and try line extensions (East, 1997). Customer satisfaction is widely recognised as a key influence in the formation of consumers' future purchase intentions (Taylor and Baker, 1994). Satisfied customers

30 IJCM Vol. 13. No. 2, 2003

are also likely to tell others of their favourable experiences and thus engage in positive word of mouth advertising (File and Prince, 1992; Richens, 1983). This positive word of mouth advertising is particularly useful in collectivist Asian cultures like that of Pakistan where social life is structured in a way to improve social relationships with others in the society (see Hofstede, 1980; Hall and Hall, 1987). Dissatisfied customers, on the other hand, are likely to switch brands and engage in negative word of mouth advertising.

A recent study conducted by Levesque and McDougall (1996) confirmed and reinforced the idea that unsatisfactory customer service could lead to a drop in customer satisfaction and willingness to recommend the service to a friend. This would lead to increase in switching by customers. So, the significance of customer satisfaction and customer retention in strategy development for a 'market oriented' and 'customer focused' firm cannot be underestimated (see Kohli and Jaworski, 1990 for further discussion). Customer satisfaction can be considered as the essence of success in today's highly competitive world of business. Customer satisfaction is increasingly becoming a corporate goal as more and more companies strive for quality in their products and services (Bitner and Hubbert, 1994). In this context, an understanding of 'determinant of customer satisfaction' (Churchill and Suprenant, 1982; Levesque and McDougall, 1996) is of great significance to marketers. The current paper reports findings from a recently conducted study which looked into the significance and importance of various determinants of customer satisfaction in retail banking in an Asian country- Pakistan.

LITERATURE REVIEW

Determinants of Customer Satisfaction Customer satisfaction is generally described as the full meeting of

one's expectations. Customer satisfaction is the feeling or attitude of a customer towards a product or service after it has been used. A review of the existing literature indicates that there can be potentially many antecedents of customer satisfaction, as the dimensions underlying satisfaction judgements are global rather than specific (Taylor and Baker, 1994; Patterson and Johnson, 1993; Rust and Oliver, 1994). The customer satisfaction literature has paid a great deal of attention to the confirmation paradigm, which concerns the comparison of product or

IJCM Vol. 13, No. 2, 2003 3

service performance expectations and evaluations (Goode and Moutinho 1995). The confirmation model treats satisfaction as a meeting of customer expectations (East, 1997; Oliver 1989) and is generally related to habitual usage of products (East, 1997). However, research on customer satisfaction has moved towards the disconfirmation paradigm which views satisfaction with products and brands as a result of two cognitive variables: prepurchase expectations and disconfirmation (Churchill and Surprenant, 1982; Peter and Olson, 1996). According to Peter and Olson (1996), "prepurchase expectations are beliefs about anticipated performance of the product; disconfirmation refers to the differences between prepurchase expectations and post-purchase perceptions" (p.509). In an earlier study, Churchill and Surprenant (1982) reported that disconfirmation positively affected satisfaction. That is, when subjects perceived the product performing better than expected, they were more satisfied (Churchill and Surprenant, 1982). Further empirical research supports the notion that satisfaction is caused by expectations and requires considerable cognitive effort on the part of customers (Bearden and Teel, 1983; Moutinho and Goode, 1995; Cadotte et al., 1987).

Customer Satisfaction and Service Quality In the service literature, strong emphasis is placed on the

importance of service quality perceptions and the relationship between customer satisfaction and service quality (see for example Bitner and Hubbert, 1994; Cronin and Taylor, 1992; Taylor and Baker 1994; Rust and Oliver, 1994). Service quality has been described as a form of attitude that results from the comparison of expectations with performance (Cronin and Taylor, 1992; Parasuraman et al., 1985). Gronroos (1982) argued that customers, while evaluating the quality of a service, compare the service they expect with perceptions of the services they actually receive. It has been argued that the quality of service is not a unidimensional construct. Rather, service quality incorporates various dimensions that relate to both core and augmented service offerings (Bitran and Lojo, 1993; Gronroos, 1984; Lewis, 1993). Parasuraman et al. (1985; 1988) initially described five dimensions of service quality: reliability, tangibles, responsiveness, assurance and empathy. Parasuraman et al. (1991a) argued that reliability was mainly concerned with the outcome of service whereas tangibles, responsiveness, assurance

32 IJCM Vol. 13, No. 2, 2003

and empathy were concerned with the service delivery process. The customers not only judge the accuracy and dependability (i.e. reliability) of the delivered service but they also judge the other dimensions as the service is being delivered (Parasuraman et al., 1991a). Customer satisfaction can thus be based not only on the judgement of customers towards the reliability of the delivered service but also on customers' experiences with the service delivery process. On the basis of their review of service quality literature, McDougall and Levesque (1994), however, argued that there were two overriding dimensions to service quality. The first one being the core or outcome aspects (contractual) of the service, and the second being the relational or process aspects (customer-employee relationship) of the service.

