CUSTOMERS PERCEPTION ON PHYSICAL FACILITIES AND PROCESSES IN BANKS - A CASE STUDY OF STATE BANK OF INDIA

Transcription

1 International Journal of Sales & Marketing Management Research and Development (IJSMMRD) ISSN Vol. 3, Issue 1, Mar 2013, TJPRC Pvt. Ltd. CUSTOMERS PERCEPTION ON PHYSICAL FACILITIES AND PROCESSES IN BANKS - A CASE STUDY OF STATE BANK OF INDIA K. RAMA MOHANA RAO 1 & S. GANGADHARA RAMA RAO 2 1 Professor, Dept. of Commerce and Management Studies, Andhra University, Visakhapatnam, Andhra Pradesh, India 2 Lecturer, School of Management Studies, Jawaharlal Nehru Technological University, Kakinada, Andhra Pradesh, India ABSTRACT The intensifying competitive environment in the banking sector forcing the public sector banks to become more and more customer focused in their operations. The quality and adequacy of the physical facilities at bank branches plays an important role in customer satisfaction and quality perceptions of the customers. Recognizing this, many banks redesigned their branch structures to create better ambiance, comforts and facilities to the visiting customers. The banks however need to know to what extent the physical infrastructure provided at bank branches could create quality perceptions to customers. This paper is an attempt to study the customers perceptions on physical facilities provided by SBI at its branches and customer interactions with bank employees based on survey research. KEYWORDS: Servicescape, Physical Environment, Ambiance, Empathy, Courtesy INTRODUCTION Customers have an important role to perform in the service production and consumption process, as customers are co-producers of service. The generated service quality greatly depends upon the customer s ability to participate in service process and also on the ability to perceive the quality generated. Physical environment is one of the major influencer of the employee as well as consumer behavior in the interactive process. The moods and emotions of the interactive people are greatly influenced by physical environment as well as physical facilities. Several authors refer to the physical facilities, i.e. the servicescape, as a quality indicator (e.g. Ward et al., 1992; Baker et al., 1994; Baker, 1998; Aubert-Gamet and Cova, 1999; Baker et al., 2002). Servicescape is a widely used term to describe the physical surroundings of a service company. It includes the exterior and interior design, ambient conditions such as temperature, noise, odour, as well as tangible parts of the service such as business cards, brochures, and other communication material (e.g. Bitner, 1992; Wakefield and Barnes, 1996). Ward et. al. (1992) compare the servicescape with a product s packaging. In analogy to packaging it is expected that tangible surrogates are important in creating expectations about the intangible service performance and thus can be used for inference making (Levitt, 1981; Rushton and Carson, 1989; Ward et. al., 1992). Since services usually involve simultaneous production and consumption, in many cases the customer has to enter the service facilities and has to be within the servicescape before he/she can make the purchase decision. Therefore, the servicescape offers a multitude of easily accessible cues to customers seeking an information searching shortcut (Baker, 1998). Physical evidence provides tangible cues to customer to develop service quality expectations (K. Rama Mohana Rao, 2011). Environmental psychologists have argued that people respond to their environment holistically, rather than to individual stimuli. Therefore, the reaction to the overall environment is more than a sum of its individual stimuli (Bell et al., 1978; Holahan, 1982; Ittleson et. al., 1974). Bitner (1992) stated that the dimensions of the physical surroundings include all of the objective physical factors that can be controlled by the firm to enhance (or constrain) employee and customer actions. Bank physical evidence includes all tangible elements that are attached to services. Examples in this respect would be physical

