CHAPTER IV CONCEPTUAL BACKGROUND ON CUSTOMERS PERCEPTIONshodhganga.inflibnet.ac.in/bitstream/10603/37207/6/chapter4.pdf · CONCEPTUAL BACKGROUND ON CUSTOMERS PERCEPTION ... Perception

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CHAPTER – IV

CONCEPTUAL BACKGROUND ON CUSTOMERS PERCEPTION

In this chapter an overview of customer perception and its associate

contribution to the customers satisfaction has been given in a brief form.

Perception is a process by which an individual select, organize and

Interpret stimuli in a meaningful picture of the world. Also, we can describe

as “how we see the world around us”. Perception is the process of selecting,

organizing and interpreting or attaching meaning to events happening in

environment. Our perception is an approximation of reality. Our brain

attempts to make sense out of the stimuli to which we are exposed. This

works well when we are about to perceive familiar facts. However, our

perception is sometimes “off” when we are not clear about concepts.

Perception is one of the objects studied by the science of consumer

behaviour. Analyzing the work of scientists studying the consumer

behaviour, it is possible to make a conclusion that perception is presented as

one of personal factors, determining consumer behaviour.

Personal factors mean the closest environment of a human, including

everything what is inside the person, his head and soul, characterizing him

as a personality. Using his sensory receptors and being influenced by

external factors, the person receives information, accepts and adapts it,

forms his personal attitude, aptitude, opinion, and motive, which can be

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defined as factors that will influence his further activity and behaviour.

Perception within this context is considered as one of the principal personal

factors, conditioning the nature and direction of remaining variables.

Authors J.C. Mowen (1987), D.L. Loudon and A.J. Della Bitta (1993)

determine perception as a phase of information processing, while C.G.

Walters and B.J. Bergiel (1989), F.G. Crane and T.K. Klarke (1994), G.D.

Harrell, G.L. Frazier (1998), M.R. Solomon (1999), B. Dubois (2000) define

perception as a separate variable of consumer behaviour having features of

the process and including separate phases of the process. C.G. Walters and

B.J. Bergiel (1989) characterize perception as a solid process during which

an individual acquires knowledge about the environment and interprets the

information according to his/her needs, requirements and attitudes.

The works of F.G. Crane and T.K. Klarke (1994), G.D. Harrell, G.L.

Frazier (1998), characterize perception as a solid process during which an

individual acquires knowledge about the environment and interprets the

information according to his/her needs, requirements and attitudes.

The works of F.G. Crane and T.K. Klarke (1994), G.D. Harrell, G.L.

Frazier (1998), M.R.Solomon (1999), B. Dubois (2000) present perception

as a more complicated process, during which sensory receptors of a

consumer capture a message sent by external signals and the information

received is interpreted, organized and saved, providing a meaning for it and

using it in a decision making process.


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DIAGRAM 4.1

ELEMENTS OF THE PERCEPTUAL PROCESS

Summarizing the studies of the perception concept provided in the

scientific literature, it can be concluded that perception has characteristics of

a process and is constituted by separate elementary elements with an

appropriate sequence. This process is influenced by subjective features of an

individual and has distinctive individual characteristics. Diagram 4.1 shows

the elements of perception as a process, provided by various authors.

M.R. Solomon

(1999) Sensation

Attention

Interpretation

Schiffman-Kanuk

(2000) Selection

Organization

Interpretation

PERCEPTION

B. Dubois

(2000) Sensation

Interpretation

J.C. Mowen

(1987) Organization

Understanding

Crane-Klarke

(1994) Sensation

Attention

Understanding

Retention

Harrell-Frazier

(1998) Reaction

Attention

Understanding

Retention


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Analyzing classifications proposed by marketing specialists, it can be

stated that sensation, attention, interpretation and retention are the important

dominating elements of the perceptual process. The interaction of these

elements is presented in Diagram 4.2.

