EFFECT OF SERVICE QUALITY ON CUSTOMERS SATISFACTION: A CASE

OF ETHIOTELECOM, ADAMA POINTS OF SALES

A THESIS SUBMITTED IN PARTIAL FULFILLMENT FOR THE REQUIREMENT FOR

DEGREE OF MASTER OF BUSINESS ADMINISTRATION

BY: MESAY ALEBACHEW

ADVISOR: TAREKEGN DEA (Ph.D.)

ADAMA SCIENCE AND TECHNOLOGY UNIVERSITY

DEPARTMENT OF MANAGEMENT
ADAMA, ETHIOPIA

June, 2015
 DECLARATION

I, the under signed, declare that this thesis is my original work and all sources of materials

used for this thesis have been duly acknowledged. The paper has never been presented in this

or any other university for the award of any academic degree, diploma or certificate.

Name: Mesay Alebachew

Signature_____________

Date_________________

Adama, Ethiopia

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 THESIS APPROVAL FORM

Student’s name: Mesay Alebachew

Degree sought: Master in Business Administration

Thesis Title: Effect of Service Quality on Customer Satisfaction: a case of

Ethiotelecom, Adama Points of Sales

University: Adama Science and Technology University

We, the undersigned, recommended that the thesis stated above is accepted in partial
fulfillment of the degree requirement.

Approved by Thesis Advisor:

_____________________ ___________________ _________________

Advisor’s Name Signature Date

Board of Examiners:

_______________________ ___________________ _________________

External Examiner Signature Date

_______________________ ___________________ _________________

Internal Examiner: Signature Date

_______________________ ___________________ _________________

Chairman Person Signature Date

Approved By the Department:

_______________________ ___________________ _________________

Head of department Signature Date

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 ACKNOWLEDGEMENT

First and foremost I would like to thank the Almighty God who gives me strength for all ups
and downs. Next, it is my pleasure to express my gratitude to my advisor Dr. Tarekegn Dea
for his professional directions. My special thanks also goes to Mr. Mesay Sata for those ideas
and comments he forwarded.
I also wish to extend my sincere appreciation to ethio telecom, Adama points of sales
employees and management for their cooperation during the data collection. Moreover, I
would like to thank the respondents, who honestly responded to many questions, and others
who directly or indirectly contributed to this research work.

Lastly I am also very grateful to my seniors, my friends and family for giving me a great
support and encouragement. Without your cooperation this would have not been possible.
Once again, thank you very much.

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 TABLE OF CONTENTS

DECLARATION ..................................................................................................................................... i
THESIS APPROVAL FORM............................................................................................................... ii
ACKNOWLEDGEMENT..................................................................................................................... iii
TABLE OF CONTENTS ..................................................................................................................... iv
LIST OF TABLES ............................................................................................................................... vii
LIST OF ACRONYMS ...................................................................................................................... viii
ABSTRACT........................................................................................................................................... ix
CHAPTER ONE: INTRODUCTION..................................................................................................... 1
1.1 Background of the Study............................................................................................................... 1
1.2 Statement of the Problem ............................................................................................................ 4
1.3 Research Questions ...................................................................................................................... 5
1.4 Objectives of the Study ................................................................................................................. 6
1.5 Scope of the Study ........................................................................................................................ 6
1.6 Limitations of the study ................................................................................................................ 7
1.7 Significance of the study ............................................................................................................... 7
1.8 Organization of the Study ............................................................................................................. 8
1.9 Definition of terms........................................................................................................................ 8
CHAPTER TWO: LITERATURE REVIEW .......................................................................................10
2.1 Introduction ................................................................................................................................10
2.2 Service Quality ............................................................................................................................10
2.2.1 Definitions of Service Quality .............................................................................................10
2.3 Importance of Service Quality ....................................................................................................12
2.4 Service Quality Models ...............................................................................................................12
2.4.1 SERVQUAL Model (Disconfirmation Approach) ..............................................................13
2.4.1.1 SERVQUAL Dimensions .............................................................................................14
2.4.1.2 Criticisms of SERVQUAL model.................................................................................17
2.4.2 SERVPREF (Performance Only) Model .............................................................................18
2.5 Customer Satisfaction .................................................................................................................19
2.5.1 Importance of Customer Satisfaction...................................................................................21

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 2.6 Service Quality and Customer Satisfaction .................................................................................22
2.6.1 Difference between Service Quality and Customer Satisfaction .........................................22
2.6.2 Relationship between Service Quality and Customer Satisfaction ......................................22
2.7 Empirical Studies Conducted on Service Quality and Customer Satisfaction in
Telecommunication Sector ...............................................................................................................23
2.8 Service Quality and Customer Satisfaction Studies Related to Ethio telecom ...........................26
2.9 Conceptual Framework...............................................................................................................27
2.10 Research hypothesis .................................................................................................................29
CHAPTER THREE: RESERACH METHODOLOGY........................................................................30
3.1 Introduction ................................................................................................................................30
3.2 Research Design ..........................................................................................................................30
3.3 Data Type and Sources................................................................................................................30
3.4 Target Population........................................................................................................................30
3.5 Sample Size and Sampling Techniques .......................................................................................31
3.6 Data Collection Instruments .......................................................................................................32
3.7 Data Collection Procedure ..........................................................................................................33
3.8 Validity and Reliability.................................................................................................................34
3.9 Data Processing and Analysis......................................................................................................35
CHAPTER FOUR: DATA ANALYSIS AND INTERPRETATION.....................................................................37
4.1 Introduction ................................................................................................................................37
4.2 Presentation of Results of Descriptive Statistics ........................................................................37
4.2.1 Respondents Characteristics....................................................................................................37
4.2.2 Perception Level of Customers on Points of Sales Service Quality Dimensions ............40
4.2.2.1Customers’ Perception on Tangibility Dimension .........................................................41
4.2.2.2 Customers’ Perception on Reliability Dimension.........................................................42
4.2.2.3 Customers’ Perception on Responsiveness Dimension ................................................43
4.2.2.4 Customers’ Perception on Assurance Dimension .........................................................44
4.2.2.5 Customers’ Perception on Empathy Dimension ...........................................................45
4.2.2.6 Customers’ Perception towards Satisfaction of Point of Sales Service ........................46
4.2.2.7 Summary of Customers’ Perception on Variables /Dimensions of the Study ..............47
4.3 Presentation of Inferential Statistics Results ..............................................................................47
4.3.1 Correlations of Points of Sales Service Quality and Customer Satisfaction....................48
4.3.2 Regression Analysis and Hypothesis Testing Results......................................................49
4.4 Discussion of the Study Findings.................................................................................................53

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 4.4.1 Perception Level of Customers’ on Points of Sales Service Quality ...................................53
4.4.2 Relationship between Points of Sales Service Quality and Customer Satisfaction .............55
CHAPTER FIVE: CONCLUSION AND RECOMMENDATION......................................................58
5.1 Introduction ................................................................................................................................58
5.2 Conclusions .................................................................................................................................58
5.3 Recommendation........................................................................................................................59
5.4 Recommendations for Further Research....................................................................................61
REFERENCES ........................................................................................................................................ i
Appendix A: English Questionnaire....................................................................................................... vii
Appendix B: Amharic Version Questionnaire ........................................................................................ xi
Appendix C: Test of Normality .............................................................................................................. xv

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 LIST OF TABLES

Table 1: Sample Size for ±3%, ±5%, ±7%, and ±10% Confidence Level is 95% andP=0.5. ....................35
Table 2: Reliability……………………………………………………………………………………………………………………..….…38

Table 3: Frequency and Percentage of Respondents’ Characteristics………………………………………………42

Table 4: Mean Score Range for Five-Scale Likert’s Response……………………………………………….……......44

Table 5: Mean and Standard Deviation Results of Tangibility Dimension………………………………………...45

Table 6: Mean and Standard Deviation Results of Reliability Dimension…………………………………….…...46

Table 7: Mean and Standard Deviation Results of Responsiveness Dimension…………………….………..…47

Table 8: Mean and Standard Deviation Results of Assurance Dimension…………………………………..…….48

Table 9: Mean and Standard Deviation Results of Empathy Dimension……………………………………………49

Table 10: Mean and Standard Deviation of Customer Satisfaction……………………………………….…….……50

Table 11: Summary of Mean and Standard Deviations of Study’s Variables/dimensions………………….51

Table 12: Correlations Results of Service Quality Dimensions and Customer Satisfaction……………..…52

Table 13: Multicollinearity Test……………………………………………………………………………………….…….…………53

Table 14: Model summery…………………………………………………………………………………………………………….…54

Table 15: ANOVA of Predictor Variables in the Test…………………………………………………………….….….……54

Table 16: Results of Regression Coefficient…………………………………………………………………………….……….55

Table 17: Summary of Results of the Tested Hypotheses…………………………………………………….….….…..57

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 LIST OF ACRONYMS

ANOVA Analysis of Variance

ETA Ethiopian Telecommunication Agency

ETC Ethiopian Telecommunication Corporation

SPSS Statistical Package for social Sciences

SERVEQUAL Service Quality

SERVPERF Service Performance

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 ABSTRACT

This research was conducted to measure the service quality level of ethiotelecom, Adama
points of sales. Moreover, the study tried to investigate the effect of service quality on
customers’ satisfaction. To this purpose, the researcher identified the five dimensions of
SERVPERF model consists of 22 different service features which are grouped in to 5 different
determinants: tangibility, reliability assurance, responsiveness, and empathy. Convenience
sampling technique was used to obtain 204 responses from telecom service subscribers
located in Adama city. And the data obtained through self-administrated questionnaires was
analyzed using statistical tools such as mean, correlation, and multiple regressions.
According to the mean scores, the perception level of customers reflects agreement towards
the service quality attributes which indicate that the customers are satisfied with the service
quality provided by the points of sales. From the correlation analysis made, all of the five
service quality dimensions have positive relationship with customer satisfaction. By
comparing the correlation results and the mean scores of the service quality dimensions, the
finding indicates a mismatch between the service quality the points of sales provides and
service quality customers’ preferred. The points of sales give more emphasis on
responsiveness of service, but what customers prefer most is reliable service. Furthermore,
the result of regression analysis showed that reliability, assurance, empathy, and
responsiveness have a positive and significant effect on customers’ satisfaction. However,
tangibility has positive but insignificant influence on customers’ satisfaction. Therefore,
considering the beta value of the regression analysis, to better satisfy its customers, the
points of sales is recommended to give more emphasis on attributes of reliability, assurance,
empathy, responsiveness, and tangibility in their descending order.

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 CHAPTER ONE: INTRODUCTION

1.1 Background of the Study

Telecommunication service sector is one of the most important sectors of an economy. All
social, economic, political, cultural, trade and commercial activities of a country is
undertaken using telecommunication service. According to Agyapong (2011), high quality
service in the telecommunication industry can lead to growth and long-term development of
any country whereas failure of delivering quality telecom services will affects country’s pace
of commercial and domestic activities. Due to this, telecom firms are expected to deliver high
quality service. Ethio telecom, the sole telecom service provider in the country, is not
exception in this regard.

Service quality is the result of comparison that customers make between their expectations
about a service and their perception of the way the service has been performed (Parasuraman,
Zeithaml, & Berry, 1988).However, customers’ requirements and expectations is a dynamic
function, implying that the status of service quality is accepted in a certain time but it does
not mean it will be always accepted by customers in the future. So, always there is a need of
continual improvement of the service quality (Zeithamal and Bitner, 2003). Particularly in the
domain of telecommunication service new technological developments are creating new
corresponding services requirement. This means customer will have new expectations on new
services and new levels of satisfaction are created as a result (Neguyen, 2014).

Customer satisfaction is influenced by many different factors such as service quality, product
quality, price, customers’ emotions, and perception of fairness. However, service quality had
a long term impact on the satisfaction of customers (Zeithaml, Bitner, & Gremler, 2009).
Studies revealed that as service quality improves the probability of customer satisfaction
increases (Kotler and Keller, 2012).Hence, delivering high quality services is a prerequisite
for achieving customer satisfaction and only through customer satisfaction can a company
gain loyal customers (Grönroos, 1984). Similarly, according to Singh and Khanduja, (2010)
excellent service delivery will lead to an increase in customer satisfaction and in turn,
customer satisfaction leads to repeat purchase, brand loyalty, positive word of mouth and
profitable relationships. In support of this, Mesay (2012) stated that, nowadays, service

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quality has received much attention because of its obvious relationship with costs, financial
performance, customer satisfaction, and customer retention. On its part, this study
investigated the relationship between service quality and customers satisfaction.

Despite the criticality of service quality to customers’ satisfaction, due to its unique
characteristics of intangibility, heterogeneity, inseparability and perishability, measuring
service quality causes difficulties to service providers(Douglas and Connor, 2003).Because of
this, services need a distinctive framework for quality clarification and measurement. Among
a number of service quality models, SERVQUAL and SERVPERF are the widely used
models to measure service quality when it comes to service sector (Sindwani and Goel,
2012).According to SERVQUAL model developed by Parasuraman et al., (1988), customers
evaluate service quality and customer satisfaction by comparing provider’s actual
performance ‘perception’ with what they believe service performance would be
‘expectation’. The five constructs of this model are; tangibility, reliability, responsiveness,
assurance, and empathy.

SERVPERF model was later extracted from SERVQUAL by Cronin and Taylor, (1992) just
focusing only the perception aspect of the same constructs. SERVPERF argues that
customers evaluation of the perception already considered the personal past expectation of
the service. In other words, expectation dimensions proposed by SERVQUAL become
double, (first, implicitly done by people in their mind, and second, explicitly done by
SERVQUAL model). Empirical findings also revealed that SERVPERF scale is superior to
SERVQUAL not only as the efficient scale but also more efficient in reducing the number of
items to be measured by 50% (Hartline and Ferrell, 1996; Babakus and Boller, 1992; Bolton
and Drew, 1991, all cited in Mesay, 2012). Bears on this conclusion, this study employed
SERVPERF model to measure service quality of ethio telecom, Adama points of sales.

The service sector plays an increasingly important role in Ethiopian economy and the
government has recognized the need for appropriate service delivery policy to encourage
public service organizations to improve their services by applying various civil service
reform programs. However, regardless of the service delivery reform being introduced in the
country, poor customer service delivery remains the feature of most public enterprises
(Zeritu, 2010). Similarly a study conducted by Potluri and Mangnale, (2011) indicates 49% of
the customers expressed overall dissatisfaction on the services provided by Ethiopian service
sectors in general. As far as ethio telecom is concerned, according to Lishan (2010) Ethiopian

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telecom sector performance review report, ethio telecom is also unable to satisfy its
customers and the company is losing 30% of its revenue per annum due to poor service
quality. Similarly, the study conducted by Potluri and Mangnale (2010) showed incompetent
employees and poor service delivery processes are among the reasons for poor service quality
of ethiotelecom.

