Factors affecting enterprise customers’ satisfaction of credit services provided by commercial banks in Thai Nguyen province

NHỮNG KẾT QUẢ MỚI CỦA LUẬN ÁN Nghiên cứu đã xác định các nhân tố ảnh hưởng đến sự hài lòng của nhóm khách hàng doanh nghiệp sử dụng dịch vụ tín dụng của các ngân hàng thương mại tại tỉnh Thái Nguyên, mức độ ảnh hưởng và xếp loại mức độ ảnh hưởng của các yếu tố đến sự hài lòng của nhóm khách hàng doanh nghiệp, các yếu tố đó là: Hình ảnh của ngân hàng, sự tiện ích, sự cảm thông, sự đảm bảo, giá cả, tình huống mua. Phương trình hồi quy: Total.satis = -3.009 + 0.230T.IMA+ 0.250T.UTI + 0.362T.EMP + 0.201T.ASS + 0.224T.PRI + 0.336T.BS (1) Kiểm định T -test cho thấy rằng có sự khác biệt giá trị trung bình giữa các nhóm bởi nhóm ngân hàng cũ và mới được các doanh nghiệp sử dụng nhiều nhất tại tỉnh Thái Nguyên. Xu hướng cho thấy rằng các doanh nghiệp sử dụng dịch vụ tín dụng của nhóm các ngân hàng cũ hài lòng nhiều hơn so với nhóm sử dụng dịch vụ tín dụng của các ngân hàng mới (μ = 3.41 vs. μ = 3.18) Kiểm định Anova và kiểm định sâu Tukey Post Hoc cũng cho thấy rằng nhóm các doanh nghiệp nhỏ có mức độ khác biệt so với nhóm các doanh nghiệp vừa trong việc đánh giá sự hài lòng (Tukey Post Hoc Tests has p–value = 0.023 < 0.050). KHẢ NĂNG ỨNG DỤNG TRONG THỰC TIỄN VÀ NHỮNG VẤN ĐỀ BỎ NGỎ CẦN TIẾP TỤC NGHIÊN CỨU * Khả năng ứng dụng trong thực tiễn: Kết quả của nghiên cứu này có thể được sử dụng làm tài liệu tham khảo, vận dụng vào việc xây dựng các chính sách phát triển, chính sách marketing, quy trình phục vụ khách hàng có chất lượng tốt hơn nhằm thu hút và duy trì khách hàng, đặc biệt là nhóm khách hàng trung thành cho các ngân hàng thương mại trên địa bàn tỉnh Thái Nguyên. * Những vấn đề bỏ ngỏ cần tiếp tục nghiên cứu: Cần có sự nghiên cứu sâu hơn, mở rộng phạm vi khảo sát đối với các dịch vụ khác của ngân hàng để có thể đánh giá chính xác hơn mức độ tác động của các yếu tố ảnh hưởng một cách toàn diện, từ đó đưa ra quy trình đánh giá sự hài lòng của nhóm khách hàng doanh nghiệp sử dụng hệ thống dịch vụ của các ngân hàng thương mại. Nghiên cứu ảnh hưởng của các biến tiền đề khác làm cơ sở hỗ trợ cho phân đoạn thị trường khách hàng doanh nghiệp cho các ngân hàng thương mại: Các biến liên quan đến trung tâm mua của doanh nghiệp, các biến đặc điểm của doanh nghiệp. HE NEW SCIENTIFIC FINDINGS The study has identified the factors influencing the enterprise customers'' satisfaction group who use the credit services of commercial banks in Thai Nguyen province, the degree of influence and level of influence factors to the satisfaction of business customers groups, these factors are: Image of banks, utilities, empathy, assurance, price, buying situation. The regression equation is formed: Total.satis = -3.009 + 0.230T.IMA+ 0.250T.UTI + 0.362T.EMP + 0.201T.ASS + 0.224T.PRI + 0.336T.BS (1) The T- test shows that there is mean difference between groups by group of bank that enterprise most used in Thainguyen province. The trend shows that the enterprises using the credit services of Bank in Old group are more satisfied than ones using the credit services of Bank in New group (μ = 3.41 vs. μ = 3.18) The One-Way Anova test and Tukey Post Hoc Tests also show that the Small enterprises group is significantly different from the medium enterprises group in accessing their satisfaction (Tukey Post Hoc Tests has p–value = 0.023 < 0.050). PRACTICAL APPLICABILITY AND RECOMMENDATIONS FOR FURTHER STUDIES * Practical applicability: The results of this study can be used as references and applied for commercial banks in Thai Nguyen province in constructing developing strategies, marketing strategies, customer service processes which have better quality to attract and retain customers, especially loyal customer groups. * Recommendations for further studies: Continue to do further study, expand the limitation of study to other services of the bank in order to assess the impact of the factors that affect on total satisfaction to the banks more accurately, thereby giving process to evaluate enterprise customers'' satisfaction to the service system of commercial banks. Study the effect of different antecedent variables to support for the business customers market segmentation of commercial banks: The variables related to the enterprises'' buying center, the variables related to characteristics of the enterprises. Nghiên cứu sinh/DM student

FACTORS AFFECTING ENTERPRISE CUSTOMERS’ SATISFACTION

OF CREDIT SERVICES PROVIDED BY COMMERCIAL BANKS

IN THAINGUYEN PROVINCE

A DISSERTATION PAPER

Presented to the Faculty of the Graduate Program

of the College of Business and Accountancy Central Philippine University, Philippines

In Collaboration with Thai Nguyen University, Vietnam

By NGO THUY HA

OCTOBER 2016

To Professor Teodoro C Robles, President of the Central Philippine University, Philippines and Professor Dang Kim Vui, President of the Thai Nguyen University, Viet Nam for their incomparable contribution and support to the development of Doctor of Business Administration programe in Thai Nguyen University;

To Dr Mario Tajanlangit, Dr Reynaldo Nene Dusaran, Dr Tran Nhuan Kien, Dr Do Dinh Long, Dr Pham Van Hanh, members of the oral examination committee, for their comments and suggestions to further improve this manuscript;

To the leadership of International Cooperation Center for Training and Study Abroad and their staff for their enthusiasm to support executive for the participants completed the study program

To Mrs Pham Thi Minh Khuyen who unselfishly shared her expertise in research, for her patience and understanding as an adviser

To the faculties and researchers of Thai Nguyen University of Economics and Business Administration and the respondents of the study, for their active involvement and cooperation which made the conduct of the study possible;

To my family and friends for their love and support in one way or another, and to all who have contributed to make this study a success

Finally, to my God, my Creator, my Savior who guide and lead me there and make everything possible

Thank you so much!