DIAGRAM 4.2

THE ELEMENTS OF PERCEPTUAL PROCESS

4.1 ELEMENT OF PERCEPTUAL PROCESS

(i) Sensation

Sensation is a stimulation of a consumer‟s sensory receptors and

transmission of the information to the brain and the spinal cord with a help

of nerve cells. In theoretical works on consumer behaviour sensation is

usually considered as a physiological mechanism that helps a human, using

his sensory receptors (eyes, ears, nose, mouth and skin) to react to external

stimuli (image, sound, scent, taste and texture). Sensation, activated by

external stimuli, can be of three types: passive, active and selective. The

intensity of sensory input depends on the sensitivity of receptors and the

intensity of signals that are limited by the absolute threshold that refers to

the minimum amount of stimulation that can be detected on a sensory

channel and the ability of an individual to adapt the margin, depending on

circumstances. In addition to this, every sensation is conditioned by the

variation of environmental energy, defined by the differential threshold. It

refers to the ability of a sensory system to detect changes of differences

between two stimuli.

Sensation Attention Interpretation Retention


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(ii) Attention

Attention is another element of the perceptual process. Attention as a

filtering mechanism of the information provided by a stimuls. The

researchers claim that attention is expressed as a processing scope of the

quantity of stimuls information. The bigger the scope of the stimuls

processing, the more of the stimuls information a consumer realizes and

conceives. Attention is a direction and focus of a mental activity to particular

objects and it is distinguished into two types of attention; voluntary and

involuntary. Voluntary attention occurs in such circumstances when a

stimuls absolutely meets a consumers demand and situation. Involuntary

attention appears when a consumer faces a new and unexpected stimuls,

interesting and attractive, though irrelevant at the time being.

(iii) Interpretation

Interpretation is the element of the perceptual process as a process of

sensation decoding. The authors are very particular to note that during this

process feeling are turned into symbols such as words, numbers or images

and other. Symbols are also used for information storage and further

analysis. The interpretation is rending of a meaning for the signal received.

The understanding and decoding of a stimulus depends on the several factors

such as sensibility of an individual, his motivation and opportunities (time

and other). Consequently, the interpretation of a stimulus is an especially

individual process during which the stimulus is provided with a subjective

and personal meaning. Two people hearing or seeing the same thing

interpret the signal received differently due to their expectations of the signal

two stages for a stimulus interpretation:


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The analysis of a stimulus features, where a consumer identifies the

main features of a stimulus and evaluates the peculiarities of a feature

set.

The stage of synthesis, where the evaluated elements of a stimulus are

combined with available external and internal information.

(iv) Retention

Retention places a significant emphasis on the last element of the

perceptual process known as retention in his works. The consumer

memorizes better and retains those signals and their meanings that are close

to his attitudes.

4.2 IMPORTANCE OF CUSTOMER PERCEPTION

Customer perception is an important component of our relationship

with our customers. Customer‟s satisfaction is a mental state which results

from the customer‟s comparison of expectations prior to a purchase with

performance perceptions after a purchase. A customer may make such

comparisons for each and every part of an offer called “domain-specific

satisfaction” or for the offer in total called “global satisfaction”. Moreover,

this mental state, which we view as a cognitive judgement, is conceived of

as falling somewhere on a bipolar continuum bounded at the lower end by a

low level of satisfaction where expectations exceed performance perceptions

and at the higher end by a high level of satisfaction where performance

perceptions exceed expectations.


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The lowest level at which an individual can experience a sensation is

called the absolute threshold. In other words, the point at which an

individual senses a difference between something and nothing is referred as

absolute threshold for example notice of bill board while driving car, Point

at which you notice vibrating sound of tongs, point at which you feel cold

etc., As our exposure to the stimulus increases we notice it less for example

taking bath cold water everyday no shivering / cold as “getting used to”. In

the field of perception the term adaption refers specially to “getting used to”

certain sensations.

4.3 CLASSIFICATION OF PERCEPTION

There are two type of perception

Supraliminal perception

Subliminal perception

4.3.1 Subliminal Perception

The process of change of weak perception into strong perception is

termed as subliminal perception through stimulus. Subliminal perception is

use to describe something that is below the level of perception. People can

get stimulated below their conscious awareness level. Such person can

perceive stimuli without being consciously aware that they are doing so.

4.3.2 Supraliminal Perception

Perception of the stimulus that is above the level of conscious

awareness is called supraliminal perception.


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4.4 CUSTOMER PERCEPTION INFLUENCES THE CUSTOMER

SATISFACTION

Customer satisfaction is the state of mind that customers have about a

company when their expectations have been met or exceeded over the

lifetime of the product or service. The achievement of customer satisfaction

leads to company loyalty and product purchase. Satisfaction comprises three

basic components, a response pertaining to a particular focus determined at a

particular time.