It is generally accepted that customer satisfaction often depends on the quality of product or service offering (Anderson and Sullivan, 1993; Levesque and McDougall, 1996). For this reason, research on customer satisfaction is often closely associated with the measurement of quality (East, 1997). Thus, both service quality and customer satisfaction share a close relationship, though they are normally conceptualise as unique (or separate) constructs (Bitner and Hubbert, 1994; Cronin and Taylor, 1992; Patterson and Johnson, 1993; Taylor and Baker, 1994). There is some empirical evidence suggesting that service quality is a causal antecedent of customer satisfaction (see for example, Cronin and Taylor, 1992; Woodside et al., 1989). However, there is very little empirical research demonstrating the importance of service quality dimensions in determining customer satisfaction (Fisk et al., 1993; Levesque and McDougall, 1996). In a recent study, Levesque and McDougall 1996 found that the performance of the service provider on core and relational dimensions of service was an important driver for customer satisfaction in retail banking in the UK. However, in a non-Western context, the link between core and relational dimensions of service and customer satisfaction is yet to be established empirically. The current paper aims to fill this gap in the literature.

Moreover, the literature dealing with services outlines some major characteristics of service that make them unique and different from physical products ( Bitran and Lojo, 1993; LeBlanc and Nguyen, 1988; Parasuraman et. al., 1985; Zeithaml and Bitner, 1996). Services are often characterized by their intangibility, inseparability, heterogeneity, and perishability. The implications of these characteristics are that it is

IJCM Vol. 13, No. 2, 2003 33

often difficult for customers to evaluate services at preconsumption, consumption and post consumption stages of the consumer decision­making (Legg and Baker, 1996). Because of the intangible nature of services, it becomes difficult for an organization to understand how its customers perceive and evaluate the quality of its services (Parasuraman et. al., 1985; Zeithaml, 1981). Customers, however, make inferences about the service quality on the basis of tangibles (the buildings, the physical layout etc.) mat surround the service environment. Support for this argument comes from empirical evidence suggesting that the tangible, physical surroundings of the service environment can have a significant impact on customers affective responses and their behavioural intentions (Wakefield and Blodgett, 1999). Dabholkar et al. (1996) reported similar findings mat me tangible aspects of department stores do influence customers' perceptions of service quality. Hence, mere are reasonable grounds to assume mat customer satisfaction is also related to customers' evaluation of physical surroundings of the service environment.

Customer Satisfaction and Service Features Factors related to service offerings are also related to customer

satisfaction (Levesque and McDougall, 1996). According to Levesque and McDougall (1996), convenience and competitiveness of the bank are two important factors which are likely to influence the overall satisfaction levels of a customer. A number of researchers have looked into the bank selection criteria adopted by customers (see for example, Anderson et al. 1976; Denton and Chan, 1991; Erol and El-Bdour, 1989; Erol et al., 1990; Khazeh and Decker, 1992; Kaynak et al., 1991; Laroche and Taylor, 1988; Levesque and McDougall, 1996; Naser et al., 1999; Tan and Chua, 1986). Empirical findings from this stream of research suggest mat convenient location is a critical factor influencing the choice of a bank by customers. A convenient bank location means customers can easily do business wim their banks on a regular basis (Levesque and McDougall, 1996). Accessibility is also a related factor which, while acting together with convenience, enables customers to deal with their banks more easily (Levesque and McDougall, 1996). Furthermore, customer satisfaction in retail banking is also likely to be influenced by the perceived competitiveness of the bank's interest rates (Laroche and Taylor, 1988; Levesque and McDougall, 1996).

34 IJCM Vol. 13, No. 2, 2003

Since services exist in real time, services are consumed at the very moment when they are made available to customers. They cannot be stored and checked for their quality like a physical product. Hence, every service production failure is likely to be experienced by a customer. Consequently, "dissatisfaction with a service might occupy most of the time over which service is consumed" (East, 1997). However, customers might not instantly switch their banks after experiencing a problem during the service production. This is mainly because of the fact that the perceived costs of switching are relatively high in retail banking. Customers, however, might display a passive response to a problem, which can be in the form of making a formal complaint. Customer satisfaction in such cases can depend upon the efficient and effective response of the service provider (Levesque and McDougall, 1996).

Customer Satisfaction and the Banking Sector Banking in the Western world is one of the many service industries

where customer satisfaction has been the focus of research (Holliday, 1996). This is mainly because of the fact that the banking sector is increasingly experiencing a high level of competition. This puts a tremendous amount of pressure on banks to improve their services (see for example, Levesque and McDougall, 1996; Good et al., 1996; Good and Moutinho, 1996; 1995; File and Prince, 1992; Nicholls et al., 1993). However, a similar argument can be made in connection with the banking sector in many Asian countries. For instance, the banking sector in Pakistan has become competitive in recent years. The government in recent years has pushed the industry from state ownership towards privatization. Related to this are the liberalization policies followed by the government, which has encouraged some international players to intensify their activities in the market. Customers are also increasingly becoming sophisticated as they have access to the latest forms of information technology (such as the Internet). Consequently, many financial institutions have to focus on increasing customer satisfaction and customer retention through improved quality of their services.