NGO THUY HA

TABLE OF CONTENTS

ACKNOWLEDGEMENT i

TABLE OF CONTENTS LIST OF TABLES ii

LIST OF FIGURES iv

LIST OF ABBREVIATIONS vi

ABSTRACT vii

CHAPTER 1: INTRODUCTION 1

1.1 PROBLEM STATEMENT 1

1.2 OBJECTIVES 3

1.2.1 Objectives of research 3

1.2.2 Specific objectives 3

1.3 THEORETICAL FRAMEWORK 3

1.4 CONCEPTUAL FRAMEWORK 8

1.5 RESEARCH HYPOTHESES 10

1.6 OPERATIONAL DEFINITION AND MEASUREMENT OF VARIABLES 11

1.7 SIGNIFICANCE OF THE STUDY 13

1.8 SCOPE AND LIMITATION 13

1.8.1 Research scope 13

1.8.2 Research limitation 14

CHAPTER 2: LITERATURE REVIEW 15

2.1 INTRODUCTION 15

2.2 RELATED LITERATURE 15

2.2.1 Definition of satisfaction 15

2.2.2 Definition of service quality and relation with satisfaction 17

2.2.3 Satisfaction measurement model 19

2.2.4 Service customers’ satisfaction measurement model 25

2.2.5 Organization’s satisfaction measurement model 27

2.3 RELATED STUDIES IN BANKING SECTOR 30

2.4 PROCESS TO APPLY THE RESULTS OF ASSESSING CUSTOMERS’ SATISFACTION IN BUSINESS 33

CHAPTER 3: RESEARCH METHODOLOGY 36

3.1 RESEARCH DESIGN 36

3.1.1 Proposed factor after literature review 37

3.1.2 Qualitative research 39

3.1.3 Pilot survey 40

3.2 POPULATION AND SAMPLE RESPONDENTS 40

3.2.1 Population 40

3.2.2 Sample respondents 41

3.3 SAMPLING TECHNIQUE 41

3.4 DATA GETHERING AND INSTRUMENTS 42

3.4.1 Data gathering 42

3.4.2 Instruments 43

3.5 DATA PROCESSING AND ANALYSIS 44

3.5.1 Data processing 44

3.5.2 Information analyzing method 44

CHAPTER 4: DATA PRESENTATION, ANALYSIS AND INTERPRETATION 49

4.1 CHARACTERISTIC OF SURVEY SAMPLE 49

4.1.1 Characteristic of respondents 49

4.1.2 Characteristic of sample enterprises 49

4.1.3 Credit services provided by commercial banks in Thai Nguyen province 53

4.1.4 Importance of effecting factors to enterprises satisfaction with credit service 59

4.2 EVALUATION THE RELIABILITY OF EFFECTIVE FACTORS TOWARD ENTERPRISE’S SATISFACTION MODEL SCALES 63

4.2.1 IMA – Image of Bank 64

4.2.2 UTI - Utility 64

4.2.3 EMP – Empathy 65

4.2.4 ASS - Assurance 66

4.2.5 PRI – Price 67

4.2.6 BS - Buying situation 67

4.3 ANALYSIS THE EXPLORE FACTOR (EFA) 68

4.4 THE EFECTIVENESS OF FACTORS TOWARD ENTERPRISE’S SATISFATION WITH CREDIT SERVICES OF THAI NGUYEN COMERCIAL BANKS 71

4.5 LEVEL OF SATISFATION WITH CREDIT SERVICES OF THAI NGUYEN COMMERCIAL BANKS 76

4.5.1 General Enterprises’ satisfaction with credit services of commercial Banks at Thainguyen Provinces 76

4.5.2 Differences in assessing the satisfaction of enterprises with bank credit services

of old and new bank group 78

4.5.3 Differences in assessing the satisfaction of small, medium and large enterprises with bank credit services 81

4.5.4 Differences in assessing the satisfaction of respondents in different position in enterprises with bank credit services 84

4.6 RECOMMENDATIONS FROM ENTERPRISES TO BANKS 85

4.7 RESEARCH FINDINGS 85

CHAPTER 5: CONCLUSION AND POLICY RECOMMENDATIONS 87

5.1 SUMMARY OF THE RESEARCH RESULTS 87

5.2 CONCLUSIONS 90

5.2.1 Conclussions 90

5.2.2 Orientation to develop credit Service of Thainguyen banking system 91

5.3 POLICY RECOMMENDATIONS 96

5.3.1 Policy Recommendations to commercial Banks at Thainguyen province 96

5.3.2 Policy Recommendations to Thai Nguyen government 103

5.3.3 Policy Recommendations to State Bank of Viet Nam and Government 104

REFERENCES 106

APPENDIX 1 114

APPENDIX 2 115

APPENDIX 3 116

APPENDIX 4 121

APPENDIX 5 1218

LIST OF TABLES

Table 2.1: Micro-Model of Customer Satisfaction 24

Table 2.2: Factors influencing satisfaction and trust in Bank 31

Table 3.1: Proposed factor after literature review 38

Table 3.2: Structure of sample enterprises by type and capital 42

Table 4.1: Location of sample enterprises 51

Table 4.2: Main business area of sample enterprises 51

Table 4.3: Lifetime of sample enterprises 52

Table 4.4: Ratio loan from bank 52

Table 4.5: Total transaction through the bank 53

Table 4.6: Number of enterprise customers of Bank 54

Table 4.7: Most often used Bank 55

Table 4.8: Second often used Banks 56

Table 4.9: Credit services which are using in Second often used Banks 57

Table 4.10: Credit services which are using in Most often used Banks 58

Table 4.11: The important of Image of bank to enterprises‘ satisfaction 59

Table 4.12: The important of Utility to enterprises‘ satisfaction 60

Table 4.13: The important of Empathy of bank to enterprises‘ satisfaction 61

Table 4.14: The important of Assurance to enterprises‘ satisfaction 62

Table 4.15: The important of Price to enterprises‘ satisfaction 62

Table 4.16: The important of Buying situation to enterprises‘ satisfaction 63

Table 4.17: Total Cronbach Alpha 63

Table 4.18: Reliability and Item-Total Statistics of Image of Bank groups 64

Table 4.19: Reliability and Item-Total Statistics of Utility group 64

Table 4.20: Reliability and Item-Total Statistics of Empathy group 65

Table 4.21: Reliability and Item-Total Statistics of Assurance group 66

Table 4.22: Reliability and Item-Total Statistics of Price group 67

Table 4.23: Reliability and Item-Total Statistics of Buying situation group 67

Table 4.24: KMO and Bartlett's Test 68

Table 4.25: Total Variance Explained 68

Table 4.26: Rotated Component Matrix 69

Table 4.27: Pearson Correlations 72

Table 4.28: Model Summaryby Enter method 72

Table 4.29: ANOVAa by Enter method 73

Table 4.30: Regression Results 73

Table 4.31: Total satisfation to credit services of the most used Bank 76

Table 4.32 : Satisfaction with credit services of Most often used Banks 77

Table 4.33: Satisfaction with credit services of Second often used Banks 77

Table 4.34: Total satisfation to most used bank divided by group of Bank 78

Table 4.35: Results of T-test by group of Bank 79

Table 4.36: Satisfaction by scale of enterprises 81

Table 4.37: Test of Homogeneity of Variances 82

Table 4.38: Results of Anova by scale of enterprise 82

Table 4.39: The results of the Tukey Post Hoc Tests 83

Table 4.40: Satisfaction by position of respondents 84

Table 4.41: Test of Homogeneity of Variances 84

Table 4.42: Results of Anova by position of respondents 85

Table 5.1: Results of research hypothesis 89

LIST OF FIGURES

Figure 1.1: Five dimensions of Perceived service Quality [Parasuraman et al., 1988] 4

Figure 1.2: The Impact of Corporate Image on Quality, Customer Satisfaction and Loyalty of Andreassen and Lindestad, 1998b 6

Figure 1.3: Model of the formation of SMEs‘ satisfaction with banks‘ services 6

Figure 1.4: The Webster and Wind Model of organization Buying Behaviour 7

Figure 1.5: Influential factors to enterprises‘ satisfation with banking services 8

Figure 2.1: Related literature of the study 15

Figure 2.2: Traditional Macro-Model of Customer Satisfaction 20

Figure 2.3 : Swedish Customer Satisfaction Barometer (SCSB) Model 22

Figure 2.4 American Customer Satisfaction Index (ACSI) Model 22

Figure 2.5 European Customer Satisfaction Index (ECSI) Model 23

Figure 2.6: SERVQUAL model 26

Figure 2.7: Dimensions of Overall customer Satisfaction 28

Figure 2.8 The Satisfaction/dissatisfaction model of B2B buyer behavior 29

Figure 2.9: Drivers of customer satisfaction 30

Figure 2.10: 5 step process to make longer – term improvements customer satisfaction 34

Figure 3.1: Research process 37

Figure 3.1: Structure of enterprises in ThaiNguyen divided by types of enterprise 41

Figure 3.2: Structure of enterprises in ThaiNguyen divided by size of capital 41

Figure 4.1: Characteristic of respondents 49

Figure 4.2: Structure of sample enterprises divided by types of enterprise 50

Figure 4.3: Structure of sample enterprises divided by size of capital 50

Figure 4.4: Plot of Means by group of banks 79

Figure 4.5 : Differences in assessing the satisfaction of enterprises with bank credit services of old and new bank group 80