As markets shrink, companies are scrambling to boost customer

satisfaction and keep their current customers rather than devoting additional

resources to chase potential new customers. When examined as a whole,

three general components can be identified which are given as follows.

1. Customer satisfaction is a response (emotional or cognitive);

2. The response pertains to a particular focus (expectations,

product, consumption experience, etc.); and

3. The response occurs at a particular time (after consumption,

after choice, based on accumulated experience, etc).

4.4.1 Customer Perception and Customer Dissatisfaction

Consumer dissatisfaction is portrayed as the bipolar opposite of

satisfaction; or consumer satisfaction and dissatisfaction are viewed as two

different dimensions. Everyone recognizes good service when they see it or

experience it or so we would like to think. Yet for many people, good

service may simply be expected and thus taken into account for granted.

What stands out in the customer‟s mind is excellent service that exceeds


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their expectations – and poor or inferior service that fails to meet them. So

how does an organization know whether its service is meeting or exceeding

these expectations? How should it determine whether the customer was

overwhelmed with good service or “under-whelmed?” with poor service?

One way to do this is to measure customer perception on service provided

and how much the customers are satisfied with the service.

The service profit chain analyzes how customer satisfaction leads to

profitability. Measuring customer satisfaction process will enables

management to minor whether this key performance metric is in line with

acceptable levels. Customer satisfaction measurement system must provide

actionable information. In other words, the focus is on measuring what can

be controlled, modified and also improved. An effective measurement

system should help to evaluate service improvement initiatives.

Businesses survive because they have customers who are willing to

buy their product or service. However, many times businesses fail to “check

in” with their customers to determine whether they are happy or not and

what it will take to make or keep them happy here comes the perception.

Finding the reasons for customer defections and doing something about

them is especially important. Measuring customer perception is a sound

business strategy due to be following reasons.

2. It is expensive to win new customers, and customer retention is

critical for success of the business concern.

3. It is less expensive to sell additional products and services to existing

satisfied category customers (so we should listen to what is important

to them).


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4. Problems encountered by customers negatively impact their loyalty (if

we disappoint them, they may start looking for alternatives and many

alternatives are also available in the present world).

5. The customer contact center has significant impact on customer.

While it seems clear that to increase customer satisfaction

understanding customer‟s perception would be beneficial to a marketing

executive, but how to measure it is less clear. Customer satisfaction has been

studied from the perspective of the individual customer and what drives their

satisfaction can be studied by the impact of customer perception.

4.5 IMPORTANT COMPONENTS OF PERCEPTION

The characteristics of service also make service in the form of unique

and different from goods as described below.

4.5.1 Intangibility

Unlike manufactured goods that are tangible, a service is intangible in

nature. The products from service are purely a performance. The customer in

a position to see, taste, smell, hear, feel or touch the product before it

produced.

4.5.2 Heterogeneity

A service is difficult to produce consistently and exactly over time.

Service performance varies from producer to producer, from customer to

customer, and from time to time. This characteristic of service makes it very

difficult to standardize the quality of various service products.


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4.5.3 Inseparability

In service industries, usually the producer performs the service at the

time the consumption of the service takes place. Therefore, it is difficult for

the service producer to hide mistakes or quality shortfalls of the service. In

comparison the goods producers, have a buffer between production and

customers‟ consumption.

4.5.4 Perishability

Unlike manufactured goods, services, cannot be stored for later as

well as consumption. This makes it impossible to have a quality check

before the producers send it to the customers. The service providers then

only have one path, to provide service right the first time and every time.

4.5.5 Non-returnable

A service is not returnable as in the case of products. On the other

hand, in many services, customers may be fully refunded if the service is not

satisfactory.

4.5.6 Needs-match uncertainty

Service attributes are more uncertain nature than the product. This

yield to higher variance of making a match between perceived needs and

service is greater than perceived need and product match.


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4.5.7 Interpersonal

Service tends to be more interpersonal than products. It means for

example compare buying a vacuum cleaner to contracting for the cleaning of

a carpet. While customers will judge the quality of the vacuum cleaner by

how if contribute the mechanical application to clean the carpet is,

customers will tend to judge the quality of the carpet cleaning service on

both the appearance of the carpet and the attitude of the technician.