IJCM Vol. 13, No. 2, 2003 35

RESEARCH QUESTIONS

On the basis of our review of the literature related to customer satisfaction and other related factors, a number of research questions can be raised. For instance, in retail banking in countries other than those in the West: first, "what is the relationship between the two major dimensions of service quality (core and relational) and customer satisfaction?"; second, "what are other factors that contribute towards customer satisfaction?"; third, "what is the role of demographic factors in mediating the relationship between the two major dimensions of service quality (core and relational) and customer satisfaction?" Answers to these questions should be of help to the retail banks that are operating in non-western countries like Pakistan.

METHODOLOGY

Measures Used The main objective of this study was to identify major factors that contributed towards customer satisfaction in the retail banking sector in Pakistan. Table 1 reports measures used in this study. Measures for the core and relational dimensions of service quality were adopted from previous literature dealing with service quality and customer satisfaction (Carman, 1990; Cronnin and Taylor, 1992; Levesque and McDougall, 1996; Parasuraman et al., 1988, 1991a). Measures for the service features were based on services marketing literature (LeBlanc and Nguygen, 1988; Laroche and Taylor, 1988; Levesque and McDougall, 1996; Lewis, 1991; Teas and Wong, 1991). Two brackets were utilized to measure gender: male (63% of the sample) and female (37% of the sample). It is normally argued that customer satisfaction in retail banking is based on the multiple interactions between the bank and the customer (Levesque and McDougall 1996). In this context, customer satisfaction could be identified as a composite of overall attitudes that customers have towards the bank. Following Levesque and McDougall (1996), three frequently used measures of customer satisfaction, namely, overall service quality, meeting of expectations, and satisfaction with the service were used in this study. The study also used recommendation to others as a measure of customer satisfaction. This is in contrast to Levesque

36 IJCM Vol. 13, No. 2, 2003

and McDougall (1996) who used recommendation to others as a measure of future intentions.

TABLE 1 The Measures Used In The Study

Service Quality

Core (5-point LT)

• When my Women Bank promises to do something by a certain time, it does so

• My Women Bank performs the service right the first time

• My Women Bank provides its services at the time it promises to do so

• My Women Bank performs the service accurately

• My Women Bank tells you exactly when services will be performed

Relational (5-point LT)

• Employees in my Women Bank have the required skills and knowledge to perform the service

• Employees in my Women Bank are always willing to help

• Employees in my Women Bank are consistently courteous

• My Women Bank gives me individual attention

• Employees in my Women Bank understand my specific needs

Tangibles

• The physical facilities of my Women Bank are visually appealing

• Parking facilities provided to customers are adequate

• My Women Bank personnel are neat in appearance

Service Features

Enabling (5-point LT)

• My Women Bank has convenient branch locations

• My Women Bank offers convenient opening hours

• My Women Bank offers a complete range of services

• My Women Bank provides easily understood statements

• It is very easy to get into and out of my Women Bank quickly

Competitive (5-point LT)

• The cost of the services offered by my Women Bank is reasonable

Customer Satisfaction and Future Intentions Customer Satisfaction (5-point LT)

• After considering every thing, I am extremely satisfied with my Women Bank

• My Women Bank always meets my expectations

• The overall quality of the services provided by my Women Bank is excellent

• If anyone asked me, I would strongly recommend him/her to deal with my Women Bank

Future Intentions (5-point LT)

• Things happen at my Women Bank that make me want to switch my accounts elsewhere

IJCM Vol. 13, No. 2, 2003 37

Data Collection A questionnaire in English was designed which incorporated the

measures mentioned above. A total of 300 questionnaires were randomly distributed to those visiting a branch of a specific bank in a major northern city of Pakistan during the last two weeks of July 1999. The procedure resulted in a sample of 165 completed questionnaires (55% useable response rate).

The bank chosen for the study was the First Women Bank Ltd. in Pakistan. In an Islamic country like Pakistan, women are not generally encouraged to mix with men. In such a situation, males are expected to carry out dealings with the banks, which are mainly run and managed by males (Naser et al., 1999). That is why the literature on customer satisfaction and the retail banking in Islamic countries mainly reflects the opinions and evaluations of male customers. In order to make women economically independent and to improve their general socio-economic conditions, the Government in 1989 established the First Women Bank. The bank is different from other traditional banks in the sense that it is exclusively run and managed by women themselves. This is in contrast to the rest of the World where no such gender segmentation exists. Under these circumstances, there were reasonable grounds to assume that the customer base for the First Women Bank in Pakistan were largely females. Thus the study was expected to highlight the views of females in relation to customer satisfaction and service quality. Given that women form a significant proportion of most Islamic societies, including that of Pakistan, the study aimed to provide a new dimension to the literature.

