Chapter 2

LITERATURE REVIEW
Tahir (2013), is “a customer's perspective based on expectation and then subsequent post
purchase experience”. In other words, it is an evaluation of products or services‟ quality level
that meets or exceeds the customer expectations. The term customer satisfaction has been on the
markets for a long time. In fact, many researchers and academicians emphasized that it is a key
element for a company’s success in the market as well as a crucial factor for company’s survival
as it has a positive effect on company’s profitability.
Novikova, (2009),It cannot be denied that a satisfied consumer has a tendency to buy more than a
less satisfied one. In a highly competitive market, customer satisfaction is, indeed, a crucial key
that builds strong and long-term relationships between the customers and the firm. The measure
of customer satisfaction, therefore, has become a vital concern for many companies and services
providers to achieve such success.
Anderson et al., (1994); Bernhardt et al., (2000) Customer satisfaction is thought to be a

precursor to behavioral intentions. Scholars have produced impressive evidence of the favorable
effects of customer satisfaction on various behavioral intention indicators, such as repeat
purchase willingness to recommend to othersloyalty and profitability.
Kincey et al., (1975), Williams,et al(1994). Ahornyet al, (1993) Equally impressive results have
also been found in healthcare research. Satisfied patients are more likely to comply with medical
treatment regimensand are more likely to utilize services in the future. It is therefore an
important business success strategy.
Oliver (1980), Satisfaction is considered to be a global evaluation of a consumer’s experience

with a product or service offering. Global evaluations of service experiences has been described
as a cognitive evaluation of the sum total of satisfactions with the individual elements or
attributes of all the products and services that make up the experience) described satisfaction as a
cognitive state resulting from cognitive evaluations between expectations and perceived
performance.
Oliver (1980), 460-469, One of the most important goals of any organization is retaining and
satisfying current and past customers.. If environmentally friendly products need to be
considered or purchased by the customers then they have to perform satisfactorily compared to
conventional products and achieve consumer satisfaction on key attributes such as functional
performance, quality and price. Customers purchase goods and services with pre-purchase
expectations about anticipated performance
Parasuraman (1994), 111-125, Service quality is antecedent to customer satisfaction Perceived

service quality is a result of individual service encounter between the service provider and the
customer, during which the customer evaluates quality and develops satisfaction or
dissatisfaction.
Gould-Williams 97-118 (1999).The pre-purchase expectations formed by the customers are

influenced by intrinsic and extrinsic cues related to a particular experience of previous
experiences and other related information sources It is difficult to reassure the customers
regarding the functional performance of the environmentally friendly products due to the past
failure of many products.
LR Ireland,( 1992) 123-124, There is an increasing tendency to view satisfying customer as

going beyond providing just a technically superior product or service, i.e., defect reduction and
continuous improvement programs. Quality is also as such defined by the customer’s perception,
not by the service provider. However, it should also be born in mind that even if the first person
who is considered as a customer is the buyer (end user), there are several other people who need
to be considered as customer for the reason that their involvement in the production and
distribution of the service or product, or project) affects the quality of the service.
Jay Kandampully (2000) 42, conducted a research study on the customer satisfaction in the hotel
industry. The objective is to identify factors of image and customer satisfaction, which are
positively related to customer loyalty in the hotel industry. The research helps extend the
understanding the relationship between customer loyalty, customer satisfaction, and image.
Berry, (1990), are of the view that the sole judge of service quality is the customer and to get
apositive feedback from him; the service companies should implement the five imperatives of
servicequality viz. Reliability, Assurance, Tangibles, Empathy and Responsiveness in their
services. The authorshave advocated knowing the expectations of the customers on the said
fronts and further measuringtheir actual perception. It becomes imperative for service companies
to improve themselves onwhich ever front expectations of the customers outscores their
perception.
Yavas, (1997), in their study have revealed a positive relationship between customers’
satisfactionthrough service quality and their long term commitment to the bank. Further, the
relationship betweenservice quality and complaint behavior of the customers, was found to be
negative. Better the quality,lower will be the number of complaints received from the customers
and vice-versa.
Levesque and McDougall (1996), had worked on Determinants of customer satisfaction in

company they had pointed out that customer satisfaction and retention are critical for
company,and investigates the major determinants of customer satisfaction and future intentions
in the
company. Identified the determinants which include service quality dimension(e.g. got right the
first time), service features (e.g. competitive interest rates), service problems,service recovery
and products used. The authors also find, in particular, that service problemsand the bank’s
service recovery ability have a major impact on customer satisfaction andintentions to switch.
Grigoroudis, E (2009)57 discuss the customer satisfaction evaluation problem. The authors
provide three classifications of customers: (1) “Self-unit customers – individuals of self-unit
customers with self-inspection, disciplined attitude, and a desire to excellence, (2) Internal
Customers – who are personnel within an organization, and (3) External customers – represented
by the buyers or users of the final products and services of the business organization” (p.9). The
authors present an overview of existing methodologies and also the development and
implementation of an original method dubbed MUSA (Multicriteria Satisfaction Analysis). This
method, the author claims, aims to provide an integrated set of results capable of analyzing
customer needs and expectations and to justify their satisfaction level. The book also deals with
customer satisfaction problem, presenting the various quantitative and related consumer
behavioral models; quality-based approaches; the MUSA method and its extensions and
advanced topics; customer satisfaction surveys and barometers; applications of the MUSA
method in real-world customer satisfaction surveys; and different information technology
approaches related to customer satisfaction. Finally, the book examines the development of a
decision support tool to help understand and apply results and methods of measuring and
implementing service quality is intended for researchers and practitioners in marketing, quality
management, and service management.
Lovaglio (2001)59,critically analysis the satisfaction of consumers towards products/services