4.5.8 Personal

Customers often view services to be more personal than products. For

example, a customer may perceive the service of her can (balancing the

tires) as more personal than purchasing a new one. If the same customer has

problems later with the tires, the defect in the tires would be less personal

than if the tires were never balanced.

Even though the food at a restaurant might not be as much as

delicious as other famous restaurants, the customers will recognize the

respective restaurant and tend to be satisfactions if the service of the

restaurant is excellent. Another example is when a flight is delayed, and

people tend to be upset with this poor service. However, if the gate agent is

very helpful and friendly, people tend to still be pleased with the service.

Like other industries, banking and financial services providers have

reached the conclusion that the relationship with the customer should not

(metaphorically and literally) end at the bank door. Customer access after

the transaction adds value to the transaction.


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4.6 CONCEPTUAL ROOTS FOR SERVICE QUALITY

Within the framework of the task of measuring and evaluating service

quality firstly basic concepts related to service and service quality will be

explained. Even though a consensus is not reached regarding the common

definition of service the following definitions largely overlap:

Service being various form of immaterial product produced to satisfy

consumer needs is carried out for someone else.

Not having material personality, inseparableness of production from

consumption, variability, heterogeneity and flimsiness are

characteristics features that separate services from goods.

Services are activities or benefits provided to group which ends up

with non-ownership. The production of service may or may not be

related to materialized product.

Services were termed as: “Those economic activities that typically

produce an intangible nature of various products such as education,

entertainment, food and lodging, transportation, insurance, trade,

government, financial, real estate, medical repair and maintenance

like occupations”.

The working of the customer‟s mind is a mystery which is very

difficult to overcome the problems and understanding the nuances of what

customer satisfaction is a challenging task. This exercise in the context of

sector will give us an insight into the parameters of customer satisfaction,

customer perception and their measurement. This vital information will help

us to build satisfaction amongst the customers and customer loyalty in the

long run which is an integral part of each and every business. The


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customer‟s requirements must be translated and quantified into measurable

targets. This provides an easy way to monitor improvements, and deciding

upon the attributes that need to be concentrated on in order to improve

customer satisfaction. It can be recognized where we need to make changes

to create improvements and determine if these changes, after implemented,

have led to increased customer satisfaction.

4.7 MEASUREMENT OF CUSTOMER PERCEPTION

Banking operations are becoming increasingly customer dictated. The

demand for 'banking super malls' offering one-shop integrated financial

services is well on the rise. The ability of banks to offer clients access to

several markets for different classes of financial instruments has become a

valuable competitive edge. Convergence in the sector to cater to the

changing demographic expectations is now more than evident. Bank assures

and other forms of cross selling and strategic alliances will soon alter the

business dynamics of banks and fuel the process of consolidation for

increased scope of business and revenue. The thrust on farm sector, health

sector and services offers several forms of investment linkages. In short, the

domestic economy is an increasing pie which offers extensive economies of

scale that only large banks will be in a position to tap. With the phenomenal

increase in the population of the country and the increased demand for

banking services; speed, service quality and customer satisfaction are going

to be key differentiators for each bank's future success. Thus it is imperative

for banks to get useful as well as valuable feedback on their actual response

time and customer service quality aspects of retail banking, which in turn

will help them to take positive steps to maintain a competitive edge.


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The working pattern of the customer's mind is a mystery which is

difficult to solve and understanding the nuances of what perception the

customer has to attain the level of satisfaction is, a challenging task. This

exercise in the context of the banking industry will give us an insight into

the parameters of customer satisfaction and their measurement. This vital

information will help us to build and promote satisfaction amongst the

customers and the customer loyalty in the long run which is an integral part

of any business. The customer's requirements must be translated and

quantified into measurable targets. This provides an easy way to monitor

improvements, and deciding upon the attributes that need to be concentrated

on in order to improve customer satisfaction. It can recognize where we need

to make changes to create improvements and determine if these changes,

after implemented, have led to increased customer satisfaction.

4.8 SIGNIFICANCE OF CUSTOMER PERCEPTION

Satisfied customers are central to optimal performance and financial

returns. In many places in the world, business organizations have been

elevating the role of the customer to that of a key stakeholder over the past

two decades. Customers are viewed as a group whose satisfaction with their

respective enterprise must be incorporated in strategic planning efforts.

Forward-looking companies are finding value in directly measuring and

tracking customer satisfaction as an important strategic success indicator.

