The effect of service quality and price on customer commitment (case study: Kermanshah Saman assurance's)

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1 International Research Journal of Applied and Basic Sciences 2013 Available online at ISSN X / Vol, 5 (10): Science Explorer Publications The effect of service quality and price on customer commitment (case study: Kermanshah Saman assurance's) Seyed Soleiman mousavi 1.AlirezaMoradi 2, mojtaba almasi 3 1. Business Management M.A. Student, Department of Business Management, Kermanshah Branch, Islamic Azad University, Kermanshah, Iran. 2. Faculty Member of Economics Department, Islamic Azad University, Kermanshah Branch, PO Box: , Kermanshah, Iran. 2. Associate professor of business Administration, Kermanshah Branch, razi University, Kermanshah, Iran. Corresponding Author soleiman1982@yahoo.com ABSTRACT: Today's antecessor companies try to increase their profitability by satisfying important ingredients for customers in the best form. This point is the essential base of their success and it's based on customer orientation. That's why this research studies the service quality's effect and price on customer commitment in usage of Saman assurance service in Kermanshah province. Eight hypothesizes are considered for this purpose. The applied research method is descriptivecorrelation. Customer's statistical society of Saman assurance in Kermanshah province, classification research method, related observed of letterpress and variables of each hypothesis's questions are offered with 1-5 scale. The conclusion of recent research showed that there is a significant and positive correlation between service quality and customer commitment and between price and customer commitment. Among the eight considered hypothesizes, all of them were accepted. Also the regression model between independent and dependent variables are significant and suitable. Key words: Service quality, Customer commitment, Price perception, Satisfaction. INTRODUCTION Nowadays forecasting and recognizing customers' requirements have special importance in economics' foundation. Customer is a key and radial element in their existence and the orientation of whole goals, strategies and sources rotate around the axis of customers' attraction and conservation. Preservation and reinforcement of customers' constancy is a strategic challenge for those companies which are anxious about preservation and development of their competitive position in market (Sutton and Klein 2003). The existence of companies is based on customers in today's global economy, so companies can't be indifferent about customers' requests and expectations. They should use all their abilities and activities in order to catch customer satisfaction because the only source of stock reversal is customers. The organization of distribution system is one of the important problems in countries' economy and commerce. Accommodating of distributions' network by the aim of decreasing the distributions' cost, decreasing the number of inductors and supplying the judicial patronage of consumers includes stuff enjoyment right, safe services and information's enjoyment right was considered in the fourth and fifth program of country's economic development. Without enough and necessary attention to customers, this important case will be failed. The whole software and hardware activities should indicate the requirement and expectation of customers (Lazarevic et al 2007). Organizations concluded that the most desirable and prosperous products wouldn't demand if they can't resolve customers' requirements and needs. Hereof if service quality is being considered as perception and expectations' comparison of each person we will realize that we won't be successful by relying upon traditional strategies of marketing in offering and selling products. Paying attention to customers' requirement and expectation for the aim of existence and profitability has the most preference in today's organizations and establishments. For the sake of moving on quality and development the organizations need to know quality measurement's tool and also recognize the blind spot of organization in offering service with desirable quality and how to remove them (Sutton and Klein, 2003).

