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Salman, Shahrukh: Effects of Perceived Service Quality on Customer Loyalty and
Repurchase Intentions. The Mediating Role of Customer Satisfaction, Hamburg, Anchor
Academic Publishing 2017
PDF-eBook-ISBN: 978-3-96067-687-4
Druck/Herstellung: Anchor Academic Publishing, Hamburg, 2017
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ACKNOWLEDGEMENT
We are extremely thankful to ALLAH Al-Mighty, the most beneficial and merciful, who gave us
knowledge, power and courage to complete this project. We are also thankful to our advisor Mr.
Ahmed-Ur-Rehman for helping us extensively through-out the project whenever we needed.
Without his help and guidance, it could not be possible for us to complete this project.
We would also like to acknowledge our parents, brothers and sisters for their cooperation and
useful help during the research project.
Although feelings are deep but unfortunately the words are too shallow. That cannot follow the
depth of our feelings. We feel no way to convey our gratitude to our benefactors so we have
gone through the old conventional way. The name has been mentioned but the extent and
sibilance of their help is impossible to capture.
Abstract
The primary objective of this study is to gage the affect of perceived service quality on
customer loyalty and repurchase intentions through customer satisfaction. In this study it is
explained the significance of customer satisfaction on customer loyalty and repurchase
intentions. Customer satisfactions play the mediating role between perceived service qualities,
customer loyalty and repurchase intentions. Population of the research is potential customers of
Lahore and the sample size is 230. Results has been drawn by using regression analysis which
showed significant relationships between perceived service quality and customer satisfaction,
customer satisfaction and customer loyalty, customer satisfaction and repurchase intentions,
perceived service quality and repurchase intentions. This study suggests that emphasis should be
given on service quality as it is a key variable that enhances customer satisfaction and leads to
customer loyalty and repurchase intentions. This in return generates profitability for the
food/restaurant industry.
Keywords: Perceived Service quality, Customer satisfaction, and Customer Loyalty and
Repurchase Intentions.
Table of Contents
1. INTRODUCTION...1
Objectives / Purpose of the project...3
2. LITERATURE
REVIEW
...4
Perceived Service Quality ...5
Customer Loyalty...8
Customer Satisfaction ...9
Theoretical Framework ...15
3. RESEARCH
METHODOLOGY
...16
Measures ...17
4. RESULTS
...19
Table 1 ...21
Table 2 ...22
Mediation analysis ...23
Table 3 ...24
5.
DISCUSSION & CONCLUSION ...25
Managerial Implications ...27
Limitations and future Research ...28
6. REFERENCES ...30
APPENDIX-A
LIST OF TABLES
Table 1
-
Correlation Analysis
Table 2
- Regression
Analysis
Table 3
- Mediation
Analysis
LIST OF FIGURES
Figure 1
-
Theoretical Framework
LIST OF APPENDICES
Appendix A -
Questionnaire
1. INTRODUCTION
1
Introduction
In today's era of competitive environment, service quality is the major focus of the
service providers. Past researchers have showed that evaluations of service quality have close
positive relation with customer loyalty and behavioral intentions (Zeithaml, Berry &
Parasuraman, 1996). In food industry, service managers have a great focus on generating
customer satisfaction and customer loyalty. The focus of this research study is to examine how
much is the impact of the customer satisfaction in order to generate customer loyalty and
repurchase intentions by continuously improving service quality.
The research intends to study the relationship of four concepts i.e. perceived service quality,
Customer Satisfaction, Loyalty and Repurchase Intentions. According to researchers, the index
of the success of an organization resulting in productive benefits is the advantage of satisfaction
and quality benefit (Ruyter, 1997). Yet another research admits that service loyalty which
eventually wins customers and results in repeated purchases by loyal buyers is the base of
service marketing; realistically, those consumers who make regular purchases form the basis of
any business (Caruana, 2002).
Service industries are playing a pivotal role in developing the economies of all the countries
across the world, services are contributing more than 60% in the economies of the developing
countries (Lien-Ti Bei, 2001). The study of service quality and customer satisfaction have been
the dominant variables in the service literature gathered so far (Cronin, Brandy & Hult, 2000).
Parasuraman, Zeithaml and Barry (1985) gave the well accepted five-gap service model
(intangibility, responsiveness, reliability, assurance, empathy) that became the forefront and the
guiding principal for the services related research (Lien-Ti Bei, 2001).
2
Past research has proved that service quality is an antecedent of customer satisfaction which
leads to customer loyalty (Cronin et al., 2000; Oliver, 1999; Zeithaml, 1988). The objective of
our study is to find the effect of perceived service quality and customer satisfaction on customer
loyalty and repurchase intentions. However the study conducted will give some more insight into
the existing study.