DATA ANALYSIS

Respondents profile The questionnaire included a section on customer's profiles, as various demographic factors (particularly the gender) were likely to influence the degree of customer satisfaction of products and services offered by the bank. Information on demographic features is also useful in formulating the bank's marketing strategy. A profile of respondents is presented in Table 2.

38 IJCM Vol. 13, No. 2, 2003

TABLE 2 Personal background of the respondents

Gender ( n = 1 6 l ) Male Female Age (n = l55) 20 or l e u 21-30 31-40 41-50 51-60 61 and over Occupation (n=161) Businessman Danker Investor University Lecturer School Teacher Accountant Manager Solicitor Journalist Politician Auditor Judge Other Education (n = 143) Lest than Matric Matric Intermediate Graduate Masters or equivalent Ph.D. Monthly Income (n = 139) Less than Rs. 5,000 Rs. 5,001-10,000 Rs. 10,001-15,000 Rs. 15,001-20,000 Rs. 20,001-25,000 Rs. 25,001-30,000 Rs. 30,001 and over Religion (n=143) Muslim Non-Muslim

Frequency

101 60

1 32 48 44 20 10

30 11 11 15 10 5 14 1 2 1 2 7 53

0 4 4 85 37 13

5 27 13 15 16 15 48

160 3

Percentage

62.7 37.3

0.6 20 .6 31.0 28.4 12.9

6.5

18.5 6.8 6.8 9.3 6.2 3.1 8.6 0.6 1.2 0.6 1.2 4.3 32.7

0 3.8 3.8 73.9 32.2 11.3

3.6 19.4 9 .4 10.8 11.5 10.8 34.5

98.2 1.8

According to Table 2, almost 63 percent of the respondents were males while females accounted for about 37 percent. This is quite surprising, given the fact that the First Women Bank was expected to have a large number of female customers as against male customers. However, the results are not surprising given the nature of Muslim society where males are expected to carry out dealings with the banks (Naser et al. 1999). It is also clear from Table 2 that almost 93 percent of the respondents were between 21 and 60 years old with 59 percent in the 31-50 age range. The table further indicated that the respondents represented a balanced mix of various professions. A significant majority (94%) of the respondents were highly educated (graduates 74%; postgraduates 32 percent; doctorate 11%). About 62 percent of the respondents earned between

IJCM Vol. 13, No. 2, 2003 39

Rs.5001 to Rs.30,000 whereas about 35 percent of them earned more than Rs.30,000 a month1. A vast majority of the respondents were Muslims (98 percent) which reflects the general pattern of Pakistani society.

Type and Duration of Banking In order to investigate customer satisfaction towards the First Women

Bank, it was important to explore where the respondents held their accounts. For instance, holding accounts in both the First Women Bank as well as any other commercial bank enables customers to make useful comparisons while evaluating service quality. Although gathering information on whether the respondents held accounts in the First Women Bank, and other commercial banks was useful, it was also important to explore different types of accounts held by the respondents with the First Women Bank, as well as a commercial bank and for how long. Details of the respondents' accounts are reported in Table 3. Tables 4 and 5 report findings in connection with the types of accounts held by the respondents and the length of time that they held their accounts.

TABLE 3 Type of Bank(s) in which respondents hold their accounts Value Label(n=164) Women Bank only Women Bank and some other Bank

TOTAL

Frequency 123 41 164

Percent 75.0 25.0 100

According to Table 3, a large number of the respondents (75%) held accounts in the First Women Bank only. The remaining 25%, however, indicated that they held accounts with the First Women Bank as well as some other commercial bank(s).

TABLE 4 Types of accounts held by the respondents (n=164)

Value Label

Current Deposit Investment Other Total

Business only Frequency 2 5 9 1 17

Percentage 1.2 3.1 5.5 0.6 10.4

Personal only Frequency 59 25 35 5 124

Percentage 36.0 15.2 21.3 3.1 75.6

Business & Personal Frequency 9 4 9 1 23

Percentage 5.50 2.4 5.5 0.6 14.0

1 According to the current exchange rate, 1US dollar = 52 Pakistani Rupees (Rs )

40 IJCM Vol. 13, No. 2, 2003

It can be observed from Table 4 that a significant proportion of the respondents (75.6%) hold personal current accounts in the First Women Bank. A reasonable proportion of the respondents (14%) indicated that they held business and personal accounts in the First Women Bank. This is followed by those (10.4%) who only had a business account with the First Women Bank.