Figure 4.6: Plot of Means by scale of enterprise 83

Figure 5.1: Digital innovation in banking offers potential rewards and losses 91

Figure 5.2: Drivers for financial inclusion and financial awareness 92Figure 5.3: Sample of evaluating effective factors to satisfaction basing on means and

importance of each factors 100

CMA and FCA Finacial Conduct Authority, Competition & Markets Authority

CRM Customer relationship management CSI Customer satisfaction index

CVP Customer value proposition ECSI European customer satisfaction index JSCBs Joint stock commercial banks

NCSB Norwegian Customer Satisfaction Barometer SBV State Bank of Vietnam

SCSB Swedish Customer Satisfaction Barometer SMEs Small and medium sized enterprises

SOCBs State-owned commercial banks

Vietcombank The Bank for Foreign Trade of Vietnam

Vietinbank Vietnam Industrial and Commercial Bank

FACTORS AFFECTING ENTERPRISE CUSTOMERS’ SATISFACTION

OF CREDIT SERVICES PROVIDED BY COMMERCIAL BANKS

IN THAI NGUYEN PROVINCE

NGO THUY HA

THAI NGUYEN UNIVERSITY OF ECONOMICS AND BUSINESS ADMINISTRATION

Supervised by PhD Do Dinh Long

ABSTRACT

The general objective of the research is to analyse factors affecting enterprise customers‘ satisfaction with the credit services that the bank had provided when they use credits services of commercial banks in Thai Nguyen province To accomplish the research objectives of the thesis, the researcher carried out some specific objectives

Firstly, by systematizing the theories on factors that affect satisfaction of enterprise customers who used bank credit services, author construct research framework to assess satisfaction, and the factors that affect enterprises‘ satisfaction towards credit services offered

by the Banks

Secondly, author also carry out a research to analyze factors affecting satisfaction of enterprises group using credit services from commercial banks in Thai Nguyen provinces; measure the satisfaction level of enterprises customers group who used credit services from old and new commercial banks in Thai Nguyen province and compare the differences in assessing the satisfaction between small, medium and large sized enterprises toward credit services of banks

After analyzing data from the research, author find out some characteristics of enterprises at Thainguyen province when they use credit services of commercial banks and assess their satisfaction as following:

(1) Many of enterprises at Thainguyen province are SMEs and are hard to loan capital from bank The ratio of enterprises which have bank loan in total business capital below 20% are up to 61.2% and it‘s not good situation especially with new start-up enterprise and SMEs

(2) Many enterprises have to use credit services of more than one bank at the same time because the borrowing limit is lower than the business capital they need and if the condition

of using credit services are more suitable they really want to lend more money from banks and other credit organization

(3) Lack of collateral and complex procedure are the main barriers to enterprises to approach the bank loans

(4) The results of regression analysis process show that all 6 initially proposed factors of the research framework are significant to customer satisfaction The factors influence customer satisfaction in the order of decreasing importance as follow: Empathy, buying situation, utility, image of bank, price, and assurance

(5) The T - test shows that there is mean difference between groups of banks that enterprises most used in Thainguyen province The trend shows that the enterprises using the credit services of bank in old group are more satisfied than ones using the credit services of bank in new group (µ = 3.41 vs µ = 3.18)

(6) The One-Way Anova test and Tukey Post Hoc Tests also show that the small enterprises group is significantly different from the medium enterprises group in accessing their satisfaction (Tukey Post Hoc Tests has p–value = 0.023 < 0.050)

(7) The One-Way Anova test shows that there isn‘t mean difference between groups by position of respondents in accessing the satisfaction with credit services of banks at Thainguyen province

Finally, after analyzing on the research results and analyzing global developing trend of banking credit sector and credit service development orientation of Vietnam banking system

to 2020, author recomend some solutions to improve customer satisfaction which are the basis

to plan overall business strategy in the short and long term, marketing strategy to penetrate deeply into the market, the process of providing services, and customer relationship management

Basing on the research results, we can confirm that all 6 proposed factor: image, utility, empathy, assurance, buying situation and price have positive correlations with enterprise‘s satisfaction and buying situation and empathy have strongest correlation with enterprise‘s satisfaction Therefore, to enhance enterprises‘ satisfaction, commercial banks at Thainguyen province must improve the real point of these factors in the banks To choose best policies banks need look at the customer satisfaction data to see where there are low absolute scores and low scores relative to the competition and pay particular attention to those issues that are important to customers: Keep up the good work when customer assess mean of factor

approximate with the importance, and concentrate to improve factor that customer assess mean of factor lower than the importance Author will recommend the process to use the results of customer satisfaction research effectively in the following part of this chapter Result of testing H7 that there are differences in assessing the satisfaction of enterprises with bank credit services of old and new bank group recommend banks in each group must have different solutions to their target enterprise customers for credit services

Segment the enterprises into groups will help banks have more suitable polices with each group of enterprise, the result of testing H8 that the small enterprises group is significantly different from the medium enterprises group in assessing their satisfaction will supply a tool for banks in segmenting their customers

CHAPTER 1 INTRODUCTION

Customer is one of the critical factors to the existence and development of organizations

in general and banks in particular Therefore, to develop sustainably in long term banks need

to attract more customers In the current period, the banking industry is facing a market that is rapidly changing; new technologies are being introduced; there is fear of economic uncertainties, fierce competition, more demanding customers and the changing climate have presented an unparalleled set of challenges (Lovelock, 2008) It requires banks to find solutions to attract, retain customers and especially to make good relationship with loyal customers groups; this problem is considered to be one of the key tasks to create long-term competitive advantage for the banks To gain this achievement, banks must understand consumer behaviors, especially the factors that affect their satisfaction with the banking services they utilize

Customer satisfaction is influenced by customers‘ perceptions of quality (Zeithaml and Bitner, 2000) Service quality is an antecedent of the broader concept of customer satisfaction (Gotlieb et al., 1994; Buttle, 1996; Zeithaml and Bitner, 1996; Lee et al., 2000) The European and American customer satisfaction indices models, however, suggest that service quality is a component of satisfaction (Fornell et al., 1996) Firms that provide superior service quality also have a more satisfied customer base (Gilbert et al., 2004; Gilbert and Veloutsou, 2006)

A lot of researches in the world as well as in Vietnam suggest that providing an impeccable customer service has become the factors that make the difference, which is regarded as an important weapon in meeting customer demand, creating satisfaction and loyalty of customers with suppliers (Oliver, 1993; Anderson and Sullivan, 1993; Fornell et al, 1996; Zeithaml et al., 2006; Wilson et al., 2008); this is the basis of the competitive advantage that all organizations or businesses want to have ownership

In banking business, Titko and Lace (2010) accentuate that the competitive power and survival of a bank lies in the degree of its customer satisfaction Banks therefore pay particular attention to customer satisfaction (Kattack and Rehman, 2010) According to Stafford (1996), due to the fact that banks sell undifferentiated products, the only effective tool they can use to survive in the market is the quality of service Bowen and Hedges (1993) claim that banks that offer very high quality services have a competitive advantage because the benefits of improving service quality are large market shares increased in profits and increased in customer retention In addition, Zeithmal et al (1996) submits that the reputation of the banks

is enhanced, new customers are captured and there is an increase in financial performance Yeung et al (2002) on the other hand intimate that customers bring new customers to the bank through word-of-mouth and thereby reducing the cost of marketing

Banks normally divide their customers into individual and corporate (enterprises) ones Satisfaction with the policy of commercial banks regarding small and medium enterprises (SMEs) is one of the most important factors affecting the success of commercial banking activities (Adamonienė and Trifonova, 2007; Madill et al., 2002; Viktorija Skvarciany, 2014) These studies identify and investigate the factors influencing satisfaction of small and medium-sized enterprises with the policy of commercial banks concerning SMEs, i.e., granting of loans corresponding business needs, offering appropriate financial services to business, creating favorable loan conditions, flexible response to changing business needs, business support by a bank during successful company activities period, business support by a bank in the critical moments of company activities, making timely financing decisions