2 Meanwhile the role of personnel as inductors between organizations and customers is very important and it has noticeable effect on customer and organization's relation (Richheld and sasser, 1999). The first competitive principle in today's competitive age is necessity of paying attention to service's quality. On the other hand customer commitment is an important and vital element for organization and it was interesting for most of the researchers in the fields of organization behavior and psychology especially social psychology during the past years. This theory has been changed during three past decades. Loans said that in recent investigative contexts, the total theory of customer commitment is an important factor for customer's behavior perception and comprehension (MahnazVahdati, 2010). The present research tries to describe and study the organized dimension of cost, service quality and customer's commitment in Saman assurance of Kermanshah province. Research Literature Services' quality A Service quality is a fairly young scientific field and near two decades is passed of researching about this field. This field has different meaning for different people. Not only the improvement of quality's description is important but also is very important for guiding personnel effort to catch the more qualified services (Dominque2002). Quality consists of preparing service or stuff to use that it itself needs quality planning, adaptation, being accessible and proper place for offering services (Louothetis, 1992). Quality doesn't have any concept or meaning except whatever a customer really wants. On the other word, a product is qualified when is coincident with customer's needs and requirements. Quality should be defined in the title of product's adaptation with customer's requirement (Rayne,1998). International standards' organization defines the quality as below: the whole features and properties of product or service which is capable of removing the customer's needs (SayedJavadian, 2002). Singapore's national efficiency organization said that the quality should be defined by customers not by producers or service exhibitors. On the clear word, quality is the collection of stuff or service's features and properties that supplies the requirements and consumer's satisfaction (SayedJavadian, 2002). Customer satisfaction The term- "customer is always right"- is a motto in modern business. The source of this term is in nominated as most of the other common terms. This statement is being attached to Lord SenizBeri but it has been said that this statement was used for the first time by John vanamicker-the owner of one store in Philadelphia- in 1860s. The concept of customer is in activity's focus and existential philosophy of commercial organizations. In modern age the protection of customer's relation is essential and accountable should aware of their customers unless the others do it. "Satisfaction" in dictionary defines as supplying or satisfying and gratification. Studies about the users of this verbal meaning were exited and after 1980s the study of users' satisfaction that means description of users' experiences was started. (Yang, 2004). Customer's commitment Commitment is defined differently by different people that some of them are studied below. Professor Motahari considers the commitment as being promise to those tenets and conventions that human believe them. He said, "Promisor is someone who is loyal to his promise and avow and tries for goals." Canter considers the commitment as people's tendency for giving their loyalty and energy to social system. Sallankick considers the commitment as linking people to their ingredients and proceedings that means commitment will fulfill when each person feels dependent and responsible for his behavior and proceedings (Moorman et al,1992). Modi et al predicates the commitment as an upper activity of prescript responsibility. Expressing the practical commitment is essential for doing the activities and it is very important in sensitive occupations. Cock and Vall considered commitment as three concepts- "loyalty, "personality and identification's feeling" and "preparation. Commitment is one of the important variables for realizing the power of marketing and also is a useful tool for measuring the probability of customer's loyalty and forecasting the customer's future shopping. It has been ratiocinated that commitment is the most general dependent variable that is being used in related researches about relation between seller and buyer. Moorman et al (1992) defined the commitment as usual tendency for preserving valuable relation. Commitment indicates the customer's tendency for preserving one valuable relation (Morgan and Hant, 1994). It can be defined as one type of energy which is linked to customers and keep buying services and products of one special seller that stick in buyer's minds and for doing something that was experienced before. Research background Anderson and Sallivan (1993) studied about "customer satisfaction's factors" and they considered quality factor as an important factor in customer satisfaction and also concluded that customer satisfaction or 1253