The introduction of telecommunication services in Ethiopia dates back to 1884, seventeen

years after the invention of telephone technology in the world. Ethiotelecom is the oldest
public telecommunications operator in Africa. It is a state owned enterprise and the sole
telecom service provider in the country. The company received a monopoly license from the
regulator, the Ethiopian Telecommunications Agency (ETA); for that it must meet efficiency,
quality of service and infrastructure expansion targets (Lishan, 2010).

In telecommunication sector, even though, there are tangible physical product associated to
provide service such as customer premise equipment and cable, the major product is
intangible in nature and the production and consumption of the final product take place
simultaneously (Potluri and Mangnale, 2010). The whole service provision and consumption
process requires an interaction between the service providing company and the consumer.
And the interaction starts from the point customers approach to the company in order to
purchase products and services for the first time. Therefore, ethio telecom point of sales acts
as retail outlets to the company and customers make their first contact to the company
through point of sales located in 202 locations across the country. The focus of this study is
on points of sales located in Adama city.

Majority of studies conducted on ethio telecom service quality and customer satisfaction level
aimed at the post purchase service performance of specific products of the company such as
mobile, fixed line and broad band internet. However, like the post purchase service
performance and customer satisfaction assessment, the quality of service provided at points
of sales and customers’ satisfaction level on the service they get at the service encounter
should get enough study attention. Besides, most of the researches conducted were
geographically restricted to customers found in Addis Ababa. Therefore, propelled by the
aforementioned facts, this study tried to examine service quality and customer satisfaction in
ethio telecom, in reference to Adama points of sales.

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1.2 Statement of the Problem

Ethio teleocm is facing huge challenge arising from its customers for the requirements of
modern and quality telecom services. Beside this, the demand of the civil service reform
program of the nation, the obligations from the regulator (ETA), and meeting international
standards are among the compulsions that need to be addressed by the company. In response
to these challenges, the company commissioned system overhaul (Potluri and Mangnale,
2010).

In this spirit, more recently, the company has undertaken Business Process Reengineering to
curb the traditional service delivery system of the points of sales (Frehiwet, 2012).Similarly,
according to ethio telecom’s 2013/14 annual report (2014), redesigning and rebranding the
physical features of points of sales, automating activities, working hour arrangements and
designing standard working processes and procedures for services provided in points of sales
are among the measures taken to improve the overall performance of the services.

Despite the aforementioned efforts undertaken by the company to improve the service quality
of points of sales, from the informal communication the researcher had with some of Adama
points of sales customers and the insights from the suggestion book feedbacks, it was learnt
that the service delivery is not satisfying the needs and wants of customers to their
expectations.

As Nguyen (2014) pointed out, while many factors are important in improving service
quality, customers’ perception of the quality of service is strongly influenced by the social
interactions they experience with employees. The behaviors of frontline service employees
are critical to customer evaluation of the service encounter (Hartline, Maxham, & McKee,
2000). Similarly, Wong (2004) stated that customers are educated than ever before hence
contact employee plays an important role in the delivery of quality service as well as the
formation of customer satisfaction. In this regard, sales representatives and other employees
in ethio telecom points of sales have an important role in delivering quality service and
guarantying customer satisfaction. Therefore, investigation of service quality and customer
satisfaction at encounter level appears an interest.

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However, majority of studies conducted on ethiotelecom are highly focused on post purchase
satisfaction of customers towards a specific service of the company. For example Mussie
(2010) and Negi (2011) conducted a study on service quality and customer satisfaction in
mobile services. Firehiwet (2012), and Adam and Yibeltal, (2014) assessed service quality
and customer satisfaction in broad band internet services. So far, to the best knowledge of the
researcher, only one study (Potluri and Mangnale, 2010) has been conducted on service
quality and customers satisfaction across service encounters related to all kinds of telecom
services rendered by ethio telecom points of sales.

Potluri and Mangnale (2010)’s study was a descriptive report which didn’t demonstrate
causal links between service quality and customer satisfaction. Besides, the study used
different parameters (models) of measuring service quality namely; service interaction,
service delivery process and customer compliant handling procedure. Moreover, the study
was geographically restricted to customers served in selected Addis Ababa points of sales.

Satisfying customers is essential to the continuous existence of any service organization,

including ethio telecom. And one of the most determinants of customers’ satisfaction is
service quality (Zeithaml et al., 2009) Therefore, always there is a need of consistent review
of service quality and customers satisfaction.

Based on the above felt reasons, the researcher have tried to measure the service quality and
its subsequent effect on customer satisfaction in reference to ethio telecom, Adama points of
sales.

1.3 Research Questions

The study seeks to answer the following specific research questions

 What is the perception level of customers towards service quality dimensions in

ethiotelecom, Adama points of sales?
 What is the perception level of customer satisfaction on ethiotelecom, Adama points of
sales service?
 What is the relationship between service quality dimensions and customer satisfaction in
ethiotelecom, Adama points of sales?
 Which service quality dimension(s) significantly influenced customer satisfaction in
ethio telecom, Adama points of sales?

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1.4 Objectives of the Study

The general objective of the study is to assess the level of service quality and investigate its
effect on customer satisfaction in ethio telecom, Adama points of sales.

The specific objectives are:

 To investigate the perception level of customers towards service quality dimensions in
ethiotelecom, Adama points of sales.
 To examine the perception level of customer satisfaction on ethiotelecom, Adama points
of sales service.
 To investigate if there is a relationship between service quality dimensions and customer
satisfaction in ethiotelecom, Adama points of sales services.
 To identify the dimension(s) of service quality that significantly influenced customer
satisfaction in ethio telecom, Adama point of sales

1.5 Scope of the Study

The study focused on measuring service quality and investigating its effect on customer
satisfaction in reference to ethio telecom, Adama point of sales from customers’ perspective.
The independent variables of the study are service quality dimensions namely; reliability,
assurance, tangibility, empathy and responsiveness, and the dependent variable is overall
customer satisfaction. The study is geographically restricted to customers served in Adama
town points of sales thus the result will not be extended to other ethio telecom points of sales
found in the country. Customers/respondents in this study are limited to individuals who
visited ethio telecom, Adama points of sales to get different telecom services. The company
is sole telecom service provider in the country and it became impossible to look for
comparative analysis with other company.

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1.6 Limitations of the study

All researches have their limitation and it is no exception on this study. One possible
limitations of the study is inability to incorporate all ethio telecom point of sales customers
found in the other location of the country due to time constraint and other resource
limitations. Therefore, it is difficult to generalize the findings of the study to the whole ethio
telecom point of sales customers in Ethiopia. Besides, the sample size is not large enough but
shall be adequate for the type of analysis undertaken. Moreover, despite the advantage of
convenience sampling used in the study, it has a limitation in that the study cannot be
generalized to the intended target population (ethio telecom, Adama point of sales
customers).

Another limitation is on the scope of study. From a theoretical point of view, the framework
of this research is restricted to its own objectives. This study has pondered the relationship
between service quality dimensions (tangibility, reliability, responsiveness, assurance, and
empathy) and customer satisfaction. Other antecedents or consequences have not been
considered.

1.7 Significance of the study

Despite the huge investment the company is outlaying to enhance the service quality,
customers are not getting services to their expectations. Hence, the findings of the study
would be a relevant input to the management of ethio telecom, Adama points of sales in
identifying the existing strength or weakness of service quality and level of customers’
satisfaction. Besides, the study essentially uncovers dimensions of service quality that
customers consider important to their satisfaction. And this helps in efficient deployment of
resources and efforts.

Besides, the study will give insight and more reliable data about the levels of service delivery
quality and customers’ satisfaction in ethio telcom to the Ethiopian Telecommunication
Agency (the regulator), policy makers and other concerned bodies.

Moreover, the result of this research project can be used as a base point for further studies in
the related issues.

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1.8 Organization of the Study

This study is divided in five chapters. The first chapter contains the introduction part that
consists of background of the study, statements of the problem, research questions, research
objectives, and scopes of the study, limitations of the study, significance of the study,
organization of the study, and definition of terms. The second chapter presents theories and
previous studies related to the topic (literature review). The third chapter deals with research
methodology that consists of study population, data sources, sampling technique, data
collection instruments, and data analysis techniques. The fourth chapter presents data
analysis, findings and discussion of the data gathered. The fifth chapter presented conclusion,
recommendation, and implication for further research.

1.9 Definition of terms

Customer Satisfaction; Customer satisfaction is an attitude or evaluation that is formed by

the customer comparing their pre-purchase expectations of what they would receive from the
product to their subjective perceptions of the performance they actually did receive(Sriyam,
2010).

Service Quality; Service quality is the discrepancy between consumers’ perceptions of

services offered by a particular firm and their expectations about firms offering such services
(Parasuraman, et al., 1988).

Service Encounter; Service encounter is an interpersonal association between the firm‘s

staff and customers (Potluri and Mangnale, 2010).

Point of sales; Point of sales is a place where sales are made.

SERVPERF; SERVPERF is a service quality model which measures service quality by

using the perceptions of customers (Cronin and Taylor, 1992).

Tangibility: Ethio telecom Point of sales overall appearance, employees’ appearance,

completeness and modernity of facilities & equipments in the shop.

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Reliability: Ability of the ethio telecom point of sales and its sales representatives and other
employees to perform the promised service accurately and dependably.

Responsiveness: The willingness of sales representatives and other employees in the ethio
telecom points of sales to provide prompt service and help customers.

Assurance: The knowledge and courtesy of sales representatives and other employees in the
ethio telecom points of sales and their ability to convey trust and confidence on customers.

Empathy: The ability of the ethio telecom point of sales and its sales representatives and
other employees to provide a carrying and individualized attention to customers and
understand customers need.

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 CHAPTER TWO: LITERATURE REVIEW

2.1 Introduction

This section reviews the literature written by different authors and researches conducted by
different scholars in relation to the study. It covers overview of service quality and customer
satisfaction, service quality measures and dimensions, importance of service quality and
customer satisfaction, the relationship between service quality and customer satisfaction,
previous studies regarding service quality and customer satisfaction in telecom sector, and
other issues related to the subject matter.

2.2 Service Quality

2.2.1 Definitions of Service Quality

Before defining the term service quality lets define each words separately. Services are
different from products because of its components. Services have some remarkable
characteristics in comparison with goods. They are intangible, inseparable, heterogeneous,
un-stored and difficult to measure (Al-Hakim, 2012). On their part, Kotler and Keller, (2012)
defined service as any activity or benefit that one party can offer to another which is
essentially intangible and does not result in the ownership of anything. Its production may or
may not be tied to a physical product.

Different meaning could be attached to the word quality under different circumstances. It has
been defined in a different way by various scholars. Some of the prominent definitions
include quality conformance to specification or requirements and fitness for use (Al-Hakim,
2012). These initial efforts in defining quality originated largely from the manufacturing
sector. In service sector where production, delivery and consumption of service can occur
simultaneously, the concept of quality refers to the matching between what customers expect

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and what they experience (Elmayar, 2011).On their part (Kotler and Keller, 2012) describe
quality as the totality of features and characteristics in a product or service that bear upon its
ability to satisfy needs.

Generally, from different definitions of quality, customers are the judges of quality.
According to Kwortnik (2005) quality is not objectively measured but is subjectively felt by
customers and measured relative to customer determined standards. This clearly shows the
difficulty of measuring quality. In support of this, Zeithaml and Bitner, (2003) stated that the
meaning of quality can be referred to in many dimensions such as experience of the provider,
the evidence of service, image, price and so on.

From the reviewed literatures, majority of definition of service quality revolves around the
idea that service quality is the result of comparison that customers make between their
expectations about a service and their perception of the way the service has been performed.

For example, Parasuraman et al., (1988) described service quality as a measure of how well
the service level delivered matches customer expectations. According to this definition,
delivering quality service means conforming to customer expectations on a consistent basis.
Caruana (2002) have pointed out that service quality is the result of the comparison made by
customers about what they feel service firms should offer, and perceptions of the
performance of firms providing the services. Similarly, Gronroos (1984) defines service
quality as the outcome of the comparison that consumers make between their expectations
and perceptions.

Generally, Service quality is the consumer’s appraisal of overall quality of service delivery
(Parasuraman et al., 1988). It is the result of the comparison that consumers make between
their expectations about a service and their perception of the way the service has been
performed or delivered (Oliver, 1980; Parasuraman et al., 1988). This evaluation of service
quality is typically formed from disconfirmation of expectations of service performance
(Parasuraman et al., 1988) or through the assessment performance measures (Cronin &
Taylor, 1992). The contention between the two approaches centers on whether service quality
is the difference between customers’ perceptions and expectations of a service
(disconfirmation) or simply their perceptions (performance based).

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2.3 Importance of Service Quality

Service quality has an effect on customer satisfaction (Zeithaml and Bitner, 2003; Ahmed et
al., 2010). That means, as service quality improves the probability of customers satisfaction
also highly increased. Obviously, satisfied customers are the foundation of any service
organizations success.

Service quality has an effect on customer loyalty (Zeithaml and Bitner, 2003; Ahmed et al.,
2010). Customers become loyal when they perceived that the organization is providing
quality service better than services offered by the competitors (Ahmed et al., 2010).
Similarly, according to Al Bassam (2013), those customers who highly satisfied with the
company services or products are more likely to repurchase the same product or service more
often and in the same or greater quantity than customers who were only satisfied.

Service quality affects relationships and relationship marketing, as customers are willing to
build relationships with organizations that provide quality service (Zeithaml and Bitner,
2003).

Service quality has an effect on profitability and costs. As Zeithaml et al., (2009) pointed out,
service quality impacts on customer satisfaction, this also impacts on customer retention,
reduction of costs and increased profitability. In support of this, Al Bassam, (2013) stated that
based on empirical researches, service quality has a strong influence on profitability and
organizational financial performance.

Therefore, service organizations will recognize a number of potential benefits deriving from
implementing service quality programmes, including increasing customer satisfaction,
customer retention, customer loyalty and positive word-of-mouth, enhanced corporate image,
profit gains, and improved financial performance.

2.4 Service Quality Models

There are various service quality models that have been developed to explain the quality of
services. Two main conceptualizations of service quality mainly exist in the literature, of
which one is based on the disconfirmation approach (scale to measure the difference between
Perception and Expectations), and the other is based on performance only approach (scale to

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measure only Perception). Both these scales have been used extensively for measuring
service quality (Sindwani & Goel, 2012).

2.4.1 SERVQUAL Model (Disconfirmation Approach)

SERVQUAL model was first introduced by Parasuraman et al., (1985). This service quality
model is based on assessment of service quality from customers’ perspective. According to
this model perceived service quality is a result of a comparison between what consumers
consider the service should be and their perceptions about the actual performance offered by
the service provider. Therefore, the model conceptualizes service quality as a gap between
customer's expectations (E) and the perception of the service providers' performance (P). i.e.
Q = (P - E). The greater the positive score mark means the greater the positive amount of
service quality or the greater the negative score mark, the greater the negative amount of the
service quality.