In Vietnam, there are not many studies about customer satisfaction, especially about bank customers These are made with customers of some specific banks So the application of these studies‘ results have been limited (Le Xuan Huy, 2007; Hoang Xuan Bich Loan, 2008;

Ha Khanh Nam Giao, 2011)

In 2010, ThaiNguyen city was recognized as a first class city of Vietnam, whereby, the economic and social development in general and the services industry, especially banking services in particular in Thai Nguyen had made a very important progress Up to the time of August 2015, there have been 18 commercial banks (see APPENDIX 1) setting up branches in Thai Nguyen; the system of commercial banks has important contributions in promoting the socio-economic development of Thai Nguyen province Among them, some of the banks have organized business activities in long time such as: Bank of Agriculture and Rural Development (Agribank), Vietnam Industrial and Commercial Bank (Vietinbank), Bank for Investment and Development (BIDV), The Bank for Foreign Trade of Vietnam (Vietcombank); some other banks have less uptime in Thai Nguyen; these banks are new enters markets of the Thai Nguyen province, and they face difficulties in reaching and attracting customers as well as competing with the leading banks groups

In Thai Nguyen province, organizational customers are often small and medium enterprises which have big loan demands to serve production and business activities Currently, the number of enterprises which are registered business in Thai Nguyen province is about 2,000 These customers group has big number of transactions and the capital transactions accounted for most of the total capital transactions of the bank

Wishing to help the commercial banks system in Thai Nguyen province understand the factors affecting satisfaction of the enterprises customers when using the credits services of the bank, thereby building development policies, marketing policies, customer service processes which have better quality to attract and retain customers, especially loyal customer

groups, the author chose the topic “Factors affecting enterprise customers’ satisfaction of credit services provided by commercial banks in Thai Nguyen province” as research title

1.2 OBJECTIVES

1.2.1 Objectives of research

The general objective of the research is to evaluate, measure the level of satisfaction of the enterprises customers group using credits services of commercial banks in Thai Nguyen province, analyze factors affecting customer satisfaction for the service that the bank had provided, and then propose solutions to further improve the customer satisfaction This will help commercial banks to plan for the business strategies, especially marketing strategies to penetrate deeply into the provincial market, and to create conditions that help promote the social and economic development of Thai Nguyen province

4 Comparing the factors affecting satisfaction of small, medium and large enterprises with bank credit services to show which strategies are suitable with each enterprise groups

5 Proposing solutions to improve customer satisfaction which are the basis to plan overall business strategy in the short and long term, marketing strategy to penetrate deeply into the market, the process of providing services, and customer relationship management

The theoretical framework of this study is proposed by modifying from the theory of

Parasuraman et al (1988) with SERVQUAL model to assess influent factor on satisfaction

and the theory of Webster and Wind with Organization Buying behavior to discover the

differences of assessing satisfaction of enterprise

SERVQUAL model (Parasuraman et al., 1985, 1988) is the most notable contribution to

the measure of service quality in the 1980s

Figure 1.1: Five dimensions of Perceived service Quality [Parasuraman et al., 1988]

According to this theory, assessment of perceived service quality is conceptualized as a discrepancy or gap between what the customer expects by way of service quality from a class

of service providers and their evaluation of the performance of a particular service provider This evaluation is not simple because service quality is a multidimensional construct having 5 components: reliability, assurance, tangibles, empathy and responsiveness (RATER) defined as follows:

Reliability: Ability to perform the promised service dependably and accurately;

Assurance: the knowledge and courtesy of employees and their ability to convey trust

and confidence;

Tangibles: the appearance of the physical facilities, equipment, personnel and

communication materials;

Empathy: provision of caring, individualized attention to customers;

Responsiveness: willingness to help customers and to provide prompt service;

When Oliver (1980) introduced his definition of customer satisfaction as the result of experimenting the service‘s quality and comparing it to the customer‘s previous expectations,

he opened the door for the researchers who had the vision to create a model and a related

instrument through which satisfaction could be measured Then, throughout the years the SERVQUAL model has also known a wide application in the field of determining customer satisfaction, especially since the models construct utilizes the ―perceptions‖ minus

―expectations‖ approach (Souca Maria Luiza, 2011)

This dissertation adopted theory to find out the effective factors to enterprise customers

to bank‘s credit service However, in this dissertation, Utility is added by replacing group of

Tangible (the appearance of the physical facilities, equipment, personnel and communication materials) and Responsiveness (the willingness to help customers and to provide prompt service) in SERVQUAL model Utility is the ability of a good or service to satisfy one or more needs or wants of a consumer It relates to the tangible utility and the responsiveness of enterprises' staff The higher a consumer‘s total utility, the greater that consumer‘s level of

satisfaction (Libby Rittenberg, 2009) And Assurance is used as the knowledge and courtesy

of employees and their ability to convey trust and confidence (assuarance in SERVQUAL model) and willingness to help customers and to provide prompt service (responsiveness in SERVQUAL model)

In addition, as experiences from researches on assessing customer satisfaction with

services, especieally enterprise customers in banking sector (Madill et al., 2002; Mačerinskienė et al., 2008; Souca Maria Luiza, 2011; Mačerinskienė et al., 2012…); the

following elements have been selected to insert for this research:

- Image of bank;

- Total price of service;

- Buying situation

Image of Bank: The relationship between image of coperation and customer satisfation

was first introduced in the Norwegian Customer Satisfaction Barometer (NCSB) model (Andreassen and Lindestad, 1998 a; b) and used in other later customer satisfaction index The first NCSB model was identical to the original American model with the exception that it included corporate image and its relationships to customer satisfaction and customer loyalty Andreassen and Lindestad, 1998b study apllied this theory and shown that image have a positive effect on both customer satisfaction and loyalty (Figure 1.2)

Many new researches (also including experimental studies in banking sector) indicate that it is an important component of the customer satisfaction model (e.g., Kristensen et al.,

1999, Martensen et al., 2000; Adamonienė and Trifonova, 2007;… )

Figure 1.2: The Impact of Corporate Image on Quality, Customer Satisfaction and Loyalty

of Andreassen and Lindestad, 1998b

Total price of service: Many researches in banking sector showed that total service price

was a very effective factor to organizational customers (Madill et al, 2002; Adamonienė and Trifonova, 2007; CMA and FCA, 2014; Viktorija Skvarciany, 2014) According to the analysis results of Viktorija Skvarciany (2014) the model of an overall small and medium sized enterprises‘ satisfaction with banks‘ business-oriented services was created (see Figure 1.2) In addition, Herrmann et al (2007) showed that price perceptions directly influence satisfaction judgments: ―The research demonstrated the influence of perceived price fairness

on satisfaction judgments empirically.‖

Figure 1.3: Model of the formation of SMEs’ satisfaction with banks’ services

Source: Viktorija Skvarciany (2014)

Overall customers‘

satisfaction

Price satisfaction

Satisfaction with service quality

Accessibility satisfaction

Value

Customer Loyalty

Perceived

Quality

Customer Satisfaction

Image +

+

Buying situation: is adopted from small and medium enterprises‘ satisfaction

measurement model of Morley Roy (2004) Nigel Hill, Jim Alexander (2006) and Holzing (2008) also showed that customers used different standard in different buying task and surrounding situation Buying situation in this model was described as urgence of buying task with organization and surrounding buying situation as enthusiasm, efficiency advisory staff and incentive buying policies

There are many underlying differences between consumer buying (B2C) and organizational buying (B2B) behavior, organizational buying is a complex process and involves many people from different functional areas, multiple goals and potentially conflicting decision criteria (Webster and Wind, 1972, Anderson et al., 1987)

Figure 1.4: The Webster and Wind Model of organization Buying Behaviour

Source: Webster and Wind, 1972

According to this theory of Webter and Wind, personal factors such as their position in organization especially in buying centre would affect on organization decision including