TABLE 5 Period of time the account(s) has/have been held (n = 165)

Value Label

Islamic

Current Deposit

Investment Other Total

Less than 1 year

Frequency

13 4 4 2 23

* 7.9 2.4 2.4 1.2 13.9

1-3 years

Frequency 43 24 41 4

114

% 27.3 I4.S 24.8 2.4 69.1

3-6 years

Frequency

13 4 2 1

20

* 7.9 2.4 1.2 0.6 12.1

More than 6 years

Frequency

0 2 6 0 8

* 0 1.2 3.6 0

4.8

Table 5 shows that a high proportion of the respondents (86%) held accounts with the First Women Bank between 1-6 years. This might imply the degree of customer loyalty towards the bank and reflect a good level of satisfaction. The bank can make use of this result by adopting a strategy that contains products and services of long-term nature (pension and saving schemes, long term financing and mortgages). This would help in diversifying products and facilities offered by the bank in Pakistan.

Service Quality, Service Features and Customer Satisfaction As per Levesque and McDougall (1996), the responses to the 17

items concerning service quality and service features were factor analysed to find out whether a solution involving the core, relational, tangible and enabling dimensions could be detected (see Table 6).

The factor analysis yielded three factors with eigenvalues exceeding considerably higher than 1.0. This provides support for two service quality and one service feature dimension (See table 6). The three constructs (that is the core, relational and service features) were tested for reliability using Cronbach alpha scores; two of these constructs (core with an alpha score of 0.75 and relational with an alpha score of 0.84) easily passed the minimum level recommended by Nunnally (1978) of 0.70. Since the third dimension i.e. the service features did not pass the

IJCM Vol. 13, No. 2, 2003 41

reliability test, the dimension was removed from further analysis. Three of the non-loading items (service accuracy, convenience, and tangibles -see Table 6) were kept for further analysis.

TABLE 6 Factor analysis - service quality items

Factor

Relational • Employees have the skills/knowledge • Always willing to help • Consistently courteous • Understand specific needs • Give individual attention • Employees neat appearance Core • Does something by a certain time • Provides services when promised • Tells when services performed • Does it right the first time Features • Offers a complete range • The cost is reasonable • Easy to get into and out • Provides easily understood statements Non-loading items • Performs the service accurately • Has convenient branch locations • Physical facilities are visually appealing

Fac 1

0.77 0.75 0.75 0.66 0.63 0.52

0 30 0.44 0.66 0.60

0.23 0.32

-0.13 0.33

0.28 0.14 0.19

Pattern Fac 2

-0 28 -0.44 -0.45 -0.12 -0.15 0.04

0 77 0.73 0.45 0 24

-0.06 -0.01 -0.42 -0.01

-0.02 0.07 0.01

Fac 3

-0 20 -0.18 -0.13 0.14 0.05 -0.19

4)01 -0.10 0.06 0.18

0.79 0.76 0.26

-0.23

-0.44 0.01 0.32

Note: All numbers are item loadings which have been re-ordered for the table presentation; factor analysis yielded three factors with eigenvalues of 4.3, 2.1 and 1.8 which accounted for 25.3, 12.4 and 10.7 per cent of the total response variance respectively; n = 165.

Table 7 reports the correlation scores among the two dimensions of service quality (core and relational), satisfaction, service accuracy, convenience, tangibles and gender. As shown in Table 7, the correlation between satisfaction and core dimension of service quality was high and significant (r = 0.653, p<.001). Similarly, the correlation between satisfaction and relational dimension of service quality was also significant (r = 0.449, p<.001). However, the correlation between satisfaction and other variables like service accuracy, convenience, tangibles, and gender was low and not significant.

42 IJCM Vol. 13, No. 2, 2003

TABLE 7 Pearson Correlation Coefficients Variables Employed in the

Regression

SATIS 1 CORE 1 RELAT1 SERVAC CONVEN TANGI GENDER

SATIS 1

1.0000

CORE 1

.6527 1.0000

RELAT1

.4491

.3034 1.0000

SERVACC U

.0564

.1229

.1261 1.0000

CONVEN

.1474

.2603

.1418

.0098 1.0000

TANGI

.0075

.0582

.0803

.1131

.2321 1.0000

GENDER

-.0751 -.0657 -.0856 .1780

-.1923 .0081

1.0000

While the correlation matrix can detect collinearity between two explanatory variables, the absence of high correlation does not always mean that there is no multicollinearity. To solve this problem, a diagnostic procedure utilizing variance inflation factors (VIFs) was employed (see Table 8). Furthermore, it was felt that customer satisfaction could be modelled using a multivariate regression analysis which linked customer satisfaction to the two dimensions (core and relational) of service quality, service accuracy, convenience, tangibles and gender. Hence, multivariate regression was performed with the two dimensions (core and relational) of service quality, service accuracy, convenience, tangibles and gender as independent variables and customer satisfaction as dependent variable. The regression results are also shown in Table 8.