Parasuraman et al., (1985) originally identified ten dimensions of service quality: reliability,
responsiveness, competence, access, courtesy, communication, credibility, security,
understanding and tangibility. Those determinants were later in their 1988 work broken down
into five dimensions: reliability, assurance, tangibles, empathy, and responsiveness.
Reliability, tangibles and responsiveness remained distinct, but the remaining seven
components collapsed into two aggregate dimensions, assurance and empathy. Therefore the
SERVQUAL scale, Parasuraman et al., (1988) identified five determinants of “tangibles”,
“reliability”, “responsiveness”, “assurance” and “empathy” as part of the 22-item
SERVQUAL scale for measuring service quality. The instrument (questioner) is managed
twice in different forms, first to measure expectations and second to measure perceptions.
Four or five numbered items are used to measure each dimension.

Generally, the main focus of the gap analysis model is the customer gap which represents the
difference between customer expectations (the reference points customers have as they begin
the service experience), and perceptions (the service as actually received by these
customers).The idea of this model is that marketers should close this gap for the purpose of
boosting customer satisfaction and building long-term relationships with them (Elmayar,
2011).

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The SERVQUAL scale has been tested and/or adapted in a great number of studies conducted
in various service settings, cultural contexts and geographic locations. According to Zeithaml
et al., (2009) on the basis of exploratory and quantitative research, these five dimensions of
SERVQUAL model were found relevant to banking, insurance, appliance repair and
maintenance, security brokage, telecommunication, repair service and others.

2.4.1.1 SERVQUAL Dimensions

Parasuraman et al., (1988) refined the ten service quality dimensions and reduced them to the
SERVQUAL’s five generic dimensions of reliability, assurance, tangibles, empathy, and
responsiveness. And, in many marketing literatures, these generic five attributes of service
quality are considered to be the common service quality measures( Al Bassam,2013).Each of
these dimensions are explained as follows;

Tangibles

Tangibles include services which are physically observed by the customer. The physical
appearance of facilities, equipment, staff, and written materials are considered under this
dimension (Parasuraman et al., 1988).Similarly, Zeithaml et al., (2009) revealed issues such
as modern looking equipment, neat appearing of employee and physical facilities materials
associated with the service such as pamphlets and statements addressed under this dimension.
They further stated that these qualities evaluate the capability of service providers and they
are used by firms to convey image and signal quality. Khan (2010) in his part describes
tangibles dimension referring to the quality of physical infrastructure, the equipment
available to make the service a delightful experience, the external show of people providing
the service. Loke et al., (2011) referred tangibility in their study of service quality in telecom
sector with constructs such as well-equipped and up-to-date facilities, comfort of physical
layout of equipment and furniture for customers, well-dressed and neat appearance of staffs,
and material and information associated with the service (e.g. promotional brochure) are
visually appealing at the customer service counter.

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Responsiveness

Responsiveness means service provider’s willingness to help the customers and provide
prompt services (Parasuramanet al.,1988).This dimension is concerned with dealing with the
customer’s requests, questions and complaints promptly and attentively. Responsiveness of a
firm is identified when it communicates to its customers how long it would take to get
answers or have their problems dealt with and responsiveness should be measured from
customers view point rather than company’s perspective(Zeithaml et al., 2009). According to
Loke et al., (2011) constructs such as telling the exactly date of services delivery, promptness
of the service, and willingness employees to help the customers are addressed to measure
responsiveness of service in telecom company. Generally, according to AlBassam (2013) a
number of studies suggest five items fall within the responsiveness dimension:
confirmation(the requirement and obligation for service providers to inform their customers
about the timing of the delivery of the service) , prompt service (the speed of the service
providers in responding to customers’ requests ), help availability(the level of help employees
can offer to customers ), flexibility(the necessity for service providers to adjust the service
process in order to allow customers to make changes or modify their orders )and updated
information(the frequency which service providers offer the latest full information and how
often it is updated ).

Reliability

Parasuraman et al., (1988) expressed reliability as the ability to perform the promised service
dependably and accurately. Reliability is also refers to the ability to perform the service at
designated time. Similarly, reliability is to convey the trust to performing services and show
the sincerity to solve the problem of customers. It includes the performance of services right
at the first time and error free records (Parasuraman et al, .1988). In particular, the three main
elements of reliability are completing and carrying out the service at the assigned time,
correctly requisitioning payment of services provided, and maintaining accurate records of
invoices made and payments received (AlBassam, 2013).According to Zeithaml et al.,
(2009), reliability has been shown consistently to be the most important dimension in service
Quality. They further stated that when a firm makes frequent mistakes in delivery, when it
doesn't keep its promises, customers lose confidence in the firm's ability to do what it
promises dependably and accurately. Reliability in telecom sector is addressed on issues such

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as delivering the promised service dependently, accurate and timely billing, and accurately
kept and readily available records (Khan, 2010)

Assurance

Assurance is related to behavior of employee, the employee should have ability to inspire the
trust and confidence (Parasuraman et al., 1988). It include safe transaction, knowledge to
answer the customer’s questions and consistently courteous with customers. The trust and
confidence may be represented in the personnel who link the customer to the organization
(Zeithaml et al., 2006).constructs such trusting the service provider staff, feeling safe when
conducting business with the service provider staff, politeness of customer service staff and
adequate supports from the service provider were included in Loke et al. (2011) study to
measure assurance of service in telecom sector. Similarly, according to Khan (2010),
assurance focuses on the expertise of the employees about the multifaceted knowledge about
the service offering, courtesy, and their ability to instill faith and dependence in the service
providers’ competence.

Empathy

Empathy quality which is the last dimension on service quality model and it is about caring,
ability to be approachable, and giving individual attention to the customers (Parasuraman et
al., 1988).There are several ways that empathy can be provided: knowing the customer’s
name, his preferences and his needs. Many small companies use this ability to provide
customized services as a competitive advantage over the larger firms (Zeithaml et al.,
2009).For a service like telecom, the employees need to maintain good relationship with the
customers because much interaction is involved between the two. The employees need to
welcome the customer whenever they call for any query or complaint. In line with this,
constructs such as individual attention given by telecom service staffs, telecom service staffs
understanding what the customers need and convenience of the working hour were used to
measure empathy of service in Loke et al., (2011) study. Khan (2010) on his part concluded
that empathy necessitates placing customers over and above everything else during the course
of staff interaction and this helps in building long term relationship with customers.

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2.4.1.2 Criticisms of SERVQUAL model

Many researchers used SERVQUAL model to measure service quality, but the model has
been criticized extensively. Major arguments were about the dimensionality of the
SERVQUAL determinants, its validity and it has been also argued that the model lacks to
address other reasonable measures (Kumbhar, 2011). In support of this, Gronroos (2001)
pointed out that one of the obvious limitations of the SERVQUAL model is its dimensions
mainly focuses on the service delivery process. That is, the functional aspect (human and
tangibles) of service process. According to him, human aspects of service delivery (measured
by responsiveness, reliability, assurance, and empathy dimensions) and the tangibles of
service are the only focus of the SERVQUAL model without considering the technical
aspect. Similarly, Lenka et al., (2009) criticize the model for failure of recognizing the
technical aspect of service which is the most important part of service quality. All of them
ascertained that using only functional quality attributes to explain or predict consumers’
behavior might be a misjudgment of service quality as it does not represent all the service
quality attributes of a service encounter and therefore has low predictive validity.

The other criticism is about unstable dimensionality of the dimensions. In particular, the
tangibility proved unstable (Gronroos, 2001).Because of this, the number of dimensions and
their applicability differ from one context to another. Therefore, it can be concluded that a
simple adaptation of the SERVQUAL factors is not sufficient to capture service quality
across diverse settings (Al Bassam, 2013).Cronin and Taylor, (1992) also criticize
SERVQUAL and develop SERVPERF model which is as discussed in the section below.

However, regardless of the criticism, Parasuraman et al., (1988) claim that diagnostic ability
is the major practical benefit of the SERVQUAL model, as the purpose of measuring service
quality is to diagnose the service shortfalls which need attention or action. Similarly, Ahmed
et al., (2010) in their study conclude that using SERVQUAL organizations can at least assess
five dimensions of service quality to ascertain the level of services provided, and to
determine which dimensions need improvement.

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2.4.2 SERVPREF (Performance Only) Model

The SERVPERF model of Cronin and Taylor (1992) was carved out of SERVQUAL model,
which was originally developed by Parasuraman et al., (1988).Cronin and Taylor (1992)
investigated the conceptualization and measurement of service quality and its relationship
with consumer satisfaction and purchase intentions. Then after, they concluded that
perceptions only are better predictor of service quality and therefore expectations should not
be included as suggested by SERVQUAL (Elmayar, 2011).The only difference between
SERVQUAL and SERVPREF is that the SERVPREF does not take into account customer
expectations. It brings into play only customer perceptions of service performance (Zeithaml,
et al., 2009).

The main argument of Cronin and Taylor (1992)is when somebody is called to evaluate the
perception, she or he in their mind has already considered the personal past expectation of the
service, thus the evaluation of the perception already considered the personal past expectation
of the service. In other words, the perception proposed by SERVQUAL becomes double
(first, implicitly done by people in their mind, and second, explicitly done by SERVQUAL
model. Similarly according to Al Khattab and Aldehayyat, (2011),to find the performance of
a firm (i.e. its service quality) all that is required is to collect data by directly asking the
customer perception through a simple survey and a questionnaire.

Therefore, SERVPERF model does not have a gap analysis between perception and
expectation of service. It has only one part, which is the perceived performance of service. In
this instrument, customers rate their perceptions of performance of the same attributes that
are covered in the SERVQUAL model (Cronin and Taylor, 1992).That means, the five
domains–tangibles, reliability, responsiveness, assurance and empathy–identified in the
SERVQUAL model are equally applicable to the SERVPREF model. Hence, 22 perception
items of the SERVQUAL are used by SERVPREF excluding the expectations scales.

An argument on SERVQUAL or SERVPERF is in favor of the later. This is because,

performance perceptions are already the result of customers’ comparison of the expected and
actual service (Babakus and Boller, 1992). They further ascertained that performance only
score showed better reliability and validity tests than expectation minus perception because
people always tend to give high expectation ratings while their perception scores rarely

P a g e | 18
exceed their expectations. Therefore, only perception is sufficient for measuring service
quality and expectations should not be included as suggested by SERVQUAL

Generally, empirical findings revealed SERVPERF scale is found to be superior not only as
the efficient scale but also more efficient in reducing the number of items to be measured by
50% (Hartline and Ferrell, 1996; Bolton and Drew, 1991, as cited in Mesay, 2012).Therefore,
bears on these conclusions and the study adopted the measurement of actual performance
(SERVPERF) to measure service quality of ethio telecom, Adama point of sales.

2.5 Customer Satisfaction

Definition of customer satisfaction has been widely discussed from the view of any
researchers and organizations who increasingly desire to measure it. However, satisfaction is
a complex concept and difficult to universally define and precisely measure (Oliver,
1980).He further stated that everyone knows what satisfaction is until asked to give definition
.Then, it seems nobody knows. However, several scholars and practitioners have defined
customer satisfaction in various ways. And most of them agree that satisfaction is an attitude
or evaluation that is formed by the customer comparing their pre-purchase expectations of
what they would receive from the product to their subjective perceptions of the performance
they actually did receive (Sriyam, 2010). On their part, Kotler and Keller (2012) defined
satisfaction as “a person’s feeling of pleasure or disappointment resulting from comparing a
product’s performance (outcome) in relation to his or her expectation” (p. 128). Customer
satisfaction is also defined as an attitude-like judgment following a purchase act or a series of
consumer product interactions; consumer’s post-purchase evaluation and affective response
to the overall product or service experience (Oliver, 1980). In the same way, Zeithaml, et al.,
(2009) define satisfaction as the after-purchase evaluation and emotional recognition of the
completed purchasing process.

The customer satisfaction can be conceptualization as transaction specific and/or a

cumulative consumption experience (Nimako & Azumah, 2009). Contrasting the two views
transaction specific conceptualization sees customer satisfaction as specific post-purchase
evaluative judgment of a service encounter following a specific buying process in that it is
based on a one time (Oliver, 1980). On the other hand, in the cumulative customer

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satisfaction perspective, customer satisfaction is conceptualized as an overall customer
evaluation of a product or service based on purchase and consumption experiences over a
time period (Wang & Lo, 2002). It is argued that since cumulative satisfaction is based on a
series of purchase and consumption experiences, it is more useful and reliable as a diagnostic
and predictive tool than the transaction perspective that is based on a one-time purchase and
consumption experience (Nimako&Azumah, 2009).

Another area that has received considerable debate in customer satisfaction literature is
whether customer satisfaction should be defined as an outcome or a process (Nimako &
Azumah, 2009). It is however important to note that these two approaches are not mutually
exclusive but complementary, as one often depends on the other. According to Vavra, (1997,
as cited in Nguyen, 2014), satisfaction is just an outcome or end result during the process of
the consumption of a service. That means it is viewed as a post-purchase experience .In this
way satisfaction is perceived as the end-state satisfaction (outcome) resulting from the
experience of consumption without comparing expectations.

However, according to Khalifa & Liu (2002, as cited in Nguyen, 2014),the process
perspective argue that customer satisfaction is a feeling of satisfaction that results from the
process of comparing perceived performance and one or more predictive standards, such as
expectations or desires. This perspective is grounded in the expectancy disconfirmation
theory proposed by Oliver (1980). The customer is satisfied if the performance of
product/service is equal to his/her expectations (confirmation) and he/she is dissatisfied if the
product/service performance is perceived to be below his/her expectation (negative
disconfirmation). If perceived performance exceeds expectations, the customer is highly
satisfied (positive disconfirmation). By taking satisfaction as a process these definitions do
not focus on satisfaction itself but things that cause satisfaction, the antecedents to
satisfaction, which occur primarily during the service delivery process (Vavra, 1997, as cited
in Nguyen, 2014).

Recent studies have found that satisfaction as an outcome or end result during the process of
the consumption of a service; it is viewed as a post-purchase experience. This approach to
measuring customer satisfaction is the performance only (Cronin & Taylor, 1992) which
challenges the disconfirmation approach by proposing that evaluations of a product or service
are affected by the perceptions of the performance (experience) only. This approach ignores
the customers’ expectations in the customer satisfaction equation and leads to the creation of

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a performance only based measure of service quality called SERVPERF model (Oliver,
1993).

2.5.1 Importance of Customer Satisfaction

Customer satisfaction has been a subject of great interest for organizations and numbers of
marketing researches, because customers are key stakeholders in organizations and their
satisfaction is a priority for sustainable growth.

Achieving customer satisfaction is always a desirable goal of all enterprises because the ones
which can satisfy the higher level of customer satisfaction are more likely to retain more
customers, increase the loyalty and earn more profits (Nguyen, 2014). A study undertaken by
Mesay, (2012) found a positive relation between customer satisfaction and loyalty of
customer and this leads to commitment of customers to reuse the services. And Mesay’s
study concluded that customer satisfaction bridges between service quality the company
provides and loyalty of customer. On the same way, Kotler and Keller (2012)
acknowledge that satisfied customers will make repeated purchases and exercise high loyalty
towards the company’s products or service. On the reverse, dissatisfied customers have no
bond of loyalty with the organization (Ahmed et al., 2010).When customers are loyal to a
company’s product it indicates that their experiences exceed their expectations and therefore
no need for changing to a competitive product.