Goal and Tasks (Buying task)

Actors (People) (Buying centre members)

Buying centre Variables

Interpersonal interaction

Group functioning: Buying task and non – task dimensions

Invidual Variables

Need and disires

Perception and learning …

Buying Decision Process

Invidual decision making process

Group decision making process …

Buying decision

satisfaction or not with products/services they used; organizational factors such as the type and size of enterprise also would affect on organization decision including satisfaction

So in this study, author wants to adopt some personal factors and organizational factors

as antecedent variables to test if it makes enterprise assess different level of satisfaction with the bank‘s credit services

Applying all above theoretical framework, this dissertation will use the following model

to measure the satisfaction of enterprises towards credit services provided by commercial banks in Thai Nguyen province:

in some special influences of enterprise characteristics and invidual characteristics (of members in buying centre of enterprise)

Firstly, some hypotheses about the relationships between influenced factors are tested

empirically

Image of bank refers to the brand name and the kind of associations customers get from

the product/brand/company According to Vegholm (2011) and Amin‗s et al (2013), satisfaction has a significant connection to the bank‗s image In this context corporate image becomes an issue of attitudes and beliefs with regard to customer satisfaction and consumer

behavior (Fornell 1992) Corporate image is consequently assumed to have an impact on customers´ choice of company when service attributes are difficult to evaluate Corporate image is established and developed in the consumers´ mind through communication and experience Corporate image is believed to create effect on customers´ satisfaction judgment When customers are satisfied with the services rendered, their attitude towards the company is improved This attitude will then affect the consumers´ satisfaction with the company In this study, it is expected that image would have a positive effect on enterprises‘ satisfaction with bank‘s credit services

Utility relates to the tangible utility and the responsiveness of enterprises' staff The

higher a consumer‘s total utility, the greater that consumer‘s level of satisfaction (Libby Rittenberg, 2009) In this study, it is also expected that utility would have a positive effect on enterprises‘ satisfaction with bank‘s credit services

Empathy is defined as the provision of caring, individualized attention to customers

(Parasuraman et al, 1988) Empathy is about the personal attention extra care and better understanding toward customers Researches showed that the satisfaction with the service depend much on the emotion of both customers and suppliers, so empathy from both side will increase the level of customer satisfaction In this study, it is expected that empathy would have a positive effect on enterprises‘ satisfaction with bank‘s credit services

Assurance according to Vietnameses is known as the abilities of bank to trust their

customers about the bank and their services, so in this study author combine assurance and reliability in SERVQUAL model to measure it, and it is expected that assuarance would have

a positive effect on enterprises‘ satisfaction with bank‘s credit services as many other

researches

Buying situation: Organization markets have high and low involvement purchase In

fact, organizational buying situation should be classified into three basic types: New task; modified rebuy and straight rebuy A new task purchasing situation will need more effort from all buyers and sellers, and without experience, the buying promote and perceive quality will decide the satisfaction Pre - buying situation in banking sector especially organizational service are often modified buying because of competing and quickly changing environment, the way bank solve problem and remain their customers will decide the level of customers‘ satisfaction In this study, it is expected that assuarance would have a positive effect on enterprises‘ satisfaction with bank‘s credit services

Price: is an important antecedent of customers' satisfaction as consumers depend on

price because it is extrinsic signal of quality Total price of banking service includes the price

of services and the interest rate of credit services, is very effective factor to organizational customers (Madill et al, 2002) To measure price satisfaction of customer, bank also need take care about the perception if price fair with the service quality A lot of surveys investigating price satisfaction and overall customer satisfaction relationship were conducted

Some authors use negatively evaluated method of price such as Zeithaml (1988) defined price as ―what is given up or sacrificed to obtain a product‖ and Andaleeb and Conway (2006) measured ―Price‖ following negative arrow of levels of evaluations; price is considered a barrier of using service, so price has negative impact on overall customer satisfaction

Other researchers have found that satisfaction with service‗s price has a positive impact

on overall customer satisfaction and loyalty (Matzler et al., 2005; Parahoo, 2010) when they measured price as price fair with the service quality so price has negative impact on overall customer satisfaction In this study, it is expected that assuarance would have a positive effect

on enterprises‘ satisfaction with bank‘s credit services

Seconly, author will test some hypothesis about influences some antecedent variables:

personal factors such as their position in organization especially in buying centre would affect

on organization decision including satisfaction or not with products/services they used; organizational factors such as the size of enterprise also would affect on organization decision including satisfaction So in this study, author wants to adopt some personal factors and organizational factors as antecedent variables to test if it makes enterprise assess different level of satisfaction with the bank‘s credit services

6 There is a positive relationship between Price and enterprises‘ satisfaction with bank credit services of commercial banks

7 There are differences in assessing the satisfaction of enterprises with bank credit services of old and new bank group

8 There are differences in assessing the satisfaction of small, medium and large enterprises with bank credit services

9 There are differences in assessing the satisfaction of staff in different position in enterprises with bank credit services

Customer Satisfaction: Customer satisfaction is defined as an overall evaluation of a

firm‘s post-purchase performance or utilization of a service (Fornell, 1992) Satisfaction of enterprise with credit services of two most used banks will be measured by Likert scale (5 points) The mean score of satisfaction with credit services of two most used banks will be used as measure for total satisfaction

Image of bank refers to the brand name and the kind of associations customers get from

the product/brand/company Image has two principal components: functional and emotional (Kennedy, 1977) The functional component is related to tangible dimensions that can be easily identified and measured, while the emotional component is associated with the psychological aspects that are manifested by individual experiences and attitudes toward the company In this study, image of bank is measured by 4 items (See Table 3.1) with 5 point

Likert scale and the mean score of these items will be used to measure Image of bank

Utility was added by grouping Tangible (the appearance of the physical facilities,

equipment, personnel and communication materials) and Responsiveness (the willingness to help customers and to provide prompt service) in SERVQUAL model Utility is the ability of

a good or service to satisfy one or more needs or wants of a consumer It relates to the tangible utility and the responsiveness of enterprises' staff The higher a consumer‘s total utility, the greater that consumer‘s level of satisfaction (Libby Rittenberg, 2009) In this study, utility is measured by 8 items (See Table 3.1) with 5 point Likert scale and the mean score of

these items will be used to measure utility

Empathy in SERVQUAL model and is defined as the provision of caring, individualized

attention to customers (Parasuraman et al, 1988) It is used as a combination of the following elements: Access (physical and social) - approachability and ease of contact; Communication

- keeping customers informed in a language they understand and really listening to them;

Understanding the customer - making the effort to get to know customers and their specific needs Because the respondents in this study are enterprises, so the author also adds the factor: solving risk and development support policies (adopted from Mačerinskienė Irena and Skvarciany Viktorija 2012) In this study, empathy is measured by 6 items (See Table 3.1)

with 5 point Likert scale and the mean score of these items will be used to measure empathy