TABLE 8 Results of the regression analysis

Variable

CONSTANT CORE 1 RELAT 1 SERVICEAC CONVIENCE TANGIBLE GENDER

Parameter Estimate .674069 .602136 .309062

-.012378 -.030317 -.014598 -.012265

/■-Statistic

1.693 9.557 4.481 -.852 -.528 -.480 -.194

PROB > | T |

.0925

.0000

.0000

.3955

.5980

.6317

.8461

VIF

1.178 1.138 1.078 1.167 1.075 1.085

R2 = .50524 F-Statistic = 26.04004 PROB > F = .0000 Stand. Error= .37072

IJCM Vol. 13, No. 2, 2003 43

It is evident from Table 8 that the multiple regression is highly significant p = 0.0000. In addition, the adjusted coefficient of determinants (R2) of the regressions indicated that more than 50 percent of variations in the dependent variable are explained by variations in the independent variables. The regression further indicated that the core and the relational dimensions of service quality are statistically related to customer satisfaction.

Although the correlation matrix reported in Table 8 pointed to possible collinearity problem between the explanatory variables, the result of the VIF test appeared on Table 9 indicates that collinearity, in this case, does not seem to be a real problem in explaining the regression results. These findings along with the correlation findings reported above provide enough support for the notion that there exists a strong relationship between the two dimensions of service quality and satisfaction. Hence customers who positively perceive the core and relational dimension of the service quality provided by a specific service provider are likely to feel satisfied with the service provider. More importantly, our findings are similar to the ones reported in a Western context. For instance, Levesque and McDougall (1996) reported that customer satisfaction was driven by a number of factors, including, but not limited to, service quality dimensions.

Customer Satisfaction and Demographic Factors In order to see whether the average perceptions (of the issues or

variables under investigation) were identical for all groups involved in this survey, the Kruskal-Wallis Test was used. The test was used to measure any significant difference in responses, since there were different groups involved in this survey. This nonparametric test is appropriate when measurement of the variables under investigation is in an ordinal scale (Grimm and Wozniak, 1990). The results are shown in Table 9.

It can be seen from Table 9 that the respondents, regardless of their age, gender, religion, income, education or occupation, expressed a degree of satisfaction towards most aspects of the First Women Bank. The results, however, pointed to some differences between the age of the respondents and the convenient location of the branch and whether the employees in the bank understood a customer's specific needs. This means that the age differences were related to convenience and one relational aspect of service quality.

IJCM Vol. 13, No. 2, 2003 44

TABLE 9 Kruskal-Wallis One-Way Anova

Variable My Women Bank has convenient branch locations My Women Bank offers convenient opening hours

My Women Bank offers a complete range of services My Women Bank provides easily understood statements It is very easy to get into and out of my Women Bank quickly

I have confidence in my Women Bank management The cost of the services offered by my Women Bank is reasonable The physical facilities of my Women Bank are visually appealing

Parking facilities provided to customers are adequate

My Women Bank personnel are neat in appearance

Employees in my Women Bank have the required skills and knowledge to perform the service Employees in my Women Bank are always willing to help

Employees in my Women Bank are consistently courteous My Women Bank gives me individual attention Employees in my Women Bank understand my specific needs When my Women Bank promises to do something by a certain time, it does so

My Women Bank performs the service nght the first time My Women Bank provides its services at the time it promises to do so

My Women Bank performs the service accurately My Women Bank tells you exactly when services will be performed After considering every thing, I am extremely satisfied with my Women Bank

My Women Bank always meets my expectations

The overall quality of the services provided by my Women Bank is excellent If anyone asked me, I would strongly recommend him/her to deal with my Women Bank Things happen at my Women Bank that make me want to switch my accounts elsewhere

Ape

X2

10.61 5.21 7.37 3.61 3.19 .380 5.94 1.07 .77

3.14 3.83

4.06 6.98 4.98

11.90 6.70 4.57 6.16 3.07 3.61 1.54 3.48 1.49 2.87

5.62

Sig.

.0313

.2664

.1175

.4614

.5261

.9841

.2038

.8989

.9428

.5352

.4289

.3986

.1369

.2892 .0181 .1528 .3343 .1876 .5465 .4616 .8198 .4809 .8280 .5796

.2293

Gender X2

5.03 1.01 1.36 6.86 3.35

.15

.32

.08

.24 0.86 0.38

.0001 0.07 2.23 3.03 0.17 .381 1.19 6.60 1.40 1.19 1.05

2.078 .3962

3.32

Sig.

.0248

.3138

.2435

.0089

.0672

.6973

.5725

.7817

.6268

.3545

.5390

.9919

.7924

.1356

.0822

.6832

.5373

.2747

.0102

.2361

.2746

.3064

.1493

.5291

.0686

Religion

X2 1.74 1.34 .66

1.95 .0009

.01

.03

.17

.12

.58

.08

.14

.44

.15

.38

.02

.32

.14 4.10 .044 1.02 .94 .06

1.04

1.002

Sig.