offered; in the evaluation of services the conceptual models proposed for the indirect estimate of
the CS go back to the theory of gaps between service and those perceived, separately for the five
fundamental dimensions of SERVQUAL. The aim of the paper is to propose a general model to
estimate latent variable customer satisfactions, which manifest categorical variables. The
approach amalgamates all the available information about customer satisfaction in the structural
models specified in the Customer Satisfaction Barometer (CSB) and American Customer
Satisfaction Index (ACSI) models with gap theory of SERVQUAL.
Nakan (2005), have observed that privatization of some public banks in Brazil has resulted in
improving their productivity. Such banks have come out of the shackles of Governmentcontrol
and on account of less bureaucratic hurdles; they are spreading their wings in right direction.
Zhilin(2004), worked on customer perceived value, satisfaction, and loyalty: The role of
switching costhad mentioned in a competitive setting, such as the Internet market, where
competition may be onlyone click away, has the potential of switching costs as an exit barrier
and a binding ingredient ofcustomer loyalty become altered? The moderating effects of
switching costs on the association ofcustomer loyalty and customer satisfaction and perceived
value are significant only when the level ofcustomer satisfaction or perceived value is above
average.
Kassem (1989), has opined that service companies can ill afford to neglect customer service
qualityissues. In the past, quality was the prerogative of manufacturing sector. However, in the
modern dayfiercely competitive service sector, quality of services has become as important (if
not more) as quality of goods.
Binks (1989), have pointed out that banks are not trying to differentiate their
products/serviceswhile targeting small business sector. They can’t afford to do so in future as the
markets are becomingmore and more heterogeneous. The authors have strongly recommended
that mass marketing mustpave way to nice and customized marketing. They have revealed that
Indian customers have lot ofresentment regarding more time taken by banks in rendering
services at counters. The studies have strongly recommended establishing standard timings for
various banking services which, must be abidedby the banks.
Berry (1990), are of the view that the sole judge of service quality is the customer and to get
apositive feedback from him; the service companies should implement the five imperatives of
servicequality viz. Reliability, Assurance, Tangibles, Empathy and Responsiveness in their
services. The authorshave advocated knowing the expectations of the customers on the said
fronts and further measuringtheir actual perception. It becomes imperative for service companies
to improve themselves onwhichever front expectations of the customers outscores their
perception.
Reichheld (1990), have suggested “Zero Defection of Profitable Customers” as an idealapproach

to attain higher profitability in service sector. Their assertion is based on the fact that it is
lesscostly and hence more profitable for the service firms to retain existing profitable customers
than toattract new customers. The profitable customers not only add to the profits of the
company brutalsobring new customers in their kitty by spreading positive word of mouth.
Leonard (1991), has opined that investment in employees leads to better servicequality, which in
turn leads to better customer retention. This assertion is based in the fact thatemployees of the
company are inseparable to customers. A direct interaction between them demands
thatemployees are possessing adequate skills to interact with customers. Such skills add to the
servicequality and go a long way in preventing customers’ churn.
Pyanne (1991),have observed that satisfied banking customers initially become friends ofthe
bank, then they become supporters and finally advocates. Thus, the starting point of
anyrelationship marketing endeavor of any bank should be to leave no stone unturned in
satisfyingcustomers to a desired extent. This, in turn, is possible if and only if the bank iskeeping
a ‘servicequality’ focus.
Rust (1993),have developed a mathematical model for assessing the value that any bankcould
attach to different elements of customer satisfaction. They have suggested that company may
adopt their model to get the best result of their endeavor leading to customer satisfaction.
Keavency (1995),has noticed that factors such as core service failure, service encounter failure
andinappropriate pricing as most important factors contributing to ‘Customer Switch’ in banking
industry.

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LITERATURE REVIEW

Anderson et al., (1994); Bernhardt et al., (2000) Customer satisfaction is thought to be a

Oliver (1980), Satisfaction is considered to be a global evaluation of a consumer’s experience

Parasuraman (1994), 111-125, Service quality is antecedent to customer satisfaction Perceived

Gould-Williams 97-118 (1999).The pre-purchase expectations formed by the customers are

LR Ireland,( 1992) 123-124, There is an increasing tendency to view satisfying customer as

Levesque and McDougall (1996), had worked on Determinants of customer satisfaction in

Lovaglio (2001)59,critically analysis the satisfaction of consumers towards products/services

Reichheld (1990), have suggested “Zero Defection of Profitable Customers” as an idealapproach

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