Satisfied customers make repeated purchases and tell others about their good experience
with the product (Mcdougall & Levesque, 2000) and this shows a direct link between
customer satisfaction and customer retention. Similarly, Singh and Khanduja (2010) stated
that satisfied customers form the foundation of any successful business as customer
satisfaction leads to repeat purchase, brand loyalty, positive word of mouth and profitable
relationships.

Kotler and Keller (2012) pointed out that satisfied customers will maintain a positive attitude
towards the service providing company and they will have a confidence in the company and
are willing to cooperate with a company’s staff.

According to Hanif, et al., (2010) customer satisfaction makes the customers loyal to one
telecommunication service provider. Hence, customer satisfaction is very important in

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today’s business world and the profitability and survival of any organization depends on the
ability to create high degree of satisfaction.

2.6 Service Quality and Customer Satisfaction

2.6.1 Difference between Service Quality and Customer Satisfaction

According to Wilson et al., (2008), service quality and customer Satisfaction have certain
things in common, but satisfaction generally is a broader concept, whereas service quality
focuses specifically on dimensions of service. Similarly, Zeithaml et al.,(2009)stated that the
two concepts are fundamentally different because service quality is a focused evaluation that
reflects the customer’s perception of reliability, assurance, responsiveness, empathy and
tangibility whereas, satisfaction is more inclusive and it is influenced by perceptions of
service quality, product quality and price, also situational factors and personal factors. In
support of this, Ling (2008) stated that satisfaction is a super ordinate construct because it can
result from a large variety of dimensions that may lie beyond those specified in service
quality dimensions.

2.6.2 Relationship between Service Quality and Customer Satisfaction

From the definitions service quality and customer satisfaction there is a relationship between
the two. However, there was no clear agreement between researchers over the antecedents of
service quality and satisfaction. A study carried out by Bitner (1990, as cited in Siddiqi,
2011) on 145 tourists in an international airport, which suggested satisfaction as an
antecedent to service quality (Satisfaction → service quality)since to reach an overall
attitude(service quality) implies an accumulation of satisfactory encounters. However, studies
made by Cronin & Taylor, (1992) and Ahmed et al., (2010)provided empirical support that
quality judgments cause satisfaction–that is, service quality is the antecedent to satisfaction
(service quality → satisfaction). In support of this, Wang (2004) ascertained that service
quality affects customers’ satisfaction, and customers’ behavioral intention is affected by

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customers’ satisfaction. That means customers satisfaction is an intervening variable that
mediate between service quality and customers behavioral intentions.

Generally, according to Jayasundara (2011), most researchers have now concurred that
quality judgments cause satisfaction–that is, service quality is the antecedent to satisfaction
Thus, there is a current consensus among researchers with regard to the causal order of these
two constructs. This study also found service quality leads to customer satisfaction more
logical. This is because, satisfaction is an important goal to be achieved by ethio telecom
point of sales customers and if the point of sales want to increase customers’ satisfaction,
they can do it through service quality.

2.7 Empirical Studies Conducted on Service Quality and Customer Satisfaction in

Telecommunication Sector

The following section summarizes empirical studies made on the service quality and
customer satisfaction in telecommunication industry in different countries. All the studies
were published in various reputable journals. And majority of these studies adopted the
perception dimensions of service quality measures developed by Parasuraman et al.,
(1988).This is based on Cronin and Taylor (1992) finding that confirmed perception
dimension (SERVPERF) alone is sufficient for measuring service quality. The studies are
under listed chronologically as follows;

Wang and Lo (2002) employed perception dimension of Parasuraman et al. (1988)’s model to
measure service quality of mobile phone operators in China. To match the sector context,
they added network quality dimension to the model. According to their findings, the most
important service quality dimensions in predicting customers overall satisfaction was found
to be assurance, followed by reliability and network quality. But they found no evidence to
support the influence of responsiveness and empathy on customer satisfaction. Generally, the
study revealed a positive relationship between service quality and customer satisfaction.

Ahmed et al., (2010) on their study that measures the impact of service quality on customers
Satisfaction: Empirical evidence from telecom sector of Pakistan. The data was collected

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from 331 youngsters who use the SMS service of any company. The study adopted
Parasuraman et al., (1988)’s model and from the correlation analysis of the study, perception
dimension empathy is negatively related with satisfaction. Whereas, the other four perception
dimensions; tangibles, assurance, responsiveness and reliability are positively related with the
satisfaction. The multiple regression analysis conducted disclosed that the entire service
quality dimensions have a significant predicts customers satisfaction.

In the same year, another study was undertaken by Khan to measure service quality of
cellular mobile telephone operators in Pakistan. Perception dimension of Parasuraman et al.
(1988)’s model (tangible, reliability, assurance, empathy and responsiveness) and
additionally, network quality and convenience dimensions were used to measure the quality
of the service. To collect the primary data, the study conveniently selected a sample of 800
mobile phone users. The finding of the study disclosed dimensions tangible, assurance,
responsiveness, empathy, convenience, and network quality had a positive and statistically
significant relationship with mobile phone users’ overall perceived service quality.
Convenience and network quality dimensions found to be relatively most important
dimensions affecting users’ perception. Dimension reliability did not reflect significant effect
on customers’ perception of quality (Khan, 2010).

In addition to what the other researchers have found, Ojo (2010) investigated the relationship
between service quality and customer satisfaction in the Nigerian telecommunication
industry. A total of 230 respondents were participated in the study. The finding revealed a
positive relationship between service quality and customer satisfaction. Besides, large
percentages of the respondents were satisfied with the overall service delivery of the
company.

Loke et al., (2011) made a study that measured service quality and customer satisfaction in
reference to telecommunication service providers in Malaysia.A total of 200 customers were
participated in the survey. The study employed perception dimensions of Parasuraman et al.,
(1988) model and according to the findings, dimension reliability, responsiveness, assurance
and empathy of service quality have a significant and positive influence on customer attitudes
which is expressed in terms of satisfaction and loyalty. However, dimension tangibility
showed no significant effect on customers’ satisfaction.

Agyapong(2011), in his study that measured the effect of service quality on customer
satisfaction in the utility industry of Ghana, employed Parasuraman et al., (1988)’s model and

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additionally three dimensions (courtesy, competence and communication) were included to
measure the service quality. According to regression analysis of the study, service quality
dimensions that significantly affected customer satisfaction were found to be competence,
courtesy, tangibility, reliability and communication. Others dimensions (Empathy, Assurance
and Responsiveness) have a positive relation with customer satisfaction but do have a
significant effect.

In the year 2013, a study was conducted by employing SERVQUAL model with GAP
analysis, regression, and t-test. The aim of the study was to measure service quality and
customer satisfaction in the cellular telecommunication service provider in Malaysia.
Samples of 225 respondents were selected on the survey process. The correlation analysis of
the study revealed that all dimensions (empathy, responsiveness, assurance, tangibles and
reliability) have a positive and significant relationship with customers’ satisfaction
(Arokiasamy& Abdullah, 2013).

Sandhu, et al., (2013) also conducted a study under title; Service Quality Dimensions Impact
on Customer Satisfaction in Telecom Sector of Pakistan. The study was intended to find out
the relationship between service quality dimensions and customer satisfaction by taking a
sample of 300 respondents. The constructs identified to measure service quality were;
tangibility, assurance, empathy, responsiveness, reliable, price fairness, technical quality, and
image. According to the correlation analysis outcome, dimension assurance, responsiveness,
reliability, technical quality, & image have a positive and significant relationship with
customer satisfaction. However, physical aspects, empathy, & price fairness have positive but
insignificant relationship with customer satisfaction. Furthermore, according to customers’
preferences, the mean score shows dimension reliability, empathy and technical quality
respectively are the most important to customer satisfaction.

A research was conducted most recently in 2015 G.C. to measure customers’ perception of
service quality in the Nigerian telecommunication sector. The study took a sample of
250customers and a single scale questioner was used to measure service quality, customer
satisfaction and loyalty. The finding of the study indicates a positive and significant
relationship between service quality and both, customer satisfaction and customer loyalty
(Osotimehin et al., 2015).

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2.8 Service Quality and Customer Satisfaction Studies Related to Ethio telecom

A study was conducted by Negi (2009) with the purpose of exploring the causal relationship
between service quality dimensions and overall service quality, and identifying service
quality gaps as experienced by the subscribers of the mobile services of ETC. The result of
the study indicated overall service quality of mobile communications was perceived to be as
below average by over half (52.7 percent) of the respondents, followed by less than one-third
(28 percent) who mentioned it as average, and about one-fifth (19.3 percent) as above
average. Similarly other studies were also conducted by (Mussie, 2010; Firehiwet, 2012;
Adam and Yibeltal, 2014) on service quality and customer satisfaction in mobile and internet
services. Although the above listed studies made a significant contribution for service quality
and customer satisfaction documentation in ethio telecom, the studies focused on post
purchase customers satisfaction on specific service of ethio telecom.

In the year 2010, Potluri and Mangnale conducted an empirical study to find out the
satisfaction level of ETC customers using the following parameters: service interaction,
service delivery process, customer compliant handling procedure and its outcome and the
overall customer satisfaction level. The findings of their analysis showed that 41% customers
of ETC were dissatisfied with employees‟ interaction skills. Furthermore another 47% of the
customers were also disappointed with customer service delivery system and 70% customers
were not pleased with the Complaint Handling Procedure and its outcome. And 57% of the
customers expressed overall dissatisfaction on the services provided by ETC. This study is a
descriptive research which lacks investigation of the relationship between customer
satisfaction and service quality dimensions. Besides, the parameters used in this study to
measure service quality are not well proven constructs like Parasuraman et al., (1988)’s
model which is used in the current study. Furthermore, like the other studies, this study is
also geographically restricted to customers served in Addis Ababa. Above all, since customer
satisfaction changes and varies with situations, there is a need of continuous research on
consumers’ expectations of service quality. Therefore, up-to-date empirical studies are a very
needed on the subject. And this research will fill the aforementioned gaps.

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2.9 Conceptual Framework

The conceptual framework of the study proposes a model of the relationship between service
quality and customer satisfaction. The two concepts of the framework are service quality
dimensions (independent variable) and customer satisfaction (dependent variable).These
concepts, as indicated in the literature review, are related to each other; service quality as an
antecedent construct and customer satisfaction as an outcome variable. Service quality has a
direct effect on customer satisfaction (Cronin & Taylor, 1992).

Among a number of service quality models, SERVQUAL and SERVPERF are the widely
used models to measure service quality in service sectors (Sindwani and Goel, 2012). Both
SERVQUAL and SERVPERF models are grounded on the fact that service quality is an
attitude towards the service delivered, resulting from customers comparison of expectations
and perceptions of service. However their main difference lies on; SERVQUAL measures
service quality as the calculated difference between expectations and perceptions of service
while in the SERVPERF model service quality is measures by directly capturing customers’
perceptions of the service delivered (Culiberg and Rojsek, 2010).SERVPERF argues that
customers evaluation of the perception already considered the personal past expectation of
the service. In other words, expectation dimensions proposed by SERVQUAL become
double, (first, implicitly done by people in their mind, and second, explicitly done by
SERVQUAL model).Cronin and Taylor (1992)’s argument on the superiority of SERVPERF
over SERVQUAL is built by empirical findings that disclosed SERVPERF as a better
predictor of overall service quality than SERVQUAL (Ling, 2008).In support of Cronin and
Taylor, other empirical findings also confirmed that SERVPERF scale is superior not only as
the efficient scale but also more efficient in reducing the number of items to be measured by
50% (Hartline and Ferrell, 1996; Babakus and Boller, 1992; Bolton and Drew, 1991, all cited
in Mesay,2012).

Consequently, the performance only scales (SERVPERF) namely; Tangibility, Reliability,

Responsiveness, Assurance and Empathy have been widely used to measure service quality
in telecommunication industries in different cultural context with high reliability and validity
tests( Zeithaml et al., 2009;Agyapong, 2011; Ling,(2008); Ahimed et al.,2010).Therefore,
bears on these conclusions, this study focused on performance only scale to investigate the
effect of service quality on customers satisfaction in ethiotelecom, Adama points of sales.

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In dependent variable Dependent variable

Fig 1.Conceptual framework (Ahimed et al., 2010)

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2.10 Research hypothesis

Based on the research frame work, the following five research hypotheses have been
developed to test the significant relationship between service quality dimensions and
customers satisfaction in the context of ethio telecom, Adama points of sales service.

Hol: Tangibility doesn’t have a positive and significant effect on satisfaction of customers of
ethiotecom, Adama points of sales
Hal: Tangibility has a positive and significant effect on satisfaction of customers of
ethiotecom, Adama points of sales
Ho2: Reliability doesn’t have a positive and significant effect on satisfaction of customers of
ethiotecom, Adama points of sales
Ha2: Reliability has a positive and significant effect on satisfaction of customers of
ethiotecom, Adama points of sales
Ho3: Responsiveness doesn’t have a positive and significant effect on satisfaction of customers
of ethiotecom, Adama points of sales
Ha3: Responsiveness has a positive and significant effect on satisfaction of customers of
ethiotecom, Adama points of sales
Ho4: Assurance doesn’t have a positive and significant effect on satisfaction of customers of
ethiotecom, Adama points of sales
Ha4: Assurance has a positive and significant effect on satisfaction of customers of
ethiotecom, Adama points of sales
Ho5: Empathy doesn’t have a positive and significant effect on satisfaction of customers of
ethiotecom, Adama points of sales
Ha5: Empathy has a positive and significant effect on satisfaction of customers of ethiotecom,
Adama points of sales

P a g e | 29
 CHAPTER THREE: RESERACH METHODOLOGY

3.1 Introduction
This section focused on the approach of the study. And, it covered research design,
population of the study, sample and sampling techniques, research data and collection
instruments .Finally, methods of data processing and analysis were described.

3.2 Research Design

To attain the research objectives, both descriptive and explanatory research design were used.
That means, the first two objectives of the study were intended to assess the level of service
quality and customer satisfaction. Therefore, to describe a reality regarding the level of
service quality and customer satisfaction, a descriptive research design was employed. The
third research objective of the study was focused on analyzing the relationship between
service quality and customer satisfaction. To analyze this objective, again, descriptive
research design was selected because it is particularly appropriate when the research
objective include the determination of the degree to which certain variables are related to
actual phenomena (Kothari, 2004).The last research objective of the study was intended to
investigate the influence of service quality dimension(s) on customers’ satisfaction. To meet
this objective, the researcher identified explanatory research design. Explanatory research
helps establish the causal relationship between independent and dependents variables
(Kothari, 2004).In addition, the study is cross-sectional in the sense that relevant data was
collected at one point in time.

3.3 Data Type and Sources

This study is based on both primary and secondary sources for collecting facts relating to
topic under research. The primary data was collected through questionnaire from customers
of the points of sales and the secondary data was collected from the records of the company.