.1872

.2463

.4169

.1625

.9761

.9183

.8545

.6843

.7324

.4477

.7826

.7107

.5048

.7028

.5398

.8860

.5728

.7127

.0429

.8338

.3121

.3328

.8006

.3069

.3168

Income X2

15.12 8.58 4.34

10.50 9.12 7.75 4.13 5.40 8.15

23.05 5.65

4.39 3.39 9.89 6.04

22.12 4.48

21.71 9.34 9.03 1.55 4.15 5.68 3.04

10.18

Sig.

.0193

.1989

.6307

.1051

.1668

.2574

.6598

.4934

.2270

.0008

.4632

.6243

.7582

.1295

.4188

.0012

.6122

.0014

.1554

.1717

.9559

.6569

.4597

.8037

.1172

Education X2

1.60 1.49 4.21 2.38 1.63

10.27 9.60 3.29 1.33 7.98 3.83

3.68 1.36 3.19 3.59 1.64 2.05 1.24 6.38 2.63

.81

.90 1.85 1.99

7.02

Sig.

.8091

.8293

.3789

.6654

.8031 .0361 .0478 .5101 .8564 .0924 .4301

.4504

.8511

.5261

.4645

.8008

.7270

.8712

.1726

.6209

.9377

.9244

.7626

.7371

.1348

Occupation X2

9.49 12.35 27.28 21.74 14.47 7.78

23.17 10.25 11.30 16.08 16.85

12.89 8.27

11.48 9.91

17.49 11.91 23.13 11.87 18.07 13.55 21.79 18.54 20.32

12.71

Sig.

.6607

.4178

.0070

.0406

.2719

.8019

.0263

.5941

.5031

.1874

.1553

.3767

.7639

.4881

.6235

.1322

.4526

.0266

.4561

.1135

.3306

.0399

.1003

.0613

.3907

IJCM Vol. 13, No. 2, 2003 45

Differences in the respondents' opinion were also reported between the gender variable and a number of variables. These variables included convenience, two of the service features (i.e. provision of easily understood statements, easy to get into and out of the bank), one relational factor (i.e. employees understand specific needs), service accuracy, and the tendency to switch the account elsewhere. These differences can be clearly observed from the reported λ2. Similarly, the reported λ2 indicated a significant difference between the religion variable and the ability of Women Bank to perform services accurately. Significant differences in the respondents' satisfaction were also reported between the income variable and convenience, one relational (i.e. the appearance of the bank's personnel) and two core factors (i.e. the bank does something by a certain time and does it right the first time). The reported X1 was also high between the education variable and the confidence in the bank's management, the competitiveness (i.e. the cost of services offered by the bank) and one relational factor (i.e. the appearance of the bank's personnel). The highest degree of differences in the respondents' opinions were between the occupation and a variety of variables. These variables included two enabling factors (namely, the range of services offered by the bank and the provision of easily understood statements), as well as competitiveness; and one core factor (i.e. the bank does something by a certain time). Significant differences were also reported in relation to two of the satisfaction related factors (i.e. the bank always meets expectations and recommendation to others).

CONCLUSIONS AND IMPLICATIONS

The previous literature has extensively discussed the relationship between service quality and customer satisfaction. The current research contributes to this discussion by demonstrating that conceptualising different dimensions of service quality into two overriding dimensions increases our ability to explain the relationship in a better way. The analysis of the items constituting different aspects of service quality and service features suggests that there are two over-riding dimensions of service quality - i.e. the core and the relational. These findings are in line with that reported earlier in a Western context (see Levesque and McDougall, 1996). The research contributes further by testing the relationship between service quality dimensions and customer satisfaction

4G IJCM Vol. 13, No. 2, 2003

utilising data from retail-banking sector in a non-Western context. We conclude that even in a non-Western context, there exists a strong relationship between the two dimensions (i.e. the core and the relational) of service quality and customer satisfaction. In other words, customers in non-Western countries who appreciate the core and relational dimensions of service quality are likely to be satisfied with the services offered by that service provider. Therefore, it appears that the core and relational dimensions of service quality are important drivers of customer satisfaction for all customers irrespective of their country of residence or even culture. Our findings also imply that service quality is a causal antecedent of customer satisfaction. This is in line with empirical findings reported earlier (Anderson and Sullivan, 1993; Cronin and Taylor, 1992; Woodside et al., 1989). The significance of core aspect of service quality means that the bank management has to make sure that things are done right the first time and they have to ensure that the promises are kept in terms of service delivery. As far as the relational aspect is concerned, the bank management has to make sure that the employees are properly trained so that the employees are not only courteous, attentive and willing to help customers but also are experts in their field so that they understand specific customer needs.