Evidence is mounting that placing a high priority on customer satisfaction is

very critical to improve the organizational performance in a global

marketplace.


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With better understanding of customers' perceptions, companies can

determine the needed actions required to meet the customers' needs. They

can identify their own strengths and weaknesses, where they stand in

comparison to their competitors in the same field, chart out path future

progress and improvement. Customer satisfaction measurement helps to

promote an increased focus on customer outcomes and stimulate

improvements in the work practices and processes used within the company.

When buyers are more powerful, the health and strength of the

company's relationship with its customers – its most critical economic asset

and is its best predictor of the future. Assets on the balance sheet – basically

assets of production – are good predictors only when buyers are weak. So it

is no wonder that the relationship between those assets and future income is

becoming more and more tenuous. As buyers become empowered, sellers

have no choice as well as money to adapt. Focusing on various aspectives of

competition has its place, but with buyer power on the rise, it is more

important to pay attention to the customer.

Customer satisfaction is very difficult as well as quite complex issue

and there is a lot of debate and confusion about what exactly is required and

how to go about it. An attempt has been made to review the necessary

requirements, and discuss the steps that need to be taken in order to measure

and track customer satisfaction.


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4.9 COMPOSITION OF CUSTOMER SATISFACTION

The word "satisfied" itself had a number of different meanings for

respondents, which can be split into the broad themes of contentment/

happiness, relief, achieving aims, achieving aims and happy with outcome,

safe and the fact that they did not encounter any hassles.

(i) Happiness

Content

Happy, pretty happy, quite happy

Pleased

Walked out of there feeling good

Walk out of there chuffed

Grateful the service has been OK

(ii) Relief

Thank God for that

Phew

At ease

Can relax

Stress reduction

Secure

(iii) Achieving aims

Achieving your aim or goal

Getting what you went in for


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Achieve whatever it is you wanted to achieve

Come away with a proportion of what you want

Got what wanted in the end

Got what you went down for

Everything went according to plan, the way it should have done

Met expectations

To be unsatisfied is when you come out and you are still on the same

level as you were before

(iv) Achieving aims, and happy with outcome

Happy with the results

Happy with what you've got

When you walk out you're happy they've sorted everything out and

quickly

Happy with outcome

Pleased with what's happened

Content with what's been done for you

A feeling of happiness having achieved your goal

You go in there feeling down and the only way you are going to come

out satisfied is if they have been good to you

(v) Safe

Go to the bank with a troubled mind and they sort it out for you

Sleep at night without worrying what's going to go on

Everything is sorted out in your mind and you're happy

Secure, you know the money has been sorted out

Knowing the money's going to be there


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(vi) No hassle

Not frustrated

Everything goes smooth

No hassle

No problems

No hassle getting there

Clearly then there is some variation in understanding of the term.

Some of the interpretations fit with the definitions used in much of the

service quality and satisfaction literature, where satisfaction is viewed as a

zero state, merely an assessment that the service is adequate, as opposed to

"delight" which reflects a service that exceeds expectations. However, most

respondents have more positive interpretations of the term. These questions

allow us to identify priorities for improvement by comparing satisfaction

with stated (overt) importance, comparing satisfaction with modeled (covert)

importance (from identifying key drivers of overall satisfaction), as well as

respondents' own stated priorities.

4.10 PERCEPTION ON SERVICE QUALITY WHICH INFLUENCE

BETTER CUSTOMER SATISFACTION

There is a great deal of discussion and disagreement in the literature

about the distinction between service quality and satisfaction. The service

quality school view satisfaction as an antecedent of service quality -

satisfaction with a number of individual transactions "decay" into an overall

attitude towards service quality. The satisfaction school holds the opposite

view that assessments of service quality lead to an overall attitude towards


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the service that they call satisfaction. There is obviously a strong link

between customer satisfaction and customer retention. Customer's

perception of Service and quality of product will determine the success of

the product or service in the market.

If experience of the service greatly exceeds the expectations clients

had of the service then satisfaction will be high, and vice versa. In the

service quality literature, perceptions of service delivery are measured

separately from customer expectations, and the gap between the two

provides a measure of service quality.