3.4 Target Population

The target population for the study comprises of ethiotelecom service subscribers or
customers who use Adama points of sales for different telecom services. According to the

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data obtained from the points of sales, the total number of subscribers (customers) in Adama
city is about 458,102 (i.e. Fixed line service customers, 25266, Mobile service customers,
410172, CDMA and EVDO service customers, 20182, and Broad band internet service
customers, 2482).

3.5 Sample Size and Sampling Techniques

The sample size was determined by Israel (1992) published table for finite population. And it
was determined using a confidence level of 95% and acceptable error unit of 7 % that is
acceptable in social science research.
Table 1: Sample Size for ±3%, ±5%, ±7%, and ±10% Precision Levels where Confidence Level is
95% and P=0.5.

Size of Sample Size (n) for Precision (e)

Population
±3% ±5% ±7% ±10%
500 a 222 145 83
600 a 240 152 86
700 a 255 158 88
800 a 267 163 89
900 a 277 166 90
1,000 a 286 169 91
2,000 714 333 185 95
3,000 811 353 191 97
4,000 870 364 194 98
5,000 909 370 196 98
6,000 938 375 197 98
7,000 959 378 198 99
8,000 976 381 199 99
9,000 989 383 200 99
10,000 1,000 385 200 99
15,000 1,034 390 201 99
20,000 1,053 392 204 100
25,000 1,064 394 204 100
50,000 1,087 397 204 100
100,000 1,099 398 204 100
>100,000 1,111 400 204 100
Source: Israel (1992, p. 2)

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As already described, the total population of the study was about 458, 102. Since the study’s
population fall in the category of the population size more than 100,000 as shown in Table 1,
the total sample size of the study becomes 204.

To select the respondents, the researcher employed convenience sampling. By convenience

sampling technique we refer to a technique that goes for the sample that is available in the
light of easy access (Kothari, 2004).Difficulty of getting the list of specific ethiotelecom
customers’ in Adama city and inability of contacting everyone who can be sampled were the
problems. Therefore, considering the time, accessibility and effort it will be needed to put in
place to do a probability sample, it was not possible for the researcher to use a probability
sampling technique
.
Ethio telecom has two points of sales in Adama city, namely Adama 1 and Adama 2 points of
sales. Adama 1 is located at the region office building of ethio telecom, and Adama 2 point of
sales resides on TETAS international hotel building, which is around the main square in
Adama. Accordingly, from both of the points of sales, the researcher selected equal number
of respondents, 102 from each, to fill the questioners.

3.6 Data Collection Instruments

Standardize and self-administrative questionnaires were employed for this study because
according to Neguyen (2014), this survey approach is the most common method of primary
data collection in marketing research and the advantages are simple manageable and data
consistency. In addition, questionnaires can be used to cover a large number of respondents.
Using the questionnaire the researcher can easily measure the degree of service quality
according to each dimension that might have an impact on customer satisfaction. The
questionnaires were developed in search of the study objectives with close-ended questions,
designed from literature review.

The questionnaire has three sections consisting of 33 questions. The first section was to
solicit data on characteristics of the respondents. It included the age, gender, occupation, type
of service used, frequency of visit and purpose of the current visit to ethio telecom points of
sales. The second part focused on perception level of customers towards ethio telecom points

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of sales service quality. The research instrument designed to measure the perception level of
customers on ethio telecom points of sales service quality is based on the five dimensions of
service quality with 22 service items of the SERVPERF model (performance only scales).
The developed questionnaire includes four items correspond to the tangibles dimension, five
items correspond to the reliability dimension, four items correspond to the responsiveness
dimensions, four items to the assurance and five items to empathy. The third part of the
questionnaire contained 5 items to measure the overall customer satisfaction towards the
point of sales service adopted from Wang, et al., (2004) and Ling (2008).

Service quality and customer satisfaction instruments were measured using scale question to
which respondents were asked to rate their agreement using a five -point Likert response
scales; strongly disagree, disagree, neutral, agree and strongly agree. Their numeric value
range from one (1) strongly disagree to five (5) strongly agree. This scale has been verified
for its reliability and widely adopted in many social science researchers in their surveys
(Nguyen, 2014).The research questionnaire developed in English language was translated to
Amharic and Afan Oromo language in order to entertain respondents to give answer to
questions with understanding. The translation was subjected to peer review.

3.7 Data Collection Procedure

A self-administered, structured questionnaire was used to gather data from respondents to the
study. The researcher first sought permission from the concerned officials of the two points
of sales as to allow their premises to be used for this study.

To avoid bias and errors, the researcher and/or the research assistants collected the data on
three days of a week in a period of three weeks from April 1, 2015 to April 22, 2015. The
working days were chosen as in the first, middle, and last days of a week, namely, Monday,
Wednesday, and Saturday.

Respondents’ were requested to fill the questionnaire on their way out from the point of sales.
Each respondent was made to fill a questionnaire after a brief introduction and objective of
the study has been explained. The researcher and/or the research assistant approaches as
many customers as possible on each visit until the required number of sample size were
filled.

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3.8 Validity and Reliability

Reliability refers to the degree to which data collection method or methods will yield
consistent findings if similar observation would be repeatedly made by the same respondents
(Hair, et al., 2000).The internal reliability tested with Cronbach’s Alpha (α), which measures
the correlation between the variables that attempt to determine a concept. Cronbach’s Alpha
test shows a value between 0 and 1, where 1 means a perfect correlation and 0 means no
correlation at all an ideally, the Cronbach alpha coefficient of a scale should be above
0.7(Pallant, 2005).

The result of reliability test for the questionnaire in the current study is shown in the
following table. As it is indicated in the table below, the test result is between 0.723 and
0.841.

Table 2: Reliability test

Constructs No. of Items Cronbach’s Alpha

Tangibility 4 .760
Reliability 5 .770
Responsiveness 4 .771
Assurance 4 .723
Empathy 5 .744
Customer satisfaction 5 .841
Source: Own Survey (2015)

The Cronbach's Alpha coefficient of the tangibility, reliability, responsiveness, assurance,

and empathy dimensions as shown on the Table 2 were 0.760, 0.770, 0.771, 0.723, and
0.745respectively. The result of the analysis shows that the values were found in the
acceptable level, which is above 0.7. This indicates that all the items in each dimension are
internally consistent. In addition, the overall alpha coefficient of the five service quality
dimensions is 0.869, which reveals that the dimensions were considered as reliable
measurements for the points of sales service quality. Furthermore, the alpha coefficient of the
dependent variable customer satisfaction is 0.841. The value of this variable is also in the

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acceptable area, which indicates that all the five items measuring customer satisfaction are
internally consistent.
In general, the Cronbach alpha result demonstrates that the measurement items are reliable
and adequate to measure the effect of points of sales service quality towards customer
satisfaction.

Validity is concerned with the degree to which an instrument measures what it is supposed to
measure. Number of steps were undertaken to ensure the validity of the study;

 Data was collected from the reliable source, from respondents who are more
representative for the point of sales service.
 Survey question were made based on literature review and frame of reference to ensure
the validity of the result.
 The questionnaire has been pre-tested by marketing instructors, who are expert on the
issue under investigation. Then a modified draft questionnaire was translated to a local
language with the help of peers.
 Questionnaire has also been pilot-tested by the respondents before starting the survey.
And so, the researcher made a pilot test on 20 customers.

3.9 Data Processing and Analysis

To ensure the accuracy and completeness of the data given by the respondents, the collected
data was organized, sorted and coded at the end of the data collection period and then the data
was captured and analyzed using descriptive and inferential statistics(correlation and multiple
regressions) with the help of Ms excel and SPSS version 20.

The descriptive statistical results were presented by tables. To analyze the patterns of
respondent’s characteristics, frequencies and percentages were employed. Mean and standard
deviations values were computed to assess the level of each service quality dimensions and
customers satisfaction variables. In this regard, the mean score shows perceptions of
customers’ towards the service quality dimensions and the overall satisfaction on 5 points of
Likert scales. The mean scores are interpreted based on the criteria used by Motwani, et al.,
(2014) and Pongsena, (2014) which helped in categorizing customers’ level of agreement. On

P a g e | 35
the analysis, high standard deviation indicates the data is wide spread and this shows that
customer gave a variety of opinion, whereas, low standard deviation means the respondents
expressed close opinions.

Pearson’s correlation coefficient was used to determine the relationships between service
quality dimensions (tangibility, reliability, responsiveness, assurance and empathy) and
customer satisfaction. Correlation coefficients run from -1 to +1. Correlation coefficients
close to -1 show a strong inverse relation and a coefficient close to +1 denotes a strong direct
relation.

Finally, the conceptual framework of the study indicates more than one independent variable.
As a result the multiple regressions analysis was used to determine the effect of each
independent variable (tangibility, reliability, responsiveness, assurance, and empathy) on the
dependent variable (customer satisfaction).

The equation of multiple regression on this study is built around the dependent variable and
independent variables.

Regress customer satisfaction on the service quality dimensions

Yi = β1 + β2X2 + β3 X3 + β 4X4 + β 5X5 + β6X6

Where Yi is the dependent variable (customer satisfaction)

X2, X3, X4, X5, and X6 are the independent variables (service quality dimensions)
β1 is the intercept term- it gives the mean or average effect on Yi if all the variables excluded
from the equation

Β2, β3, β4, β5, and β6 refers to the coefficient of their respective independent variable which
measures the change in the mean value of Y, per unit change in their respective independent
variable.

In addition to the regression model stated above, the constructed hypothesis can only be
accepted if the p-value is less than 0.05.

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 CHAPTER FOUR: DATA ANALYSIS AND INTERPRETATION

4.1 Introduction

This chapter presents the statistical result and discussion of the data gathered through
questionnaires. The chapter consists of two major sections where the first section presents
only the result of the descriptive and inferential statistics tools while second section presents
the discussion of the statistical result in comparison with the previous empirical findings
made on the subject matter.

4.2 Presentation of Results of Descriptive Statistics

Based on to the objectives of the study, the following sections describe a reality regarding the
level of service quality and customer satisfaction. To make some general observations about
the data gathered, characteristics of respondents is also analyzed.

4.2.1 Respondents Characteristics

The frequency and the percentage of the characteristics of sampled 204 customers of ethio
telecom, Adama points of sales is summarized and depicted in the table 3 below. The
demographics factors used in this research include variables like the age, gender, occupation,
educational background, and service type. And, some general questions like type of service
the customers is using, the number of times the customer visited the points of sales,
frequency of visits (if the no visit is > 2) ,and reason for the current visit are also addressed in
this section.

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Table 3: Frequency and Percentage of Respondents’ Characteristics

Frequency(
Factors Classification Percentage
N=204)
Gender Male 141 69.1
Female 63 30.9

Age Under 18 14 6.9

Between 18-30 126 61.8
Between 31-45 47 23
Above 45 17 8.3

Occupation Student 58 28.4

Self-employed 42 20.6
Public – employee 47 23
Private – employee 36 17.6
Unemployed 21 10.3

Service type Mobile Service 99 48.6

Fixed line service 59 28.9
CDMA Wireless service 16 7.8
Internet Service 30 14.7

No of times the customer

Once 15 7.4
visited the points of sales
Twice 35 17.1
More than two times 154 75.5

Frequency of visits (if the

Twice a month 95 46.6
no visit is > 2)
Once in a month 48 23.5
More than twice in a
61 29.9
month

Reason for the current

Service purchase 48 23.5
visit
SIM card replacement 97 47.5
Mobile Apparatus Purchase 12 5.9
To register complaint 19 9.3
To settle monthly bill 23 11.3
For other service 5 2.5
Source: Own survey (2015)

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From the result of the study as shown in Table 3, male respondents had the higher frequency
level representing 69.1% of the survey population while the female respondents represented
30.9 %. The age statistics indicated that the highest age group from the study was those
between 18 to 30 years comprising 61.8% of the respondents sampled for the study followed
by the age group between 31 to 45 years, representing 23 % of the respondents. The least age
group was above 45, representing 8.3% of the respondents and below 18, representing 6.9%.
Hence we can notice that there were large numbers of young people using ethio telecom,
Adama points of sales services. With respect to sex of respondents, 69.1% of the customers
are male and the rest 30.9% are female customers. Considering the occupation of the
respondents, higher frequency level representing 28.4% of customers are students followed
by public employee (23%), self-employed (20.6%), and private-employee (17.6%)
respectively. The least frequency (10.3%) goes for unemployed customers.

Most of the respondents are mobile service subscribers, which are about 48.6 % of the
respondents, followed by fixed line service subscribers (28.9%), internet service subscribers
(14.7%) and only 7.8 % of respondents are CDMA Wireless service subscribers. With regard
to the number of times the respondents visited the point of sales, majority of them (75.5% of
the total respondents) confirmed that they visited the service encounter more than twice,
17.1% of respondents visited the point of sales exactly twice and the least percentage (7.4%)
of respondents visited the point of sales only once. Therefore, it can be inferred that, majority
of the customer have an experience with the point of sales service. So they can judge the level
of service quality they are receiving from the points of sales. From those customers who
visited the point of sales more than twice, 46.6 % of them have a frequency of visiting twice a
month, 29.9% of the respondents visited the points of sales more than twice a month and the
rest 23.5 % of the respondents visited once in a month. Finally, regarding the reason for the
current visit at the time of survey, 47.5 % of the respondents were seeking for sim card
replacement followed by service purchase (23.5%), monthly bill settling (11.3%), and
registering complaint (9.3%). The least number of respondents (5.9 %) and (2.5%) were at
the point of sales to purchase mobile apparatus and other types services respectively.

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4.2.2 Perception Level of Customers on Points of Sales Service Quality
Dimensions

The following section is intended to assess the level of service quality and customers
satisfaction. For this purpose, descriptive statistics (mean and standard deviation) were
employed to assess the perception level of customers, which was measured using Five-Point
Likert Scale.

Table 4: Mean Score Range for Five-Scale Likert’s Response

Mean Level of agreement

From 1.00 to 1.80 Strongly Disagree
From 1.81 to 2.60 Disagree
From 2.61 to 3.40 Neutral
From 3.41 to 4.20 Agree
From 4.21 to 5.00 Strongly Agree
Source – (Motwani, et al., 2014; Pongsena, 2014)

According to Motwani, et al., (2014) and Pongsena, (2014) the resulted mean scores were
classified in ranges to fit the five-scaled Likert’s level of agreement (strongly disagree,
disagree, neutral, agree, and strongly agree) as shown in Table 4. Therefore, based on the
above criteria, customers’ level of agreement on each item for all variables under study were
determined as follows;

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 4.2.2.1Customers’ Perception on Tangibility Dimension

The tangibility dimension was assessed by four constructs. As it can be seen from Table 5,
the results obtained from the analysis is presented in mean and standard deviation as follows

Table 5: Mean and Standard Deviation Results of Tangibility Dimension

Level of
Std. Agreement
Item Mean
Deviation (in Mean)

 The point of sales has modern looking

3.72 .965 Agree
equipments
 The point of sales physical features are
3.64 .928 Agree
visually appealing
 Employees of the point of sales are well
3.76 .886 Agree
dressed and neat appearing
 Materials associated with the service (such
as pamphlets, brochures etc) are visually 3.58 .847 Agree
appealing in the point of sales
Source: Own Survey (2015)

From table 5, the mean score results show customers agreement in all of the four constructs
describing tangibility dimension. The highest mean score was shown by the item that assesses
well dressing and neat appearing of employees in the points of sales(mean = 3.76, SD = .886)
while the least mean was scored by visually appealing of materials associated with the service
in the point of sales(mean = 3.58, SD =.847).