3 dissatisfaction and stuffs or service's quality has substantial role.loscomack and Daugal (1992) tried to study the role of service's quality, service's features, service's problems and occasional factors as effective factors on customer's satisfaction and the future tendency in bank system. The acquired information for their research was assembled by questionnaire of325 persons of bank customers. The result of this research helped the managers to find out the customer satisfaction's stimulus. Recognition of departmental satisfaction's stimulus was their aim and they used SERVQUAL technique for measuring service's quality. Based on marketing literature in banking services they used some symbols for service's features in their research. These symbols are: Enabling symbols: these symbols relate with accessibility and convenience. Competitive symbols: competitive policy such as lot loan's rate is one of the competitive symbols. Replying problems with satisfaction The study conceptual model A conceptual model of research is based on theory relation among some of factors that are important in studied subject. This model not only illustrates the research variables but also displays their relation (Tabibi et al, 2009). This theory frame is logically going on by studying the research data. Based on offering definitions and mentioned past researches, the researchers offer below conceptual model in order to show the efficacy of price perception and service quality on customer commitment (figure number 1). Figure 1. Research conceptual model The Research hypothesis The Sub-hypotheses Service quality has significant effect on customer commitment in Saman assurance of Kermanshah province. Perceived Price has significant effect on customer commitment in Saman assurance of Kermanshah province. The Sub-hypotheses Service quality has significant effect on Perceived value in Saman assurance of Kermanshah province. Service quality has significant effect on customer satisfaction in Saman assurance of Kermanshah province. Perceived Price has significant effect on Perceived value in Saman assurance of Kermanshah province. Perceived Price has significant effect on customer satisfaction in Saman assurance of Kermanshah province. Customer satisfaction has significant effect on customer commitment in Saman assurance of Kermanshah province. Perceived value has significant effect on customer satisfaction in Saman assurance of Kermanshah province. 1254

4 RESEARCH METHOD This research is descriptive-scaling- based on application goals and types of data. Spearmen's correlation coefficient test is using for studying the relation between independent and dependant variables and researches' hypothesis by using SPSS software. Multilateral regression was used for testing all of the cause and effect relations between variables and studied components. Questionnaire is the measurement tool for testing mentioned hypothesizes so the research method is based on free research. Required data for testing questionnaire researches hypothesizes is based on 1-5bscoring. 3types were used for measuring service quality and respectively 9 and 5 types for measuring price conception and customer commitment. In this research kronbakh alpha was used for measuring stability of questionnaire and they got amount was 0.9 which indicates the adequacy, higher stability and trustworthy of questionnaire. The research statistic's society includes the whole customers of Saman assurance in Kermanshah province. The simple random sampling method was used for choosing the samples and Kokaran formula was used for sampling 384 persons of Saman assurance's customers. Research finding In this research the samples specified general information such as gender, education and job history that were offered as closed answer. Sensibility, viewpoint, dependency and belief of responders can be determined by this scale. Most of samples were men with frequency of 7.83 and B.A education (49.1) among 384 distribution questionnaires. Data analysis Spearmen coefficient correlation was used for testing hypothesizes. Statistically there is significant relation between variables if meaningful level becomes less than The attained results from table 1 indicate that correlation coefficient between service quality and customer commitment in meaningful level of (0.000) is that the calculated meaningful level is 0.05 so there is a positive and significant correlation between service quality and customer commitment. The attained results from the second basic hypothesis in table 2 indicate that the correlation coefficient between variables is in meaningful level of (0.000) so there is a positive and significant correlation between price conception and customer commitment. The attained results of other hypothesizes is summarized below. Table 1. The testing results of research hypothesizes Hypotheses Research hypotheses text Sig Correlati Results on Coefficie nt Service quality has significant effect on customer commitment Not Rejected One Major in Saman assurance of Kermanshah province. Two Major Perceived Price has significant effect on customer commitment in Saman assurance of Kermanshah province Not Rejected Service quality has significant effect on Perceived value in Saman assurance of Kermanshah province. Service quality has significant effect on customer satisfaction in Saman assurance of Kermanshah province. Perceived Price has significant effect on Perceived value in Saman assurance of Kermanshah province. Perceived Price has significant effect on customer satisfaction in Saman assurance of Kermanshah province. Customer satisfaction has significant effect on customer commitment in Saman assurance of Kermanshah province. Perceived value has significant effect on customer satisfaction in Saman assurance of Kermanshah province Not Rejected Not Rejected Not Rejected Not Rejected Not Rejected Not Rejected 1255