4.11 PERCEPTION ON EXPECTATIONS AND CUSTOMER

SATISFACTION

Expectations have a central role in influencing satisfaction with

services, and these in turn are determined by a very wide range of factors

lower expectations will result in higher satisfaction ratings for any given

level of service quality. This would seem sensible; for example, poor

previous experience with the service or other similar services is likely to

result in it being easier to pleasantly surprise customers. However, there are

clearly circumstances where negative preconceptions of a service provider

will lead to lower expectations, but will also make it harder to achieve high

satisfaction ratings - and where positive preconceptions and high

expectations make positive ratings more likely. The expectations theory in

much of the literature therefore seems to be an over-simplification.

It is far more difficult to measure the level of performance and

satisfaction when it comes to the intangible expectations. One of the ways to


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help obtain loyal customers is by having products and services that are so

good that there is very little chance that the customer requirements will not

be met. Of course one of the difficulties in understanding the true customer

requirements is that the customer can and will change them without notice or

excuse. Having a good recovery process for a dissatisfied customer is a very

vital process for any service organization.

4.12 MODELS ON CUSTOMERS PERCEPTION AND

SATISFACTION

4.12.1 The KANO Model

The customer satisfaction model from N. Kano is a quality

management and marketing technique that can be used for measuring client

happiness. KANO's model of customer satisfaction distinguishes six

categories of quality attributes, from which the first three actually influence

customer satisfaction:

(i) Basic Factors - The minimum requirements which will cause

dissatisfaction if they are not fulfilled, but do not cause customer satisfaction

if they are fulfilled (or are exceeded). The customer regards these as

prerequisites and takes these for granted. Basic factors establish a market

entry 'threshold'.

(ii) Excitement Factors - The factors that increase customer satisfaction if

delivered but do not cause dissatisfaction if they are not delivered. These

factors surprise the customer and generate 'delight'. Using these factors, a

company can really distinguish itself from its competitors in a positive way.


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(iii) Performance Factors - The factors that cause satisfaction if the

performance is high, and they cause dissatisfaction if the performance is

low. Here, the attribute performance-overall satisfaction is linear and

symmetric. Typically these factors are directly connected to customers'

explicit needs and desires and a company should try to be competitive here.

Important attributes of personal factors.

Indifferent attributes. The customer does not care about this feature.

Questionable attributes. It is unclear whether this attribute is expected by

the customer.

Reverse attributes. The reverse of this product feature was expected by the

customer.

4.12.2 Steps in the Customer Satisfaction Model

Kano developed a questionnaire to identify the basic, performance and

excitement factors as well as the other three additional factors.

1. For each product feature a pair of questions is formulated to which the

customer can answer in one of five different ways.

2. The first question concerns the reaction of the customer if the product

shows that feature (functional question);

3. The second question concerns the reaction of the customer if the

product does NOT show this feature (dysfunctional question).

4. By combining the answers all attributes can be classified into the six

factors.


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4.13 THE PROFIT – CHAIN MODEL

Research has shown that organizational subunits where employee

perceptions are favourable enjoy superior business performance. The service

profit chain model of business performance has identified customer

satisfaction as a critical intervening variable in this relationship (profit-chain

model). A number of researchers have found that revenue-based measures of

business unit performance, for example, sales and profitability, are

significantly correlated with employees' work-related perceptions. The

evidence suggests that business units in which employees' collective

perceptions are relatively favourable perform better.

Stated simply, the service profit chain asserts that satisfied and

motivated employees produce satisfied customers and satisfied customers

tend to purchase more, increasing the revenue and profits of the

organization. The service profit chain as involving direct and strong

relationships between profit; growth; customer loyalty; customer

satisfaction; the value of goods and services delivered to customers; and

employee capability, satisfaction, loyalty and productivity. These authors

recommend the service profit chain as a framework for constructing a

strategic organizational vision, and suggest that, provided service profit

chain concepts are carefully interpreted and adapted to an organization's

specific situation, they are capable of delivering remarkable results.

The second crucial element of the service profit chain is the link

between customer satisfaction and financial performance. Management

theorists and chief executives have often argued that superior business

performance depends critically on satisfying the customer.


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Consumer researchers have established that customers who are

satisfied with a supplier report stronger intentions to purchase from that

supplier than do dissatisfied customers. However, the link between customer

satisfaction and actual, as opposed to intended, purchase behavior is less

well established. Indeed, the results are mixed, with both positive findings.

