Citation
(2015), "Executive summary of “Does outcome quality matter? An investigation in the context of banking services in an emerging market”", Journal of Consumer Marketing, Vol. 32 No. 5. https://doi.org/10.1108/JCM-08-2015-036
Publisher
:Emerald Group Publishing Limited
Executive summary of “Does outcome quality matter? An investigation in the context of banking services in an emerging market”
Article Type: Executive summary and implications for managers and executives From: Journal of Consumer Marketing, Volume 32, Issue 5
This summary has been provided to allow managers and executives a rapid appreciation of the content of this article. Those with a particular interest in the topic covered may then read the article in toto to take advantage of the more comprehensive description of the research undertaken and its results to get the full benefits of the material present.
Today’s services market is widely acknowledged as being highly competitive. Gaining an edge over rival operators therefore demands among other things service quality of a consistently high standard. Researchers have noted the importance of service quality as a strategic tool and its impact on a wide range of areas. These include customer satisfaction, loyalty and positive word of mouth (WOM), along with financial goals such as enhancing sales and profits and the lowering of operating costs.
The term “service quality” has prompted different definitions among academics. Similar debate has prevailed in relation to how it is operationalized. For instance, a popular approach was to compare what a customer expected from a service provider with what he or she actually received.
More recent work has increased the focus on the actual domain of service quality. Differences here also remain evident with regard to determining what elements are incorporated within the service quality construct. In general, research has been influenced by two separate approaches. One is termed as European/Nordic, with the key premise being that service quality is multidimensional in nature. This is founded on the belief that customers use a variety of relevant attributes to measure the standard of service received. Advocates of this perspective contend that service quality should be evaluated based on two broad dimensions, correspondingly pertaining to functional quality and outcome quality. The former of these dimensions essentially identifies with how a service is delivered, while what the customer actually receives is addressed by the latter. Certain scholars assert that functional quality refers to the quality of processes and service quality to the technical aspects of the service delivered.
What is recognized as the American school of thought adopts a narrower focus on how service quality is operationalized. Much of this approach is based on the utilization of a scale developed as a means of measuring service quality. Known as SERVQUAL, the scale contains 22 items relating to the reliability, assurance, tangibility, empathy and responsiveness dimensions that are proposed. Modified versions of this scale have also emerged.
Since its inception, this widely used scale has remained subject to considerable criticism and its “predictive validity” questioned. The reason for doubting its suitability centers on its perceived sole focus on functional quality. In defense of the scale, exponents point to the reliability dimension as addressing the “what” aspect of service delivery. But this has not quelled the doubts or the belief that a more comprehensive measurement tool is needed.
The lack of attention afforded to outcome quality has major implications for the banking industry. Competitiveness has heightened over time, and this is especially evident within emerging economies like India. High degrees of value consciousness are evident among customers within such markets and frustration is likely to result in them switching service providers. Withdrawing and transferring money or completing other basic banking tasks will be seen as far more important than friendly banking personnel or a comfortable lounge to wait in. Banks should therefore focus on improving the quality of service outcome before considering such functional aspects of the service, however important they might be overall.
Jain and Jain investigate the key issues involved in a survey of Indian customers of domestic and foreign banks. Subjects where approached in person and contacted online in Delhi and the National Capital Region (NCR). Of the final usable sample, 325 were customers of the 23 Indian banks covered in the survey, while the remaining 130 were customers of the six foreign banks. Male graduates accounted for the majority of respondents, who were diverse in terms of age and income.
The SERVQUAL scale was modified to increase its relevance to the banking industry and the authors also identified items to include in a scale for measuring outcome quality. Different analyses were conducted to ascertain the suitability of both the functional and outcome service quality measurement scales. With functional quality, the authors eventually settled for an 11-item model spread across the three dimensions labeled as “reliability”, “personal interactions” and “tangibles”. Elimination resulted in a single-factor model incorporating four items for outcome quality.
Given previous comments about the relatedness of these two service quality dimensions, further analysis led to additional items being removed. The final result was a framework with the four dimensions and 10 factors, eight of which are related to the functional service quality.
Moves were then taken to test how functional quality and outcome quality relate to the overall quality of service. Two models were devised and the “extended” type, containing both functional quality and outcome quality, indicated a better fit than the “restricted” model based solely on functional quality.
On this evidence, Jain and Jain conclude that outcome quality is the most important determinant. This was the case here for the sample both for Indian banks and their foreign counterparts. Only the functional quality element appeared significant, but even this ceased to be so when the extended model was applied. In the restricted model, the tangibility dimension of functional quality also showed some significance as a determinant for perceived service quality at domestic Indian banks.
The authors believe that using outcome quality as a measure can provide a more accurate picture of how consumers perceive service quality. It helps managers identify inadequacies in the two quality dimensions and devise strategies to address them. It is recommended that outcome quality is made the main priority in the banking sector to ensure that customers are able to complete core tasks with the minimum of fuss. Management is thus advised to simplify processes and make certain that staff is properly trained and aware of their responsibilities in this respect. Another important factor is the ready availability of documents and forms needed to complete these transactions. This will help avoid the frustrations that can result in service quality being negatively perceived. Jain and Jain also urge managers to conduct periodic surveys to monitor perceptions and identify issues before they become major concerns.
Future work could examine different consumer groups within other parts of India and compare customers of private and public sector banks. Consideration of other service industries is also an option. The authors recognize the possible limitation of the final outcome quality scale used here and believe that further research could enable additional items to be incorporated.
To read the full article enter 10.1108/JCM-10-2014-1169 into your search engine.
(A précis of the article “Does outcome quality matter? An investigation in the context of banking services in an emerging market”. Supplied by Marketing Consultants for Emerald.)