On the basis of our findings, we also conclude that there is no significant relationship between customer satisfaction and tangible aspects of service environment. This is in contrast to findings reported by previous research (Wakefield and Blodgett, 1999; Dabholkar et al., 1996) which reported that the tangible and physical surroundings of the service environment might influence customer affective responses including customer satisfaction. Our findings are, however, in line with those reported by Parasuraman et al. (1991b), who argued that the tangible aspects of service environment had no effect on customers' overall quality perceptions.

Our findings indicate that most of the respondents were generally satisfied with most aspects of products and services of the First Women Banks. This implies that the bank had a competitive advantage in terms of enjoying customer confidence as satisfied customers are likely to engage in repeat purchase and reflect strong loyalty towards the First Women Bank. As argued by East (1997) and Richens (1983), satisfied customers are likely to engage in positive word of mouth and try line extensions. In the context of Pakistani society, satisfaction with the bank

IJCM Vol. 13, No. 2, 2003 47

means customers are highly likely to tell their friends and family about their positive experiences. Since satisfaction is an important component of the total value required by customers, the First Women Bank can use a segment of satisfied customers in its promotional material to attract new customers. The bank can also use images of its caring employees as the respondents in our study generally favored the personnel of the bank. Employees are a significant part of the service delivery process and play a significant role in company-customer interaction.

Our findings also indicate that there existed strong demographic differences in the way respondents expressed their opinions about various aspects of service quality, service features and satisfaction with the First Women Bank. These findings are in line with those reported earlier (Goode and Moutinho, 1996; Naser et al., 1999). In their study, Naser et al. (1999) reported demographic differences in the degree of customer satisfaction towards an Islamic bank in Jordan. Our review of previous research indicated that convenience and competitiveness of a retail bank are two important factors influencing customer satisfaction. However, different segments of customers can have different preferences depending upon their needs and usage patterns (Levesque and McDougall, 1996). For instance, Tan and Chua (1986) found that convenient bank location was not a very critical factor to the Singapore respondents. Rather for the Singapore respondents, courteous personnel was the most dominant factor in the selection of a bank. On the basis of this, Tan and Chua (1986) argued that, in an Oriental culture, customers desired to have a more intimate and close interaction with the bank personnel. In our study, respondents belonging to different age, gender, and income groups expressed their differences towards convenient bank location. On the basis of this, we can conclude that convenience is not a critical factor for all age, gender and income groups. It is quite obvious from this that the First Women Bank has to look into the needs of different age, gender and income groups in order to meet their respective bank selection criteria. There were differences of opinions concerning the competitiveness of the First Women Bank relating to education and occupation of the respondents. Previous research has suggested that customer satisfaction can be influenced by the perceived competitiveness of the bank (Laroche and Taylor, 1988; Levesque and McDougall, 1996). On the basis of our findings, we can conclude that competitiveness of the bank is not a critical factor for all education and occupation groups.

48 IJCM Vol. 13, No. 2, 2003

Similarly, differences were found concerning the ability of the employees to understand specific needs of different age and gender groups. It might be that different age and gender groups have different expectations about the employees' ability to take care of their needs. Differences were also found concerning the appearance of the employees regarding the education and income levels of respondents. It might be due to the fact that in Pakistani society, generally, a lot of attention is paid to the conspicuous aspect of social interactions. Our findings, however, suggest that respondents with different education and income levels have different opinions about the neat appearance of bank employees. That is, not all of them focus on this particular aspect of service quality. Rather, they may pay attention to other aspects of service quality and service features depending upon their education and income levels. This means that the First Women Bank needs to emphasise some other aspects of its service quality to customers with different education and income levels.

Gender and religion were two important demographic factors as far as the service accuracy was concerned. It means that different gender and religious groups might have different expectations towards service accuracy. Differences were also reported regarding gender and occupation for a number of service features (such as provision of easy to understand statements, easy to get in and out of the bank, and the range of services).

Overall, occupation and gender were two significant factors with significant differences in opinions about various aspects of service quality, service features, and satisfaction with the bank. This might be due to the fact that respondents from different occupational and gender backgrounds expected the First Women Bank to perform well on a number of criteria. It might also be that both these groups had higher levels of expectations from the bank. If that is the case, then there are some strategic consequences for the First Women Bank. The bank can either make sure that every aspect of its service quality and service feature is of the utmost quality so that expectations of customers belonging to various occupation and gender groups are met or even exceeded. On the other hand, the bank can embark upon a strategy of lowering expectations of customers belonging to different occupation and gender groups so that there is a match between what these customers expect from the bank and what the bank actually offers them. The latter

IJCM Vol. 13, No. 2, 2003 49

strategy has been successfully applied by many of the no-frills airlines such as the Southwest Airlines in the U.S.A. and EasyJet in the UK (Piercy, 1999).

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