Assurance: Assurance is one of five dimensions of the SERVQUAL approach and is

defined as the knowledge and courtesy of employees and their ability to convey trust and confidence (Parasuraman et al., 1988) It is also used as a combination of the following elements: Competence - having the requisite skills and knowledge; Courtesy - politeness, respect, consideration and friendliness of contact staff; Credibility - trustworthiness, believability and honesty of staff; Security - freedom from danger, risk or doubt The Author adds reliability factor, the ability to perform the service accurately In this study, assurance is measured by 5 items (See Table 3.1) with 5 point Likert scale and the mean score of these

items will be used to measure assurance

Buying situation: Organization markets have high and low involvement purchase In

fact, organizational situation should be classified into three basic types: New task; modified rebuy and straight rebuy Morley Roy (2004), Nigel Hill, Jim Alexander (2006) also showed that in different situation, organizational customers have the different assessing satisfaction process A new task purchasing situation will need more effort from all buyers and sellers, and without experience, the buying promote and perceive quality will decide the satisfaction Pre - buying situation in banking sector especially organizational service are often modified buying because of competing and quickly changing environment, the way bank solve problem and remain their customers will decide the level of customers‘ satisfaction In this study, buying situation is measured by 4 items (See Table 3.1) with 5 point Likert scale and the

mean score of these items will be used to measure buying situation

Price: is defined as ―what is given up or sacrificed to obtain a product‖ Price is an

important antecedent of customers' satisfaction as consumers depend on price because it is extrinsic signal of quality Total price of banking service includes the price of service, the interest rate of credit services is very effective factor to organizational customers (Madill et al, 2002; Adamonienė and Trifonova, 2007) To measure price satisfaction of customer, bank also need take care about the perception if price fair with the service quality In this study, price is measured by 3 items (See Table 3.1) with 5 point Likert scale and the mean score of

these items will be used to measure price

1.7 SIGNIFICANCE OF THE STUDY

Theoretical significance with other researchers

Firstly, the author collects and synthetizes the related theories and models to propose a model for assessing organizational customers‘ satisfaction not only in banking sector but also

in general B2B services sector

Secondly, the study proposes a framework for assessing the satisfaction of organizational customers who are using bank credit services in Thai Nguyen province

Practical significance with the Commercial Banks

The study assesses factors affecting the satisfaction of enteprise customers who used credit services of commercial banks in Thai Nguyen provinces and the importance of them Secondly, the study recommends regular process to evaluate customer satisfaction using bank credit services in operations strategies, marketing strategies, customer service processes and customer relationship management

The study proposes strategic solutions applied to the entire commercial banking system

in Thai Nguyen province, contribute to improve customer satisfaction efficiency and contribute to develop the local economy and society

Practical significance with enterprise in Thai Nguyen

The study proposes suitable strategic solutions applied to commercial banking system in Thai Nguyen province with the demands of credit services of enterprises in Thai Nguyen provinces With these solutions, enterprises would have better credit services which give them

a good capital resources for developing business

1.8.1 Research scope

- Research content: The study concentrates on identifies factors affecting satisfaction

toward credit services of commercial banks of only enterprise customers because they are the most importance customers of commercial banks in Thai Nguyen in this period

- Research space: The study explores the factors that affect to satisfaction of

enterprises‘ group toward credit services of commercial banks in Thai Nguyen province

- Research time: The study identifies factors affecting enterprises‘ satisfaction toward

credit services of commercial banks in Thai Nguyen province in the period from April 15 to May 30, 2016 And because of the lag time of the financial statements of Vietnam enterprises,

in the questionnaire, enterprises will require to provide the numbers up to date December 31,

2015

And the study assesses the credit operational efficiency of commercial banks in the period from 2010- 2014 period

CHAPTER 2 LITERATURE REVIEW

The concept of customer satisfaction has attracted much attention in recent years From the first time be mentioned in Cardozo‘s research about consumer effort, expectation and satisfaction in 1965, there are many books and research, articles about this topic

Organizations that try to analyze this concept should begin with an understanding of various customer satisfaction models Therefore, this chapter looks at the literature review, specifically the literature on concepts of customer satisfaction, quality and its relation with customer satisfaction, satisfaction measurement models and the empirical studies in the banking sector

Figure 2.1: Related literature of the study

2.2.1 Definition of satisfaction

Cardozo is the first person who related to satisfaction in his research about consumer effort, expectation and satisfaction in 1965 After that, many researches had been started studying more deeply and widely Despite the researchers tried to measure and analyze about

Definition of quality and

relation with satisfaction

Factor effect to Satisfaction

Service customers‘

Satisfaction measurement

models

the customer satisfaction but until now, they can‘t reach the common ideal and framework for this content

The disagreement on satisfaction definitions expressed at whether satisfaction were a process or reaction of a process Many researchers gave the definition of satisfaction emphasizing the evaluation process (e.g research of Fornell, 1992; Hunt, 1977; Oliver, 1981) The satisfaction of customers is formed, increased or decreased depending on the services using process with the various factors that impact customers These authors claim that satisfaction are less stable and when they are measured, they will be influenced by the differences of the factors involved in the product or service consumption process

Meanwhile, some other definitions emphasize satisfaction as a result of an evaluation process of customers (such as in the study of Halstead, Hartman, and Schmidt, 1994; Howard and Sheth, 1969; Oliver, 1985 to 1997; Tse and Wilton, 1988; Westbrook and Reilly, 1983) This means, after all using process, customers make general observations about the satisfaction level of themselves

When approaching customer satisfaction as a feeling, the result of evaluation process of customers, it is important to note that it is mostly influenced by the customer‘s experience with the firm and product In this perspective, customer satisfaction is conceived as ―the emotional state that occurs as a result of a customer‘s interactions with the firm over time‖

(Anderson et al., 1994, Verhoef, 2003) In fact, customers are usually comparing the product

received from the firm to their own expectations over time If the product fulfils and performs the customer‘s expectations, customer seems satisfied Clearly, it seems that customer satisfaction is composed by ―two components: client expectations and the perceived quality Parassuraman et al (1985, 1988) approached customer satisfaction in the same way by demonstrating that customer satisfaction is a function of ―the difference scores or gaps between expectations and perceptions (P – E)‖ According to them, customer satisfaction is only achieved ―if actual perceived quality surpasses the consumer‘s expectations‖

Most subsequent research on the world and Vietnam used this ideal to define the satisfaction of the customer as reaction after the evaluation process In particular, studies often use connotation of customer satisfaction as a strategic concept of a response after the completion of the consumption, overall assessment, physical response and behavior after consumption In this study, author also use this ideal to determine the satisfaction

A further discrepancy expressed in terms of audience who is decisive satisfaction Many researchers have used the term implies satisfaction with satisfaction is determined by the final consumer - direct customer who use products for personal purposes (research Cronin and

Taylor, 1992; Oliver, 1993; Tse and Wilton, 1988), others said that satisfaction was rated by customers in general (Forrnell 1992; Halstead, Hartman and Schmidt, 1994; Smith, Bolton and Wagner, 1999) These terms are used interchangeably and often depend on the judgment

of the study's authors The respondents this research are enterprises, so author concentrates on assessing the satisfaction of them and factors that effect to them on assessing the satisfaction with credit services of commercial banks

2.2.2 Definition of service quality and relation with satisfaction

2.2.2.1 Service quality

For decades, many researchers have developed a service perspective The concept of service quality should be generally approached from the customers‘ point of view because they may have different values, different ground of assessment, and different circumstances (Philip Crosby, 1996, Joseph M Juran, 2001) Parasuraman, Zeithaml and Berry (1990) mention that service quality is an extrinsically perceived attribution based on the customers‘ experiences about the service that the customer perceived through the service encounter Another research study on service quality is presented by Grönroos (2007) who focuses

on a model that is a comparison between customer expectations of the service and their experience of the service they have received before This model is named ―total perceived service quality‖ As he emphasizes on what customer is really looking for and what they evaluate, the service quality is based on two dimensions

The first dimension is the technical quality and this dimension refers to the outcome, what is delivered or what the customer gets from the service The other dimension is the functional quality which refers to the manner in which the service is delivered or how it is delivered Both dimensions affect the corporate image and the perception of quality in various ways According to total perceived service quality model, perceived quality of a service is not only affected by the experiences of the quality dimensions that the consumer used for evaluating whether quality is perceived as good, neutral, or bad It is also affected by the perceived quality

of given service as well as the outcome of the evaluation process

In the study described by Grönroos (1983) 10 determinants of service quality were identified:

Reliability: that is connected to the consistency of performance and dependability Here

it is determined if the company give the service in the right way the first time and keeps to its promises

Responsiveness: This factor concerns to what extent the employees are prepared to

provide service This involves factors such as mailing a transaction slip immediately, calling a customer back in short time and giving prompt service

Competence: Competence is connected the knowledge and skills of contact personnel,

operational support personnel (also research capability) that are needed for delivering service