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 4.2.2.2 Customers’ Perception on Reliability Dimension

Table 6: Mean and Standard Deviation Results of Reliability Dimension

Level of
Std. Agreement
Item Mean
Deviation (in Mean)

 The Point of sales provide services as

3.36 .975 Neutral
promised

 When you have problem, the Point of sales

3.60 .902 Agree
shows a sincere interest in solving it

 The point of sales performs the service right

3.56 .807 Agree
the first time

 The point of sales provides its service at the

3.51 .879 Agree
time it promises to do so

 The point of sales insists on error free records 3.40 .860 Neutral

Source: Own Survey (2015)

As shown in table 6, reliability dimension was measured by five constructs. From these
constructs, customers were in agreement with items; the point of sales shows a sincere
interest in solving customers problem (mean=3.60, SD=.902), the point of sales performs
services right the first time (mean=3.56, SD=.807) and the point of sales provides its service
at the time it promises to do so (mean=3.51, SD=.879). Whereas, the customers responses on
items: the points of sales insists on error free records (mean= 3.40, SD=.860) and the point of
sales provide services as promised (mean=3.36, SD=.975) is neutral. That means, no clear
view is received on these items so it can’t be said certainly that the points of sales maintain
error free of records or not, and service is delivered as promised or not.

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 4.2.2.3 Customers’ Perception on Responsiveness Dimension

Table 7: Mean and Standard Deviation Results of Responsiveness Dimension

Level of
Std. Agreement
Item Mean
Deviation (in Mean)

 Employees in the point of sales tell you

3.66 .768 Agree
exactly when the services will be performed

 Employees in the point of sales give you

3.81 .748 Agree
prompt service

 Employees in the point of sales are always

3.80 .821 Agree
willing to help you

 Employees in the point of sales are never too

3.94 .840 Agree
busy to respond to your request

Source: Own Survey (2015)

Regarding the responsiveness of service which is measured by four constructs, as shown in

table 7, the respondents agreed on all of the four constructs that determines responsiveness of
the points of sales service. The highest mean score was on the points of sales employees
readiness to respond on customer request (mean=3.94, SD=.840) while the least mean is
scored by item that addresses employees performance towards informing exactly when the
service will be performed (mean=3.66, SD=.768).

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 4.2.2.4 Customers’ Perception on Assurance Dimension

Table 8: Mean and Standard Deviation Results of Assurance Dimension

Level of
Std. Agreement
Item Mean
Deviation (in Mean)

 The behavior of employees in the point of

3.78 .728 Agree
sales instills confidence in you

 You feel safe in your transactions with the

3.70 .821 Agree
point of sales

 Employees in the point of sales are

3.62 .795 Agree
consistently courteous with you

 Employees in the point of sales have the

3.75 .784 Agree
knowledge to answer your questions

Source: Own Survey (2015)

Table 8 shows customers’ perception level towards the assurance dimensions which is
measure by four items. The customers are in agreement with all of the four constructs
describing assurance. The highest level of customers agreement was revealed on the behavior
of employees installing confidence in customer (mean=3.78, SD=.728).Whereas, the least
level of agreement was given to an item that addresses customers feeling safe in transaction
with the points of sales (mean=3.70, SD=.821).

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 4.2.2.5 Customers’ Perception on Empathy Dimension

Table 9: Mean and Standard Deviation Results of Empathy Dimension

Level of
Agreement
Item Mean Std. Deviation
(in Mean)

 The point of sales gives you individual

3.40 .798 Neutral
attention
 The point of sales has operating hours
3.70 .803 Agree
convenient to customers
 The point of sales has employees who
3.70 .857 Agree
give you personal attention
 The point of sales has your best interest at
3.67 .857 Agree
heart

The employees of the point of sales

3.71 .820 Agree
understand your specific needs

Source: Own Survey (2015)

With regard to empathy of service in ethio telecom, Adama points of sales which is measured
with five items, as shown in table 9, customers response was in agreement with items such as
understanding the specific needs of customers(mean=3.71, SD=.820), convenient operating
hours of the point of sales (mean=3.70, SD=.803), personal attention given to customers by
employees of the points of sales (mean=3.70, SD=.857) and the point of sales always has
customers interest at heart (mean=3.71, SD=.820). On the other hand, customers were asked
to share their view on whether the points of sales give individual attention to its customers or
not. No clear view is received on this opinion (mean = 3.40, standard deviation = .798).

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 4.2.2.6 Customers’ Perception towards Satisfaction of Point of Sales Service

Table 10: Mean and Standard Deviation of Customer Satisfaction

Level of
Std. Agreement
Item Mean
Deviation (in Mean)

 The point of sales completely meets my

3.61 .922 Agree
expectations
 In my view, the point of sales is customer-
3.58 .853 Agree
oriented
 I feel absolutely delighted with the point of
3.59 .846 Agree
sales services
 My experience with ethio telecom point of
3.60 .833 Agree
sales is excellent

 I am completely satisfied with the services

3.52 .845 Agree
delivered by the point of sales

Source: Own Survey (2015)

As the statistical results on Table 10 depicts, the mean result of the five items indicates that
customers are in agreement with all of the constructs reveling their satisfaction. The
customers’ highest agreement level was shown on the item stating the points of sales
completely meets customers expectations (mean=3.61, SD=.922). However, the lowest
agreement was revealed on the item measuring the complete satisfaction of customers on the
point of sales service (mean=3.52, SD=.845).

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 4.2.2.7 Summary of Customers’ Perception on Variables /Dimensions of the Study

Table 11: Summary of Mean and Standard Deviations of Study’s Variables/dimensions

Level of
Variables/dimensions Mean Std. Deviation Agreement(in Mean)

 Tangibility 3.68 .692 Agree

 Reliability 3.49 .639 Agree
 Responsiveness 3.80 .611 Agree
 Assurance 3.71 .578 Agree
 Empathy 3.63 .579 Agree
 Overall Customers Satisfaction 3.58 .672 Agree
Source: Own Survey (2015)

Table 11 shows the summery of perception level of customers on the variables or dimensions
of the study. The customers’ perception level on the variables/ dimensions of the points of
sales service quality and customer satisfaction reflected agreement. The highest level of
agreement was scored by responsiveness (mean= 3.80, SD=.611) followed by assurance
(mean=3.71, SD=0.578), tangibility (mean=3.68, SD=0.692), and empathy (mean=3.63,
SD=0.579).Whereas the least level of agreement was scored by reliability dimension (mean =
3.49, SD = .639).The standard deviation of the variables is ranged between 0.578 and 0.692
which indicates customers expressed close opinions.

4.3 Presentation of Inferential Statistics Results

The relationship between independent variables (service quality dimensions) and dependent
variables (customer satisfaction) of the study were investigated using Pearson correlation
coefficient. According to Ling (2008), among a number of different coefficients used to
measure correlations variables, the best known is the Person product-moment correlation
coefficient.

P a g e | 47
Multiple regression on the other hand is used when the researcher wants to explore the
predictive ability of a set of independent variables on one dependent variable. It shows the
degree by which the independent variables explain the variance in the dependent variable, at
the same time it indicates the respective contribution of each of these independent variables,
and helps to determine whether the results are statistically significant or not. As an inferential
statistics tool, multiple regression was used for hypotheses testing (Pallant, 2005).Regression
analysis is used when independent variables are correlated with one another and with the
dependent variable (Ling, 2008).

4.3.1 Correlations of Points of Sales Service Quality and Customer Satisfaction

Table 12: Correlations Results of Service Quality Dimensions and Customer Satisfaction

Tangibility Reliability Responsiveness Assurance Empathy

Tangibility
Reliability .597**
Responsiveness .455** .608**
Assurance .546** .826** .645**
Empathy .486** .555** .500** .522**
Customer satisfaction .581** .852** .674** .833** .616**
**. Correlation is significant at the 0.01 level (2-tailed).
Source: Own Survey (2015)
Table 12 revealed a significant and positive relationship between the independent variables
(tangibility, reliability, responsiveness, assurance, and empathy) and the dependent variable
(customer satisfaction). The highest significant and positive relationship was between
reliability and customer satisfaction (r = 0.852, p <.01), followed by assurance and customer
satisfaction (r =0.833, p <.01), responsiveness and customer satisfaction (r =0.674, p <.001),
empathy and customer satisfaction (r = 0.616, p <.01). The least correlation was between
tangibility and customer satisfaction (r = 0.581, p <.01).Because the correlation was positive,
service quality and customer satisfaction is positively related, which means the better service
quality was the higher customer satisfaction.
Once it is known that the service quality dimensions are correlated with customers’
satisfaction, the next step will be the analysis of significant influence of each service quality
dimensions on customers ‘satisfaction which is investigated through multiple regressions as
follows.

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4.3.2 Regression Analysis and Hypothesis Testing Results

In multiple regression analysis, multicollinearity refers to the correlation among the

independent variables and to have good results, the independent variables should not be
highly correlated with each other (Pallant, 2005).

To make sure there is low multicollinearity, the values of Tolerance and VIF (Variance
Inflation Factor) should be checked. Tolerance value indicates to what extent the independent
variables do not explain much of the variability of a specified independent variable and the
value should not be very small (should be more than 0.10) to indicate the absence of
multicollinearity. In addition to that, VIF, the inverse of tolerance value, should have a value
of less than 10 to avoid any concerns of multicollinearity (Pallant, 2005).

Table 13: Multicollinearity Test

Model Collinearity Statistics

Tolerance VIF

Tangibility 0.601 1.664

Reliability 0.275 3.641
Responsiveness 0.537 1.861
Assurance 0.283 3.539
Empathy 0.621 1.61

Dependent Variable: Overall customer satisfaction

Source, Own survey (2015)

Therefore, as shown in table 13, the result of multicollinearity test indicates variance inflation
factor (VIF) values were less than 10, and the tolerance values were more than 0.1 meaning
that no problem of multicollineaarity or the independent variables of the study were not
highly correlated. Besides, Kurtosis and Skewness values were used to check the normality of
each variable used in the research. Skewness values within the range of (−1) to (+1) and
Kurtosis values within the range of (−3) to (+3) indicate an acceptable range (Martey,
2014).This assumption of normality tests has not been violated in this study (see the
attachment in the appendix- C)

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Table 14: Model summery

R R Square Adjusted R Square Std. Error of the Estimate

.900a .809 .804 .297

Predictors: (Constant), Empathy, Tangibility, Responsiveness, Assurance, Reliability

Source, Own survey (2015)

From the results of model summery presented in table 14 above, R = 0.900 which shows
strong relationship between the five service quality dimensions and customer satisfaction.
The adjusted R-Square shows that tangibility, reliability, responsiveness, assurance, and
empathy jointly determine (explain) 80.4% of the variance in customer satisfaction .The other
unexplored variables may explain the variation in customer satisfaction which accounts for
19.6 %.

Table 15: ANOVA of Predictor Variables in the Test

ANOVAa
Model Sum of Squares Df Mean Square F Sig.
Regression 74.234 5 14.847 168.024 .000b
1Residual 17.495 198 .088
Total 91.729 203
a. Dependent Variable: Overall customer satisfaction
b. Predictors: (Constant), Empathy, Tangibility, Responsiveness, Assurance,
Reliability

Source, Own survey (2015)

From the model summery (table, 14), service quality dimensions jointly determine 80.4%
variation in customer satisfaction. And to assess the statistical significance of this result, the
analysis-of-variance (ANOVA) test was performed as shown in Table 15. Consequently, the
regression result was found to be statistically significant (F (5, 203) = 168.024, P value less
than .05).Therefore, there was a statistically significant association between service quality
dimension and customer satisfaction.

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 Table 16: Results of Regression Coefficient

Coefficientsa
Model Unstandardized Standardized T Sig.(P)
Coefficients Coefficients
B Std. Error Beta
(Constant) -.555 .162 -3.434 .001
Tangibility .034 .039 .035 0.867 .387
Reliability .435 .062 .414 6.988 .000
1
Responsiveness .150 .047 .136 3.216 .002
Assurance .362 .068 .311 5.334 .000
Empathy .161 .046 .139 3.525 .001
a. Dependent Variable: Overall customer satisfaction

Source, Own survey (2015)

According to Pallant (2005), the values of the Standardized Beta Coefficients (β) indicate the
effects of each independent variable on dependent variable when the variance explained by
all other service quality dimensions in the model is controlled. The t value and the sig (p)
value indicate whether the independent variable is significantly contributing to the prediction
of the dependent variable. If the Sig (p) value is less than .05 then the variable is making a
significant unique contribution to the prediction of the dependent variable. However, if Sig
(p) value is greater than .05, and then we can conclude that that variable is not making a
significant unique contribution to the prediction of the dependent Variable (Pallant, 2005).

Therefore, the study hypothesis was tasted based on the β and Sig (p) values generated from
the Table16 and the following results are obtained;

 Hol: Tangibility doesn’t have a positive and significant effect on satisfaction of

customers of ethiotecom, Adama points of sales
 Hal: Tangibility has a positive and significant effect on satisfaction of customers of
ethiotecom, Adama points of sales

As shown in the table of coefficients summary, the t-statistics for the tangibility is 0.867 (p-
value > 0.05) and beta is 0.035. Therefore, there is sufficient evidence to conclude that
tangibility has a positive but insignificant effect on customers’ satisfaction in ethiotelecom,
Adama points of sale. Therefore, null hypothesis is accepted.

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  Ho2: Reliability doesn’t have a positive and significant effect on satisfaction of
customers of ethiotecom, Adama points of sales
 Ha2: Reliability has a positive and significant effect on satisfaction of customers of
ethiotecom, Adama points of sales
As shown in the table of coefficients summary, the t-statistics for the reliability is 6.988 (p-
value <0.05) and beta is 0.414. Therefore, there is sufficient evidence to conclude that
reliability has a positive and significant effect on customers’ satisfaction, in ethiotelecom,
Adama points of sale. Therefore, the null hypothesis is rejected.

 Ho3: Responsiveness doesn’t have a positive and significant effect on satisfaction of

customers of ethiotecom, Adama points of sales
 Ha3: Responsiveness has a positive and significant effect on satisfaction of customers
of ethiotecom, Adama points of sales
As shown in the table of coefficients summary, the t-statistics for the responsiveness is 3.216
(p-value <0.05) and beta is 0.136. Therefore, there is sufficient evidence to conclude that
responsiveness has a positive and significant effect on customers’ satisfaction, in
ethiotelecom, Adama points of sale. Therefore, the null hypothesis is rejected.