Objectives / Purpose of the project
The objective of this research is to learn the relationship between customer's perception
about the services of the organization which will have an effect on its satisfaction level and
generates loyalty and lead to repurchase intension.
This research will explain the theoretical frameworks which are developed i.e. perceived service
quality as an independent variable; loyalty and repurchase intentions as dependant variables.
Customer satisfaction mediates between independent (Perceived Service Quality) and dependent
variables (Loyalty & Repurchase Intentions). With the help of this study; the perception of
customers about service quality in restaurants will be found. The satisfaction level will have a
significant relationship with loyalty of the customers and their repurchase intentions.
Basically the study altogether is about the behavior of the customers to find whether the
customers are satisfied with the services of the organization and are they up to their standards.
3
2. LITERATURE REVIEW
4
Literature Review
Perceived service quality
Service quality was defined in past as the disparity between the expectation and
perception of service which is received or to be received by the customers (Gronroos, 2001).
Parasuraman et al., (1985) has explained that perceived service quality is the comparison of what
services are being offered by the service provider and what they actually should be.
Service was defined by Gronroos (2000) as, "A service is a process consisting of a series of more
or less intangible activities that normally, but not necessarily always, take place in interactions
between the customer and service employees and/or physical resources or goods and/or systems
of the service provider, which are provided as solutions to the customer problems". Service
Quality was however defined by Fogli (2006) as "A global judgement or attitude relating to a
particular service; the customer's overall impression of the relative inferiority or superiority of
the organization and its services. Service quality is a cognitive judgement". Service quality has
become so important that this is considered an important strategy to be implemented for success
in present competitive environment (Parasuraman et al., 1985; Reichheld and Sasser, 1990;
Zeithmal et al., 1996). In a study, Buzzell and Gale (1987) have discussed that those companies
who focus on delivering better service quality achieve greater market share and high growth.
With superior service quality delivery the profits increased because of greater market share and
growth. (Bagozzi & Philips, 1982)
Parasuraman et al., (1985) has defined perceived service quality as "a global judgment, or
attitude" relating to superiority of a service". Asubonteng, McCleary and Swan (1996), has
5
defined service Quality as "the difference between customer expectations for service
performance prior to the service encounter and their perception of the service perceived".
There are a few features of the services which were identified by Mudie and Pirrie (2006) which
are discussed below:
Intangibility: It is one of the main features of service. Service does not have a tangible
identity that means that it cannot be touched, counted, tested, verified or measured as in the case
of sale of goods. This is one of the main reasons that most of the companies and organizations
find it very hard to evaluate their services or the quality of their services.
Inseparability (simultaneous production and consumption): This is again a quality
that hugely differentiates the physical goods from services. Services are produced, sold and
consumed at the same time whereas the tangible products or goods are first produced than sold
and consumed at the end.
Variability (heterogeneity): Variability and heterogeneity is also one of the important
features of services. As services are provided by different people and all have different
temperament and way of thinking therefore the services they provide are also unique in their
respect. The quality however may vary depending upon the person who is providing these
services and it also very much depends upon how these services are provided.
Perishability: Services are also perishable in nature as they cannot be stored because
they are performances. We cannot store the services with an intention of using them at a later
stage as they are consumed at the time they are produced.
In today's competitive competition that is going on in the business world service quality is
considered as the major tool that helps the organizations gain competitive advantage over other
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organizations. This also is the major differentiator that differentiates the two service
organizations. Some past references of the different studies say that service quality fulfills the
need and expectations of the customers (Dotchin & Oakland, 1994). Parasuraman et al., (1985)
highlighted that "the judgment on service quality is a reflection of the degree and direction of
discrepancy between consumer's perception and expectations." By providing good service
quality; organizations can achieve customer satisfaction, customer loyalty, and repurchase
intentions (Hackl, Scharitzer & Zuba, 2000).
In service marketing literature, the conceptualization and measurement of perceived service
quality is the most argued and debatable topic (Zeithmal, 2000; Rust & Oliver, 2000).
Services are intangible and the consumer's asses the services subjectively which is why service
quality is referred as obscure and indefinable. (Parasuraman et al., 1985; Smith, 1999).
In literature, many varieties of quality models are available. SERVQUAL MODEL is one of the
most widely used models which are developed by Parasuraman, Zeithamal & Berry, (1988).
Reliability, responsiveness, empathy, assurance, and tangibility are the five dimensions
postulated in SERVQUAL Model. Reliability means an ability of any organization in providing
promised services accurately and correctly. Assurance looks up to the knowledge of employees
and their capability to pass on reliance and confidence. Tangibles refer to the physical entities of
any organization. Empathy means providing individual attention and responsiveness is the
willingness of employees in providing help and prompt services to their customers.
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