Access: This factor is connected to the approachability which means for example if the

operating hours are convenient, the location of the facilities are convenient, the waiting times are short and also easy access by telephone

Courtesy: This factor involves politeness, respect, consideration, friendliness of contact

personnel (including receptionists, telephone operators and so on)

Communication: This is about keeping the customer informed in a language they can

understand and also listen to the customer The company may have to make some adjustments

in order to include foreign customers

Credibility: Factors such as trustworthiness, believability and honesty are included It

means to the level the company has the customer‘s best interest at heart Factors that affect the credibility are the company name, reputation, personal characteristics and the degree to which the hard sell is connected to interactions with customers

Security: Security means freedom from danger, risk or doubt Factors included are:

physical safety, financial security and confidentiality

Understanding the customer: This is about making an effort to understand the customer

which involves learning about specific requirements, providing individualized attention and recognizing also the regular customer Tangibles, they include physical aspects of the service such as physical facilities, appearance of personnel, tools or equipment that is used to provide the service, physical representations or other customers in the service facility

Grönroos (1983) describes that the analyses of the study resulted in four conclusions The first is that service quality is determined by the customer‘s perceptions which result from comparing expectations that the customer have before receiving the service and the actual experience that the customer get from the service delivery If the expectations are met the service quality is described as satisfactory They can also be exceeded and then they are considered as more than satisfactory The second is that the evaluation depends on the service process and also the service outcome As the third conclusion, it is described that it exists two types of service quality: quality at the level where the regular service is delivered and the quality level where expectations or problems are handled

2.2.2.2 Relation between Service quality and customer satisfaction

Quality of service is the most influential factors to customer satisfaction (Cronin and Taylor, 1992; Ahmad and Kamal, 2002) If the service provider gives customers the quality products satisfying their demand, they can make their customers satisfied Regarding the relationship between customer satisfaction and service quality, Oliver (1993) first suggested that service quality would be antecedent to customer satisfaction regardless of whether these constructs were cumulative or transaction-specific

Some researchers have found empirical supports for the view of the point mentioned above (Anderson & Sullivan, 1993; Fornell et al, 1996); where customer satisfaction came as

a result of service quality In relating customer satisfaction and service quality, researchers have been more precise about the meaning and measurements of satisfaction and service quality Satisfaction and service quality have certain things in common, but satisfaction generally is a broader concept, whereas service quality focuses specifically on dimensions of service (Wilson et al., 2008, p 78) Although it is stated that other factors such as price and product quality can affect customer satisfaction, perceived service quality is a component of customer satisfaction (Zeithaml et al., 2006, p 106-107) This theory complies with the idea

of Wilson et al (2008) and has been confirmed by the definition of customer satisfaction presented by other researchers That is also the reason why many authors of experimental studies used the model that modified from quality measurement models to measure the customer satisfaction We will look more detail about the relationship between perceived service quality and customer in many other models in the following parts

2.2.3 Satisfaction measurement model

Willard's study (2000) summarized the research model on customer satisfaction and divided into two groups models: macro models and micro models

In particular, macro models are understood that the models used to assess customer satisfaction in the impacts, link to a network of related factors such as value, quality, complaining behavior and loyal The macro models are particularly important and commonly used now to study customer satisfaction to build business strategies and marketing policies The micro models consider the components of customer satisfaction as indeterminacy of expectations, attributes and influence The micro models help researchers operate on the scale

to measure satisfaction correctly Therefore, they help build a stable structure of satisfaction

in the study

Macro-Model of Customer Satisfaction

Traditional Macro-Model of Customer Satisfaction of Woodruff & Gardial, 1996: This

model underlies much of the research in customer satisfaction over the past decade Note the following:

1 Perceived performance often differs from objective or technical performance, especially when a product/service is complex, intangible, and when the consumer is unfamiliar with the product/service

2 Comparison standards can come from numerous sources that can vary widely by individual, by situation, and by product/service type

3 Perceived disconfirmation is the evaluation of perceived performance according to one or more comparison standards Disconfirmation can have a positive effect (generally implying a satisfying result), a negative effect (generally implying a dissatisfying result),

or a zero effect

4 Satisfaction feeling is a state of mind, an attitude The phrase ―mixed feelings‖ applies here, as a consumer may have different levels of satisfaction for different parts of a product/service experience

5 Outcomes of satisfaction feelings may involve intent to repurchase, word-of-mouth (the consumer‘s communication with her/his network of her/his approval/disapproval for a product/service), and complaints These outcomes also are moderated by other variables For example, extreme dissatisfaction will not necessarily generate complaint behavior,

especially if the consumer believes complaining will be futile

‘Includes intent to purchase, word-of-mouth, loyalty, and complaints

Figure 2.2: Traditional Macro-Model of Customer Satisfaction

At the national level, the customer satisfaction index (CSI) is a nationwide gauge of how adequately companies and industries in general satisfy their customers In addition, CSI‘s can be used at the lower industry or even company level facilitating comparison of companies within an industry These indicators complement traditional measures of economic performance (e.g., return on investment, profits and market shares) providing useful

diagnostics about organizations, and their customers evaluations of the quality of products and services

The structure of the CSI is continually undergoing review and subject to modifications Although the core of the model is in most respects standard, the ACSI (American), the ECSI (European), the NCSB are most famous and common model For example, the image factor is not employed in the ACSI model although plans are underway to include this factor into this model (Johnson et al., 2001) The CSI model consists of a number of latent factors, each of which is operationalized by multiple indicators Customer satisfaction can be defined as an overall evaluation of a firm‘s post-purchase performance or utilization of a service (Fornell, 1992) It is at the core of the CSI framework and is encased within a system of cause and effect running from the antecedents of overall customer satisfaction - expectations, image, perceived quality and value – to the consequences of overall customer satisfaction – customer loyalty and customer complaints The obvious strength of this approach is that it moves beyond the immediate consumption experience and facilitates the study of the causes and consequences of consumer satisfaction In fact, the primary objective of this structural approach is to explain customer loyalty

Since 1970s, researchers of consumer behavior and marketing in developed countries have conducted comprehensive studies on customer satisfaction (Spreng, MacKenzie, and Olshavsky, 1996) In 1989, Fornell and his colleagues at Michigan StateUniversity helped Sweden build the first national-level measurement system for customer satisfaction – the Swedish Customer Satisfaction Barometer (SCSB) (Fornell, 1992)

Later in 1994, the American Customer Satisfaction Index (ASCI) was launched (Fornell, et al., 1996) In the mid-1990s, Customer Satisfaction Indices were gradually recognized by governments and companies worldwide as a good instrument to measure a nation‘s or company‘s output quality (Yang, Tian, and Zhang, 2000)

Swedish customer satisfaction barometer (SCSB) model

Created in 1989, the Swedish Customer Satisfaction Barometer (SCSB) was the first national customer satisfaction index for domestically purchased and consumed products and services (Fornell, 1992) The original SCSB model shown in Figure 1 contains two primary antecedents of satisfaction: perceptions of a customer‘s performance experience with a product or service, and customer expectations regarding that performance Perceived performance is equated with perceived value Accordingly, the consequences of increased satisfaction are decreased customer complaints and increased customer loyalty An increase in

satisfaction should decrease the incidence of complaints (Johnson, Gustafsson, Andreassen, Lervik, and Cha, 2001) Increased satisfaction should also increase customer loyalty (Bloemer and Kasper, 1995) Loyalty refers to a customer‘s psychological predisposition to repurchase from a particular product or service provider (Johnson, Gustafsson, Andreassen, Lervik, and Cha, 2001)

Figure 2.3 : Swedish Customer Satisfaction Barometer (SCSB) Model

The American Customer Satisfaction Index (ACSI) Model was developed in 1994 and builds upon the original SCSB model The ACSI model represents a customer-based measurement system (see Figure 2.3) for evaluating and enhancing the performance of firms, industry, economic sectors, and national economies (Johnson, Gustafsson, Andreassen, Lervik, and Cha, (2001, p 222) The ACSI measures the quality of the goods and services as experiences by the customers that consume them