 Ho4: Assurance doesn’t have a positive and significant effect on satisfaction of

customers of ethiotecom, Adama points of sales
 Ha4: Assurance has a positive and significant effect on satisfaction of customers of
ethiotecom, Adama points of sales
As shown in the table of coefficients summary, the t-statistics for the assurance is 5.334(p-
value <0.05) and beta is 0.311. Therefore, there is sufficient evidence to conclude that
assurance has a positive and significant effect on customers’ satisfaction, in ethiotelecom,
Adama points of sale. Therefore, the null hypothesis is rejected.
 Ho5: Empathy doesn’t have a positive and significant effect on satisfaction of customers
of ethiotecom, Adama points of sales
 Ha5: Empathy has a positive and significant effect on satisfaction of customers of
ethiotecom, Adama points of sales
As shown in the table of coefficients summary, the t-statistics for the empathy is 3.525 (p-
value <0.05) and beta is 0.139. Therefore, there is sufficient evidence to conclude that
empathy has a positive and significant effect on customers’ satisfaction, in ethiotelecom,
Adama points of sale. Therefore, the null hypothesis is rejected.

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Considering the relative contribution each service quality dimensions in explaining customers
satisfaction, reliability dimension having the largest beta value (β=0.414) was the strongest
contributor followed by assurance (β=0.311), empathy (β=0.139), and responsiveness
(β=0.136) respectively. However, tangibility (β=0.035) is the least contributor to explaining
customers satisfaction.

4.4 Discussion of the Study Findings

The general objective of the research was to measure service quality and its subsequent effect
on customers’ satisfaction in reference to ethiotelecom, Adama points of sales. In line with
this, the study assessed the perception level of customers towards the points of sales service
quality dimensions, and the overall satisfaction of customers on the points of sales service
was also examined. Moreover, the relationship between each services quality dimensions
(independent variables) and customer satisfaction (dependent variables) was explored.
Furthermore, the hypotheses constructed have been tested to obtain the significant influence
of the service quality dimensions (tangibility, reliability, responsiveness, assurance, and
empathy) on customer satisfaction. The reliability and validity test in the study revealed that
both the independent and dependent variables constructs were appropriate for measuring
service quality and customer satisfaction. Therefore, this section tries to discuss the findings
of the statistical analysis in relation to the previous researches and literatures.

4.4.1 Perception Level of Customers’ on Points of Sales Service Quality

Descriptive statistics, mean and standard deviation, were used to examine customers
perception level towards the points of sales service quality dimensions and overall customer
satisfaction. The perception level of customers’ according to the mean score results reflect
agreement to all the points of service quality dimensions and the dependent variable,
customer satisfaction. The highest level of agreement was observed in responsiveness
dimension followed by assurance, tangibility, empathy, and reliability respectively. These
findings don’t concur with Khan, (2010) study in which tangibility has the highest mean
scores followed by reliability, empathy, responsiveness, and assurance respectively. On the
other hand, according to Sandhu, et al., (2013) study, the highest customers’ perception is

P a g e | 53
scored on empathy followed by assurance, reliability, responsiveness, and tangibility. These
findings clearly indicate that the quality of service provided in each dimensions differs from
one organization context to the other. Considering the mean scores of each dimension as per
the perception of the customers the following findings are obtained:

 Tangibility of service addressed issues such as the points of sales overall physical
appearance, employees’ appearance, completeness and modernity of facilities &
equipments in the service area. In this regard, Customers agreed that ethio telecom
Adama points of sales have visually appealing and modern looking equipments. Besides,
majority of customers believed that employees of the points of sales are well dressed and
neat appearing. According to Zeithaml et al., (2009) these qualities evaluate the
capability of service providers and they are used by firms to convey image and signal
quality. In this regard, ethiotelecom, Adama points of sales are doing well.

 Reliability of service deals with the ability of ethio telecom point of sales and its contact
employees to perform the promised service accurately and dependably. Khan, (2010)
ascertained that for telecom users, the consistency and dependable service is extremely
important. With respect to this dimension, customers confirmed that the points of sales
provide the service right the first time and it is delivered within the time promised.
Besides, customers agreed that the points of sales have an interest in solving their
problems. However, customers didn’t provide clear view on whether the points of sales
delivers service as promised, and maintain error free records or not. In overall, although
reliability scored the least mean compared to the other service quality dimensions,
majority of the customers agreed that the points of sales provide reliable service to its
customers.
.

 Responsiveness of service relates to the willingness of front line employees in ethio

telecom points of sales to provide prompt service and help customers. In this regard,
customers agreed that employees of the points of sales are willing to help customers and
they tell exactly when the service is going to be delivered. Furthermore, customers feel
that employees of the points of sales are never too busy to respond to customers’ request,
and they provide prompt services.

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 Assurance focuses on the knowledge and courtesy of front line employees in the points
of sales and their ability to convey trust and confidence on customers. In this regard,
customers believed that employees of the points of have the knowledge to answer their
questions. Besides, customers agreed that the employees are consistently courteous with
them. Moreover, customers declared that they feel safe in transaction with the points of
sales.

 An empathy dimension is all about the ability of the point of sales and its staffs to provide
a carrying and individualized attention to customers and understand customers need. In
this regard, customers are in agreement that the points of sales have convenient working
hours for its customers, and caring and ability to be approachable of employees are good.
However, customers are not certain about whether the points of sales give individual
attention to its customers or not. Therefore, personnel in the points of sales service should
strive to improve the customized or individualized service requirements of the customers.

 Customers’ perception on their overall satisfaction towards ethio telecom, Adama points
of sales service indicates they are satisfied with the service since from the mean scores
they agreed that the points of sales service meets their expectations, the points of sales
are customer oriented, and the experience they encountered with ethio telecom, Adama
points of sales is good.

4.4.2 Relationship between Points of Sales Service Quality and Customer Satisfaction

From the correlation analysis made, it is evident that all the five service quality dimensions
namely tangibles, reliability, responsiveness, assurance, and empathy have positive and
significant relationship with overall customer satisfaction. The highest significant and
positive relationship was between reliability and customer satisfaction, followed by assurance
and customer satisfaction, responsiveness and customer satisfaction, empathy and customer
satisfaction, the least correlation was between tangibility and customer satisfaction. This
finding is consistent with the findings of Loke et al., (2011); Arokiasamy & Abdullah, (2013)
in which all the five service quality dimensions positively and significantly related with
customer satisfaction. Because the correlation was positive, service quality and customer

P a g e | 55
satisfaction is positively related, which means the better service quality was the higher
customer satisfaction.

Comparing the correlation results and the mean scores of service quality dimensions, there is
a mismatch between service quality the points of sales provides and service quality the
customers’ preferred. The points of sales gives more emphasis on responsiveness of service,
which is well in mean score but what customers prefer most in the quality of service to
enhance their satisfaction is reliability. Similarly, customers give less attention for tangibility
whereas the points of sales give relatively good emphasis on tangibility. This finding is
concurred with Zethemal and Bitner (2003) opinion who stated that one of the most
managers’ mistakes in trying to improve service quality and customers’ satisfaction is
spending resources on wrong initiatives.

From the regression analysis made, reliability had a positive and significant effect (influence)
on customer satisfaction in ethio telecom, Adama points of sales. This means that customer
satisfaction is dependent on reliability of the points of sales service. This finding is
consistence with the findings of Loke et al., (2011) and Agyapong (2011) who reported that
reliability has a positive and significant effect on customer satisfaction in telecom service.
Moreover, this finding proved Zeithaml et al., (2009), suggestion of reliability as the most
important dimension in service sector for customers’ satisfaction.

The finding of this study further indicates that assurance has a positive and significant effect
on customer satisfaction. This finding is supported by Loke et al., (2011), and Wang and Lo
(2002) who found that assurance has a significant and positive effect on telecom customer
satisfaction.

Besides, the regression result of the study showed that empathy has a positive and significant
effect on customer satisfaction. Similarly Loke et al., (2011) study found empathy of service
as a significant contributor to customers’ satisfaction. However, Wang and Lo (2002) found
that responsiveness do not have a significant effect on customer satisfaction. The
dissimilarity of findings between the studies could be due to context difference and research
methodology applied.

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Moreover, the finding of this study indicates that responsiveness has a positive and
significant effect on customer satisfaction. This finding is consistence with Agypong (2011)
& Loke et al., (2011) study who reported that responsiveness has a significant effect on
customer satisfaction. However, Wang and Lo (2002) found that responsiveness do not have
a significant effect on customer satisfaction.

However, the result of the regression analysis indicates tangibility has a positive relation but
insignificant influence on customer satisfaction. This shows tangibles like having up-to-date
equipment and materials, having visual appealed physical facilities, well dressed and neat
appearing employees have no significant effect on the satisfaction of ethiotelecom, Adama
points of sales customers. This finding concur with the outcome of Loke et al., (2011) study
who reported that tangibility is positively correlated with customer satisfaction but the
influence is insignificant. Similarly, Sandhu, et al., (2013) study confirmed that physical
aspects have a positive but insignificant effect on satisfaction of telecom customers.
However, study conducted by Agypong (2010) revealed that tangibility has a positive as well
as significance influence on customer satisfaction.

Furthermore, considering the relative contribution each service quality dimensions in

explaining customers’ satisfaction, reliability dimension having the largest beta value was the
strongest contributor followed by assurance, empathy, and responsiveness respectively.
However, tangibility is the least contributor to explaining customers’ satisfaction.

In overall, the results revealed that all the independent variables (service quality dimensions)
accounted for 80.4 percent of the variance in customer satisfaction. Thus, 80.4 percent of the
variation in customer satisfaction can be explained by the five service quality dimensions and
other unexplored variables may explain the variation in customer satisfaction which accounts
for about 19.6 percent. This finding clearly shows that service quality is the most important
factor for customers’ satisfaction. Put it in other way, a small increase in service quality will
boost customer satisfaction dramatically. However, not all of the service quality dimensions
have significant effect on customer satisfaction. Out of the five service quality dimensions,
four dimensions (reliability, responsiveness, assurance, and empathy) have positive and
significant effect on customer satisfaction. On the other hand, tangibility has a positive but
insignificant effect on customers’ satisfaction in ethio telecom, Adama points of sales.

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 CHAPTER FIVE: CONCLUSION AND RECOMMENDATION

5.1 Introduction
This final chapter includes the conclusion drawn and recommendations made by the
researcher

5.2 Conclusions

The study was conducted to assess service quality and its subsequent effect on customers’
satisfaction in reference to ethiotelecom, Adama points of sales. To achieve the stipulated
objectives, the study majorly used primary data collected through self-administered
questionnaire from 204 respondents. The study employed SERVPERF model consists of 22
different service features which are grouped into 5 different determinants: tangibility,
reliability assurance, responsiveness and empathy.

The mean scores were used to identify customers’ perception level on the points of sales
service quality dimensions and their overall satisfaction. The findings revealed that customers
of the points of sales show their agreement towards all service quality dimensions
(tangibility, reliability, responsiveness, assurance, and empathy) and the overall satisfaction.
This indicates ethiotelecom Adama points of sales customers’ are satisfied with the points of
sales service quality. The highest response of agreement was scored by responsiveness
followed by assurance, tangibility and empathy respectively. However, majority of customers
showed least level of agreement on reliability dimensions. Specifically, providing the
promised service, individual attention given to customers and error free of records are rated
as the least provided service quality attributes in ethio telecom, Adama points of sales.

The correlation analysis of the study indicates that all service quality dimensions (tangibility,
reliability, responsiveness, assurance, and empathy) have positive and significant relationship
with customer satisfaction. This means that an excellent service delivery will lead to an
increase in customer satisfaction. The finding further indicates that the highest relationship
was found between reliability and customer satisfaction and the least relationship was
between tangibility and customer satisfaction.

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Comparing the correlation results and the mean scores of service quality dimensions, there is
a mismatch between service quality the points of sales provides and service quality the
customers’ preferred. The points of sales gives more emphasis on responsiveness of service,
which is well in mean score but what customers prefer most in the quality of service to
enhance their satisfaction is reliability. Similarly, customers give less attention for tangibility
whereas the points of sales give good emphasis for this dimension.

The result of the regression analysis indicates service quality dimensions namely; reliability,
responsiveness, assurance, and empathy have a positive and significant influence on customer
satisfaction. However, tangibility dimension has a positive but insignificant effect on
customer satisfaction.

Generally, all service quality dimensions jointly determine (explain) 80.4% of the variance in
customer satisfaction. That means, a small increase in service quality will boost customer
satisfaction dramatically.

5.3 Recommendation

In light of the findings and conclusions made above, the following possible recommendations
are suggested as being valuable to the management of ethio telecom, Adama points of sales
for maintaining and improving service quality activities to assure customer satisfaction.

 Improvement in the current service delivery has to be emphasized by the points of sales
management since customers’ level of agreement towards the service quality, as per the
mean score, is between 3.49 and 3.80 for all service quality dimensions. This indicates
customers’ agreement, not strong agreement.
 From the regression analysis undertaken, reliability is a major contributor to customers
satisfaction followed by assurance, empathy, responsiveness, and tangibility respectively.
Therefore, the points of sales to better satisfy its customers should give more emphasis on
attributes of reliability, assurance, empathy, responsiveness, and tangibility in their
descending order. Note that, tangibility is not as serious as reliability in affecting
customers’ satisfaction that doesn’t mean it should be ignored because it still has a
positive association with satisfaction.

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 In general, it sounds that customers are valuing more to the human element and task
efficiency. Hence, to better maintain and improve the service quality, the points of sales
employees should be imparted with a knowledge and skill that would enable them to
accomplish their activities in the desired way. Besides, the behaviors of employees have
to be shaped in a way that can satisfy the customers of the points of sales. This could be
ensured through both training programs and pursuing appropriate motivational
techniques. But, when designing the training programs care must be taken to address the
dimensions according to their order as they are prioritized in the findings.

 Particularly reliability is one of the most important factors influencing customer

satisfaction but less attention is given to this dimension than the others. Hence, the points
of sales must make every effort to provide reliable service which is expressed through
providing service as promised, performing the service exactly at the first time, showing a
keen interest in solving customers’ problems, providing service at the promised time and
insisting error free transactions. Specifically, the points of sales should give special
attention on providing service as promised and avoiding errors on transactions which are
rated as the least practiced in the points of sales. Additionally, from my own experience,
the one constraint that hinders front line employees to fully keep their promise to provide
a service is the work and process in the back office. Therefore, the points of sales should
improve the integration and coordination between the works of the front line employees
and the back office.

 Empathy of service is also the important factors to influence customer satisfaction in the
points of sales. However, next to reliability, relatively less attention is given for this
service quality dimension. One way of addressing this could be by treating customer with
great respect, giving individual attention to customers, serving customers based on their
specific needs and treating them in a friendly manner. This is to say, in order to maximize
customers’ satisfaction, the points of sales management should focus on these factors in
general and particularly individual attention given to each customer’s needs more
emphasis because it is rated as the least practiced in the points of sales. Hence, more
individual attention should be given to customers in order to better understand their needs
and better satisfy them.

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 Management of ethio telecom needs to conduct a research of this kind periodically to
study the perception of customers towards points of sales service quality to identify
shortcomings in its service quality so that it can improve and provide its service in
accordance with customers’ needs and wants.