4.14 THE SERVICE EXPECTATION MODEL

Customer satisfaction with a service/product (p/s) can be measured

through a survey of the actual perception of the users or otherwise

comparing their actual perception with their expectations. More

appropriately in the first case "quality" is considered, in the second

“Customer Satisfaction” (CS). Therefore to measure the CS we have to

compare the evaluations of the user with his expectations connected to an

ideal p/s. For some kinds of p/s such expectations are typically "subjective",

they have to be gathered ad hoc; for others they can be suggested by the

provider the p/s referring to an optimum p/s; in this way the expectations are

collected in an "objective" way.

4.15 VARIABILITY IN THE SERVICE PROCESS MODEL

(WHARTON)

Service quality has become an essential part of organizational success

due to increased customer expectations and customization of services in

many markets. In fact, even the definition of service quality is changing.

Good service quality used to mean that the output was made to conform to

the specifications set by the process designers. Today, the concept of service

quality is evolving to mean uniformity of the service output around an ideal


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(target) value determined by the customer. However, when the dimensions

or performance of a service output exceed allowable limits, the variation

needs to be identified so the problem can be corrected.

Four factors represent major explanations for the existence of process

variation in services: heterogeneous customers with different service

expectations; lack of rigorous policies and processes; high employee

turnover; and nature of customization. The financial performance of a

financial service institution is driven to a large extent by its ability to attract

and retain customers. Customers increasingly have alternatives from which

they can choose. We are interested in whether a customer's decision whether

to stay with her current service provider might be more sensitive to

variability of service than the level of service quality.

While there is a significant body of theoretical and anecdotal evidence

on the importance of process management, there is very little statistical

evidence that process management matters with respect to the 'bottom line'

of the institution. The model shows that, while no individual process is

correlated with firm performance, the aggregate measure of process

performance affects firm performance. More importantly, the most

significant finding is that while aggregate process performance is correlated

with financial performance, it is not correlated with customer satisfaction.

The process performance measure associated with both firm financial

performance and customer satisfaction is the measure of variation across

processes. We have found that if processes are managed in a consistent way,

then both financial performance and customer satisfaction are improved. By

consistent process management, we mean that the performance of individual


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processes within a firm are similar to one another and thus provide a

consistent service offered to the consumer. Consumers' desire consistency

and thus, the bank must align its various delivery processes to meet the

consumer's needs. Therefore, we define process variation as the variation in

performance across the eleven individual process performance scores for

each bank. It is the variation that we have found to be the best predictor of

overall firm performance.

4.16 THE COMMON MEASUREMENTS TOOL (CMT)

The CMT is the result of an extensive study by researchers at the

Canadian Centre for Management Development and others, which examined

a number of approaches to standardising measurement of customer

satisfaction with public services. The model they have developed provides a

useful example of how elements of different approaches can be combined to

improve our understanding of satisfaction and highlight priorities for

improvement. It incorporates five main questioning approaches, measuring:

expectations of a number of service factors;

perceptions of the service experience by the customer on these

factors;

level of importance attached to each of a number of service

elements;

level of satisfaction with these elements;

respondents' own priorities for improvement.

The approach is therefore made up of three distinct strands. The

measures of expectations and perceptions of the service experience tend to


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focus on a relatively small number of very specific factors, such as how long

customers wait to be served etc. This allows the gap analysis approach

through comparing expected service quality with experience gained.

The second strand involves asking levels of satisfaction with a more

extensive list of elements, followed by asking how important each of these

aspects are to respondents. This allows the comparison of satisfaction and

importance that asking people to think about what should be provided by an

ideal or excellent service. As noted above, this approach has also been taken

by Berry in later studies.

4.17 PERCEPTION ON THE CUSTOMER SATISFACTION INDEX

(CSI)

The Customer Satisfaction Index represents the overall satisfaction

level of the customer as one number, usually as a percentage. Plotting this

Satisfaction Index of the customer against a time scale shows exactly how

well the service providers is accomplishing the task of customer satisfaction

over a period of time.

Hence, in order to understand customer perception it is an important

aspects to understand customer behaviour, customer satisfaction, the

importance of perception and the related attributes which describes about

customer perception.


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CHAPTER IV CONCEPTUAL BACKGROUND ON CUSTOMERS PERCEPTIONshodhganga.inflibnet.ac.in/bitstream/10603/37207/6/chapter4.pdf · CONCEPTUAL BACKGROUND ON CUSTOMERS PERCEPTION ... Perception