Figure 2.4 American Customer Satisfaction Index (ACSI) Model

Customer

Customer Loyalty

Perceived

Quality

Perceived Value

Customer Satisfaction (ASCI)

Perceived

Performance

(Value)

Customer Complaints

Customer Loyalty

Customer

Expectations

Customer Satisfaction (SCSB)

The ACSI model predicts that as both perceived value and perceived quality increase, customer satisfaction should increase (Fornell, et al., 1996) Expected customization and expected reliability were two latent variables used to measure customer satisfaction expectations through three measures, including overall expectations, expected customization, and expected reliability (O‘Loughlin and Coenders, 2002) The main differences between the SCSB model and the ACSI model are the addition of a perceived quality component, as distinct from perceived value, and the addition of measures for customer expectations (Fornell, et al., 1996)

European customer satisfaction index (ECSI) model

The European Customer Satisfaction Index (ECSI) model (See Figure 2.4) differs from the ACSI model (Eklof, 2000) in several ways The ECSI model is an indicator thatmeasures customer satisfaction It is an adaptation of the SCSB model (Fornell, 1992) and is compatible with the ACSI model (Fornell, et al., 1996) The ECSI model is based on well-established approaches in customer behavior and can be used by different industries Bayol, Foye, Tellier, and Tenenhaus (2000, p 361, 362) illustrated that the ECSI model contains seven interrelated variables: (a) a core model, i.e., the traditional latent variables: perceived quality, expectations, perceived value, satisfaction index, and loyalty, shown in bold for the constructs with impacts shown by solid lines; (b) two optional latent variables that can be added by national committees: image and complaints shown in italics with impacts shown by dotted line The variables on the left side are to be seen as drivers for explaining the Customer Satisfaction Index; variables on the right side of the model are performance indicators (loyalty/complaints)

Figure 2.5 European Customer Satisfaction Index (ECSI) Model

Customer Satisfaction Image

Johnson, et al (2001, p 225) maintained that there are two differences between the ACSI and ECSI models First, the ECSI model does not include the incidence of complaint behavior as a consequence of satisfaction Second, according to the original NCSB model, the ECSI model incorporates image as a latent variable in the model Corporate image is specified to have direct effects on customer expectation, satisfaction, and loyalty

Micro-Model of Customer Satisfaction

Erevelles and Leavitt, 1992 provide an excellent summary of our micro-models Table 2.1 lists the seven types of models they review in their article, and we will briefly comment on each type

Table 2.1: Micro-Model of Customer Satisfaction

Macro-Model of Customer Satisfaction

1 Expectations Disconfirmation Model

2 Perceived Performance Model

Source: Erevelles & Leavitt, (1992)

1 The Expectations Disconfirmation Model has been the dominant model in satisfaction research The model has consumers using pre-consumption expectations in a comparison with post-consumption experiences of a product/service to form an attitude of satisfaction or dissatisfaction toward the product/service In this model, expectations originate from beliefs about the level of performance that a product/service will provide This is the predictive earning of the expectations concept

2 The Perceived Performance Model deviates from the model above in that expectations play a less significant role in satisfaction formation The model performs especially well in situations where a product/service performs so positively that the consumer's expectations get discounted in her/his post-consumption reaction to the product/service

3 Norms Models resemble the Expectations disconfirmation Model in that the consumer compares perceived performance with some standard for performance In this case, however, the standard is not a predictive expectation Rather than considering what will happen in the consumption experience, the consumer uses what should happen as the comparison standard This is the normative meaning of "should" rather than its occasional chronological commutation in the English language

4 Multiple process Models characterize the satisfaction formation process as multidimensional That is, consumers use more than one standard of comparison in forming a (dis) confirmation judgment about an experience with a product/service

5 Attribution Models integrate the concept of perceived causality for a product/service performance into the satisfaction process Consumers use three factors to determine attribution's effect in satisfaction These are locus of causality, stability, and controllability The locus of causality can be external (that is, the service provider gets the credit or blame) or internal (that is, the consumer is responsible for the product/service performance) Stable causes would tend to have more impact in satisfaction because consumers tend to be more forgiving of product/service failures that appear to be rare events

Finally, controllability affects attribution in that a poor outcome in a consumption experience may mean that the consumer will be unsatisfied with the product/service provider

if the consumer believes the provider had the capacity, that is, control, to perform in a better fashion

6 Affective Models differ from previous models in that it goes beyond rational processes In these models, emotion, liking, and mood influence (dis) satisfaction feelings following the consumption experience

7 Equity Models emphasize the consumer's attitude about fair treatment in the consumption process Fair treatment can use the concept of the equity ratio (that is, the amount of her/his return for her/his effort made) or the concept of social comparison (that is, the perceived, relative level of product/service performance that other consumers experience) Oliver (1997) breaks equity down further into three categories, procedural fairness; interactional fairness; and distributional fairness

2.2.4 Service customers’ satisfaction measurement model

The definition of perceived service quality of many author are like the satisfaction in many aspects (they are all the result of comparison between expected service and perceived service) and perceived service quality often consider the most important - influential factor to service customers‘ satisfaction Therefore, many authors applied service quality model to

assess the customers‘ satisfaction Two most common used models are Servqual model and Servperf model

SERVQUAL model

Figure 2.6: SERVQUAL model

SERVQUAL is based on the external perspective regarding service quality, which states that the customer‘s assessment of the service quality is paramount This assessment is conceptualized as a discrepancy or gap between what the customer expects by way of service quality from a class of service providers and their evaluation of the performance of a particular service provider This evaluation is not simple since Parasuramanet al (1985) first formulated, service quality is a multidimensional construct having 10 components:

as follows:

Reliability: Ability to perform the promised service dependably and accurately;

Assurance: the knowledge and courtesy of employees and their ability to convey trust

and confidence;

Tangibles: the appearance of the physical facilities, equipment, personnel and

communication materials;

Empathy: provision of caring, individualized attention to customers;

Responsiveness: willingness to help customers and to provide prompt service;

In fact, SERVQUAL served also as a basis for more specific instruments in the hospitality industry: LODGSERV, a 26 item index designed to measure customer

expectations for service quality in the hotel experience (Knutson et al., 1991); DINESERV,

an instrument designed to evaluate the service quality in restaurants (Stevens et al., 1995);

RECQUAL, an evaluation instrument for recreation centers (MacKay and Crompton, 1990)…

In addition, there have also been many unnamed modified models from SERVQUAL

SERVPERF model

The SERVPERF model was carved out of SERVQUAL by Cronin and Taylor in 1992 SERVPERF measures service quality by using the perceptions of customers Methodologically, the SERVPERF scale represents marked improvement over the SERVQUAL scale Not only is the scale more efficient in reducing the number of items to be measured by 50 per cent, it has also been empirically found superior to the SERVQUAL scale for being able to explain greater variance in the overall service quality measured through the use of single-item scale This explains the considerable support that has emerged over time in favor of the SERVPERF scale (Gotlieb, Grewal and Brown, 1994; Woodruff, Cadotte and Jenkins, 1983) Numerous studies have been undertaken to assess the superiority of two scales, but consensus continues to elude as to which one is a better scale Though still lagging behind the SERVQUAL scale in application, researchers have increasingly started making use

of the performance-only measure of service quality (Cronin et al., 2000)

2.2.5 Organization’s satisfaction measurement model

Researched on customer satisfaction in business-to-business relationships is still modest and lagging far behind consumer marketing Most of them concerned in the complex of buying center, the role of relationship and the buying situation, and as we all know, these factors lead to the differences between B2C and B2B business These are some representative studies:

Christian Homburg, Bettina Rudolph (2001), in his article, ―Customer satisfaction in industrial markets: dimensional and multiple role issues‖ gained three achievement: (1) Develop a multiple-item measure of organizational customer satisfaction and assess its psychometric properties based on an international data set; (2) The influence of the identified dimensions of customer satisfaction on overall satisfaction is analyzed; (3) As buying