5.4 Recommendations for Further Research

 Finding in this study reveal that one of the dimensions examined in this study (tangibility)
related positively but insignificant on prediction of the variance in customers’ satisfaction
which is opposite to other previous studies. Therefore, further studies should be conducted
to discover the consistency of the finding.

 Since the study did not investigated the association between demographic feature of
customers using the points of sales service and satisfaction, future research may explore
the association between gender, age, income, and customers’ satisfaction

 The scope of this study is confined to the level of service delivery quality of points sales
found in Adama city. Other research work should be conducted on service quality and
customers’ satisfaction in Adama town with respect to specific ethio telecom products
such as mobile, internet and fixed line .This helps to get insight about the overall service
quality of ethioteleom in Adama town.

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P a g e | vi
Appendix A: English Questionnaire

Questionnaire for Service Quality and Customer Satisfaction Survey on

ethio telecom

First I would like to thank you for your time. My name is Mesay Alebachew and I am a

graduate student at Adama Science and Technology University Department of Business and

Economics. I am conducting this study for the completion of my Masters Degree in Business

Administration.

The purpose of the study is to measure service quality and the level of customer satisfaction

in ethiotelecom. Your kind cooperation will help me to find reliable data and will be used

only for this study. Please try to answer all stated questions and I would like to thank you for

your time again.

Please mark your response with “√”

P a g e | vii
 Part one: Demographic information of respondents.

1 Age

□below 18 □18 – 30 □31 – 45 □Above 45

2 Gender

□Male □Female
3 Occupation

□Student □Self-employed □Public - employee

□Private - employee □Unemployed
4 From services provided by ethio telecom which service do you currently use?

□Mobile Service □Fixed line telephone service

□ CDMA Wireless Telephone service □Internet Service
If other please state ______________________________________________

5 How many times did you visit ethiotelecom, point of sales?

□Once □Twice □ More than two times

6 If you visited ethio telecom point of sales more than two times, how frequently do you visit
ethio telecom points of sales?

□ Once a month □ Twice a month □ More than twice a month times

7 What is the purpose of your current visit to ethio telecom’s point of sales
□Service Purchase □SIM Card Replacement □Mobile Apparatus Purchase □To
register complaint □To settle monthly bill

If other please state ______________________________________________

P a g e | viii
Part two: Perception towards service quality dimensions.

Please show the extent to which you believe the ethio telecom point of sales, you visited, has
the feature described in the statement. (1 represent = Strongly Disagree, 2 represent =
Disagree, 3 represent =Neutral, 4 represent =Agree, 5 represent = Strongly Agree).

Please mark your response with “√”

Service quality dimensions Your level of agreement

Tangibles 1 2 3 4 5
Ethio telecom point of sales has modern looking equipment
The Ethio telecom point of sales physical features are visually
appealing
Employees in the ethio telecom point of sales are well dressed and
neat appearing
Materials associated with the service (such as pamphlets, brochures
etc) are visually appealing in the point of sales
Reliability 1 2 3 4 5
The Point of sales provide services as promised

When you have problem, the Point of sales shows a sincere interest
in solving it
The point of sales performs the service right the first time
The point of sales provides its service at the time it promises to do
so
The point of sales insists on error free records
Responsiveness 1 2 3 4 5
Employees in the point of sales tell you exactly when the services
will be performed
Employees in the point of sales give you prompt service
Employees in the point of sales are always willing to help you
Employees in the point of sales are never too busy to respond to
your request

P a g e | ix
Assurance 1 2 3 4 5
The behavior of employees in the point of sales instills confidence
in you
You feel safe in your transactions with the point of sales
Employees in the point of sales are consistently courteous with you
Employees in the point of sales have the knowledge to answer your
questions
Empathy 1 2 3 4 5
The point of sales gives you individual attention
The point of sales has operating hours convenient to customers
The point of sales has employees who give you personal attention
The point of sales has your best interest at heart
The employees of the point of sales understand your specific needs

Part Three: Level of Customer Satisfaction

Please indicate your level of agreement on the below statements. (1= Strongly Disagree,
2=Disagree, 3=Neutral, 4=Agree, 5= Strongly Agree)

Statement 1 2 3 4 5
The point of sales completely meets my expectations
In my view, the point of sales is customer-oriented
I feel absolutely delighted with the point of sales services
My experience with ethio telecom point of sales is excellent
Overall, I am completely satisfied with the services delivered by
the point of sales

Comment or additional information

Please use the space below for additional comment.

______________________________________________________________________________
______________________________________________________________________________
______________________________________________________________________________
__________________________________________________________________
Thank you!

Page |x
Appendix B: Amharic Version Questionnaire

የኢትዮቴሌኮም የአገልግሎት ጥራት እና የደንበኞች እርካታ ምዘና መጠይቅ

በመጀመሪያ ጊዜዎን ስለሰጡኝ ላመሰግንዎ እወዳለሁ፡፡ስሜ መሳይ አለባቸው ይባላል፡፡ በአዳማ

ሳይንስና ቴክኖሎጂ ዩኒቨርሲቲ በንግድ ሥራ አስተዳደር ትምህርት ክፍል የ2ኛ ዲግሪ ተመራቂ ተማሪ
ስሆን ይህንን ጥናት የማካሄደውት ምህርቴን ለማጠናቀቅ እንዲረዳኝ ነው፡፡

የጥናቱ ዓላማ የአገልግሎት ጥራትን እና የደንበኞች እርካታ ደረጃን በኢትዮቴሌኮም የሽያጭ ማዕከል
ለመለካት ነው፡፡ትብብርዎ እውነተኛ እና አስተማማኝ መረጃ ለማግኘት የሚረዳኝ ሲሆን ከእርስዎ
የማገኘው መረጃ ለጥናቱ ዓላማ ብቻ የሚውል ይሆናል፡፡ እባክዎን ሁሉንም የተጠቀሱትን ጥያቄዎች
ለመመለስ ይሞክሩ ፤ ጊዜዎን ስለሰጡኝ እንደገና ላመሰግንዎት እወዳለሁ፡፡

እባክዎን ምላሽዎን በ “” ያመላክቱ፡፡

P a g e | xi
 ክፍል 1፡

 ዕድሜ
 ከ18 ዓመት በታች  ከ18-30  ከ31-45  ከ45 ዓመት በላይ

 ፆታ
ወንድ ሴት

 ሥራ
ተማሪ  ራሱን ቀጥሮ የሚያስተዳደር  የመንግስት ሰራተኛ
የግል - ሰራተኛ ሥራ የለኝም

 በኢትዮ ቴሌኮም ከሚቀርቡት አገልግሎቶች በአሁኑ ጊዜ የትኞቹን ይጠቀማሉ (ከአንድ በላይ አገልግሎት
ተጠቃሚ ከሆኑ የሚጠቀሙአቸው አገልግሎቶች ላይ ምልክት ያድርጉ)?

የሞባይል አገልግሎት የመስመር ስልክ አገልግሎት

ሲዲኤምኤ ገመድ አልባ ስልክ አገልግሎት የኢንተርኔት አገልግሎት

እባክዎን ሌላ ካለይ ግለጹ

 የኢትዮቴሌኮምን የሽያጭ ማዕከል ለምን ያህል ጊዜ ጎብኝተው ያውቃሉ?

አንድ ጊዜ ለሁለት ጊዜያት ከሁለት ጊዜያት በላይ

 ከሁለት ጊዜያት በላይ ጎብኝተው የሚያውቁ ከሆነ የኢትዮቴሌኮም የሽያጭ ማዕከልን በምን ያህል
ጊዜ ልዩነት ይጎበኟቸዋል?

በወር አንድ ጊዜ በወር ሁለቴ በወር ከሁለት ጊዜ በላይ

 የኢትዮቴሌኮምን የሽያጭ ማዕከል በአሁኑ ጊዜ የጎበኙበት ምክንያት ምንድን ነው?

ለአገልግሎት ግዢ ለምትክ ሲም ካርድ ለሞባይ ቀፎ ግዢ

ቅሬታ ለማስመዝገብ ወርሃዊ ክፍያለ መፈፀም

እባክዎን ሌላ ካለ ይግለጹ

P a g e | xii
ክፍል ሁለት፡ የአገልግሎት ጥራት ገጽታዎች መለኪያ

የሚከተሉትአረፍተነገሮችየኢትዮቴሌኮምየሽያጭጣቢያንየአገልግሎትጥራትገጽታዎችየሚያመሇክቱናቸዉ፡፡እ
ርስዎበሽያጭጣቢያውበነበርዎትቆይታመሰረትበአረፍተነገሮቹያሇዎትንየስምምነትመጠንእባክዎንያመልክቱ
(1= በጣም አልስማማን ይወክላል ፣ 2= አልስማማምን ይወክላል ፣3 = ምንም ሀሳብ የለኝምን
ይወክላል፣ 4 = እስማማለሁን ይወክላል ፣ 5 = በጣም እስማማለሁን ይወክላል)

እባክዎን ምላሽዎን በ “” ያመላክቱ፡፡

የአገልግሎት ጥራት ገጽታዎች የስምምነት ደረጃዎ

ተጨባጭ ሁኔታዎች 1 2 3 4 5
የኢትዮቴሌኮም የሽያጭ ማዕከል ዘመናዊ መሳሪያ አለዉ
የኢትዮቴሌኮም የሽያጭ ማዕከል ለአይን የሚማርክነዉ
የኢትዮቴሌኮም የሽያጭ ማዕከል ሰራተኞች ጥሩ አለባበስ ያላቸውእና ንጹህ ሆነዉ የሚታዩ ናቸዉ
ከአገልግሎቱ ጋር ተዛማጅ የሆኑ ቁሳቁሶች (እንደፓምፕሌቶች ፣ ብሮሸሮችወዘተ) በኢትዮቴሌኮም
የሽያጭ ማዕከል ለእይታ በሚማርኩ መልኩይገኛሉ
ተዓማኒነት 1 2 3 4 5

ቃል በተገባዉ መሰረት የኢትዮ ቴሌኮም የሽያጭ ማዕከል አገልግሎቶችን ያቀርባል

ችግር ሲያጋጥሞት ፣ የኢትዮቴሌኮም የሽያጭ ማዕከል ችግሩን ለማስወገድ ቅን ፍላጎት ያሳያል

የኢትዮቴሌኮም የሽያጭ ማዕከል አገልግሎቱን ለመጀመሪያ ጊዜ በቀጥታ ይፈጽማል
የኢትዮቴሌኮም የሽያጭ ማዕከል አገልግሎቱን ቃል በገባበት ጊዜ ውስጥ ይፈጽማል
የኢትዮቴሌኮም የሽያጭ ማዕከል ከስህተት ነጻ የሆ ነመዝገብ አያያዝ አለው
ምላሽሰጪነት 1 2 3 4 5
የኢትዮቴሌኮም የሽያጭ ማዕከል ሰራተኞች አገልግሎት የሚሰጥበትን ጊዜ በትክክል ያሳዉቃሉ
የኢትዮቴሌኮም የሽያጭ ማዕከል ሰራተኞች ቀልጣፋ የሆነ አገልግሎት ይሳጣሉ
የኢትዮቴሌኮም የሽያጭ ማዕከል ሰራተኞች ሁልጊዜም እርስዎን ለመርዳት ፍቃደኛ ናቸው
የኢትዮቴሌኮም የሽያጭ ማዕከል ሰራተኞች የእርስዎን ጥያቄ ለመመለስ ሁሌም ዝግጁናቸው

P a g e | xiii
ማረጋገጫ 1 2 3 4 5
የኢትዮቴሌኮም የሽያጭ ማዕከል ሰራተኞች ባህሪ በእርስዎ ውስጥ መተማመን ያሳድራል
ከኢትዮቴሌኮም የሽያጭ ማዕከል ጋር ባለዎት ግብይቶች ደህንነት ይሰማዎታል
የኢትዮቴሌኮም የሽያጭ ማዕከል ሰራተኞች በወጥነት በትህትና የተሞላ አቀራረብ አላቸው
የኢትዮቴሌኮም የሽያጭ ማዕከል ሰራተኞች የደንበኞችን ጥያቄ ለመመለስ በቂ እውቀት አላቸው
መረዳት 1 2 3 4 5
የኢትዮቴሌኮም የሽያጭ ማዕከል ለደንበኞች የግል እንክብካቤ ይሰጣል
የኢትዮቴሌኮም የሽያጭ ማዕከል ለደንበኞች ምቹ የሆነ የስራ ሰአት አለው
የኢትዮቴሌኮም የሽያጭ ማዕከል ሰራተኞች ለደንበኞች ጥንቃቄ የሚያደርጉ ናቸው
የኢትዮቴሌኮም የሽያጭ ማዕከል የልብዎትን ለመፈፀም የተቻላቸውን ሁሉ ያደርጋል
የኢትዮቴሌኮም የሽያጭ ማዕከል ሰራተኞች የእርስዎን ልዩ ልዩ ፍላጎቶች ይረዳሉ

ክፍልሶስት፡ የደንበኞች እርካታ መለኪያ

በሚከተሉትአረፍተ ነገሮቹ ያለዎትን የስምምነት ደረጃ እባክዎን ያመልክቱ፡፡ (1= በጣም አልስማማን
ይወክላል ፣ 2= አልስማማምን ይወክላል ፣3 = ምንም ሀሳብ የለኝምን ይወክላል፣ 4 =
እስማማለሁን ይወክላል ፣ 5 = በጣም እስማማለሁን ይወክላል)

መግለጫ 1 2 3 4 5
የሽያጭ ማዕከሉን አገልግሎት እንደጠበኩት ሆኖ አግኝቸዋለሁ
በእኔ አስተያየት የሽያጭ ማዕከሉ ደንበኛ ተኮር አሰራር ይከተላል
ከሽያጭ ማዕከሉ ጋር እጅግ በጣም ጥሩ የሆነ መስተጋብር አለኝ
በሽያጭ ማዕከሉ አገልግሎት ፍፁም ደስተኛ ነኝ
በአጠቃላይ በሽያ ጭማዕከሉ አገልግሎት አሰጣጥ ረክቻለሁ

አስተያየት ወይም ተጨማሪ መረጃ

ተጨማሪ አስተያየት መስጠት ከፈለጉ ከዚህ በታች ያለውን ቦታ ይጠቀሙ፡፡

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አመሰግናለሁ!!

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 Appendix C: Test of Normality

N Mean Std. Deviation Skewness Kurtosis

Statistic Statistic Statistic Statistic Std. Error Statistic Std. Error

Tangibility 204 3.6765 .69222 -.336 .170 -.012 .339

Reliability 204 3.4853 .63987 -.441 .170 1.401 .339
Responsiveness 204 3.8027 .61185 -.689 .170 1.219 .339
Assurance 204 3.7096 .57815 -.745 .170 1.987 .339
Empathy 204 3.6343 .57962 -.300 .170 .362 .339
Overall customer
204 3.5814 .67221 -.408 .170 1.332 .339
satisfaction
Valid N (listwise) 204

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