5 customer commitment Table 2. Variable's correlation satisfaction Price Perceived value Service quality customer commitment satisfaction Perceived Price Perceived value Service quality Perceived value Service quality Table 3. Model Summary Model R R Square Adjusted R Std. Error of Change Statistics Square the Estimate R Square Change F Change df1 df2 Sig. F Change a b c d a. Predictors: (Constant), Price b. Predictors: (Constant), Price, Perceived value c. Predictors: (Constant), Price, Perceived value satisfaction d. Predictors: (Constant),Service quality Price, Perceived value satisfaction The amount of multilateral R for price is which indicates that this variable can forecast the alteration of customer commitment. If we add conceptual value to the previous one, the amount of forecasting will be By adding satisfaction variable it will be and by adding service quality it will be that is high. The other affectivity of customer commitment variable is based on uncontrolled variables that impact on dependant variables. Table 4. Standard and substandard regression coefficient Model Unstandardized Coefficients Standardized Coefficients t Sig. B Std. Error Beta 1 (Constant) Perceived Price (Constant) Perceived Price Perceived value (Constant) Perceived Price Perceived value satisfaction (Constant) Perceived Price Perceived value satisfaction Service quality Table: correlation coefficient for predictor variables BETA shows the alteration of customer commitment for quantity of one standard deviation on independent variables. Excluded Variables Table 5. Excluded Variables a Model Beta In t Sig. Partial Correlation Collinearity Statistics Tolerance satisfaction.422 b Perceived value.422 b Service quality.412 b satisfaction.244 c Service quality.218 c Service quality.169 d a: Dependant variables -----customer commitment b: predictors in the model price c: predictors in the model ----price, conceptual value d: predictors in the model price, Perceived value, satisfaction 1256

6 In this table, those variables which were deleted in each phase again come back to the list. In the first phase independent variables were deleted but because their meaningful level was less than 0.5 (VALUE=0.020) they enter the table again so none of the variables were deleted. RESULTS AND CONCLUSION Within results, codification's hypothesizes was tested by Spearmen correlation coefficient test and correlation between dependent and independent variables was distinct. Hypothesizes were confirmed by 95% certainty. Proposed model's test of this result is matched with researches of Grigorathis et al (1999),Bejou (2002), Anderson & Sullivan (1993), Losoko and Mag Dogual (1999) and also confirmed their results. Suggestions are offered below based on researches' results: This type of culture expands and developed in organizations because of services' quality effect on customer commitment. Regarding the competitive atmosphere in occupations, it is proposed that the service organizations should increase their level of service quality in order to improve their functions. They should consider the service quality as an important and preferable goal. It is proposed that the organization's managers should act in a way that increasing quality becomes one part of organization's culture and values. The whole managers and staves should obey this order and seriously start gathering and reporting thisinformation about customers which causes higher function. Regarding the determinant role of service quality on functions, organizations should reinforcement it more. Increasing customer's perception to necessity of customer commitment and loyal customer is very important in profitability. REFERENCES Anderson E, Weitz B.1992."the use of pledges to build and sustain commitment in distribution channels",journal of marketing Research,Vol.9,No.,pp:18-34 Domeniko T seven golden rule for customer satisfaction, Abd- Shlalvnd, prudence Magazine, December, No. 58, Javadin S, Yazdani R, AP Factors affecting the intention of customers to use bank services - no internet ( Saman case study ), Journal of Knowledge Management, Issue 70 Lazarevic V, petrovic lazarevic S " Increasing Brand loyalty of Generation Y for future marketing ", Monash University, Journal of Business and Economics, pp.7 28 Lazarevic V, petrovic lazarevic S " Increasing Brand loyalty of Generation Y for future marketing ", Monash University, Journal of loyalty; The role of switching costs, Phychology and Marketing, Vol. 21, No. 10. Louothetis, N., Managing Portotal Quality from Deming to toguchianlspe, Prentice Hall, International, 1992.loyalty; The role of switching costs, Phychology and Marketing, Vol. 21, No. Moorman C, Zaltman G, Deshpandé R "Relationships between providers and users of market research: The dynamics of trust within and between organizations" Journal of Marketing Research, 29(3), Morgan RM, Hunt SD The commitment-trust theory of relationship marketing, Journal of Marketing, Vol. 58, pp Ndubisi, N.O., Chan, K.W. and Chukwunonso, N.C. (2004) Rayne, Molly Inhofe and wern, Orent M. Service Quality as a Competitive Opportnity, Journal of services Marketing 12/3 [1998] Reichheld F, Sasser WE Jr.1999.Zero defection quality comes to services :Harvard Business Review, Vol. 68, September_ October, p, Sutton D, Klein T "Enterprise Marketing Management", New York: John Wiley &Sons, Inc. Vahdati M Effects of social capital on organizational commitment of employees Pars Oil and Gas Company, Tehran PNU MA thesis Yang Z, Peterson RT Customer perceived value, satisfaction, and loyalty; The role of switching costs, Phychology and Marketing, Vol. 21, No. 1257