2 54 K. Rama Mohana Rao & S. Gangadhara Rama Rao facilities, the equipment used in order to perform a service, personnel and visible communication materials (Zeithaml and Parasuraman, 2004) such as signs, the brand, logos, brochures that describe and create an image for the promised services, documents that certify the acquisition of a particular service, direction indicators etcetera. Physical environment is more important in the banking sector where services are very difficult to measure and customers can get an idea about the quality of services based on the elements they can see. When customers interact with bank employees they must involve themselves in the delivery process. The bank s location, park places as well as the interior and exterior layout of the bank therefore, are of great importance. Customers expect to feel comfortable within the bank unit and thus pay attention to the physical layout of equipment and other furnishings (Mohammed and Mohammad, 2003). The place where customers meet the service provider is of high importance in the perceived service quality (Ballantyne, Christopher, et al., 1995) as they take into consideration all physical evidences and infer the bank s and its services performance (Lenka, Suar et al., 2009). Thus, banks physical evidences influence customer satisfaction with the bank and its services. The banking scene in India changed completely after independence. The banking system in the country recorded rapid progress over the years. The major reasons for the progress of Indian banking sector are planned economic growth, increase in money supply, growth of banking habit, control and guidance by the Reserve Bank of India and the nationalization of banks. The major differentiating parameter that distinguishes the new private sector banks in India from other banks in the system is the high level of service. Leveraging of their strengths and competencies management, operational efficiency and flexibility, superior product positioning and higher employee productivity skills forms some of the key efficiency instruments of these new private sector banks. The public sector banks are challenged from all fronts. To survive and flourish in the changing competitive scenario, public sector banks must respond to major trends reshaping markets. Hence, customer centric quality focus became the need of the hour. Beside all other quality factors, public sector banks need to ensure qualitative physical facilities for customer and employee interactions at the bank premises. OBJECTIVE This paper aims to study the opinion of the customers on the physical environment of the selected bank in order to find out the gaps in providing quality services. RESEARCH METHODOLOGY To study the opinion of the customers on the physical environment at various branches of State Bank of India, a survey was conducted in five Zones of the Bank located in Andhra Pradesh. A sample of 300 SBI customers was selected from the five zones. Further the sample was equally divided among five groups of SBI customers namely Employees, Businessmen, Professional, Agriculturalists and Housewives. Likert scale is used to elicit opinion of the customers. Weights are assigned to the responses ranging from 1 to 5 (1 strongly agree, 2 agree, 3 neutral, 4 disagree and 5 strongly disagree) to find out weighted score. ANOVA is used to draw inferences from the primary data. Opinion on Physical Environment Physical environment plays a vital role in influencing the behavior of customers as well as employees of any service organization including banking organization (K. Rama Mohana Rao and S.G. Rama Rao, 2011). The design of the servicescape should facilitate comfortable and efficient participation of customers and employees in the service production and consumption process. The quality of the service will be influenced greatly in the way the process is facilitated. There are many dimensions, which can be exploited in the physical environment to create quality perceptions to the customers. Competition considerations cannot be overlooked in the design of physical environment. Whatever efforts the service provider makes in shaping the physical environment, it should suit to the needs and desires of the target customers. They

3 Customers Perception on Physical Facilities and Processes in Banks - A Case Study of State Bank of India 55 should remember that customer is the ultimate judge of the performance of the service provider. In fact, service organization should focus on exploring new ways of presenting a service outlet by encouraging customers participation in introducing refinements and modifications in the physical environment. The beginning is definitely to know the opinion of the customers on the physical environment. Since the customer interaction with the physical environment is a vital input in shaping the first impression on the bank and also the quality perception of customers, an attempt is made to know the opinions of the respondents on the physical environment of the bank. The opinion of the respondents is elicited on physical environment of the bank using ET Scale (Excellent to Terrible). The data presented in the Table 1 shows that 83.7 per cent of the respondents rated the exterior of the bank as good, 10.3 per cent of the respondents rated the exterior either very good or excellent. Ambiance represents the surroundings of service outlet and an atmosphere in the service outlet that persuades the employees as well as customers to get involved pleasantly and comfortably in the service production and consumption process. This is the reason why ambiance is considered as an important characteristic of a servicescape. The study revealed, as many as 63.3 pre cent of the respondents rated ambiance as good, while 22.7 per cent rated it as average. The layout of the bank branch was rated as good by 67 per cent of the respondents and 20.3 per cent of the respondents rated the layout as average. As far as signage is concerned, 55.3 per cent of the respondents rated it as good and 38.7 per cent rated it as average. The interactive system designed by the bank is rated as average by the majority of the respondents (54 per cent). While 25.7 per cent of the respondents rated the interactive system as good and 4 per cent of the respondents rated as very good, 15.7 per cent of the respondents rated the interactive system as poor. The facilities for interaction also rated by the majority as average and more than 20 per cent rated the facilities for interactions as poor. The process designed for service production and delivery by the bank was rated average by as many as 49.3 per cent of the respondents. A little over 77.3 per cent rated the tangibles present in the bank service outlet as good. Further, the table reveals that there is a significant difference among the zones on the factors of physical environment. The factors such as Ambiance (mean 3.12, F=4.731) and Layout (mean 3.21, F=4.7) differ significantly in customer opinion. Signage (mean 3.41, F=3.908) and Tangibles (mean 3.16, F=4.177) are the other factors got significant differences in the zones. It can be inferred from the table, that the exterior of the bank, secured positive rating as the mean value of the factor was The other factors though were not rated negatively, but failed to secure positive rating as the mean value of the factors varied between >3 and <4. Table 1: Opinion on Physical Environment of the Bank (n=300) Particulars Excellent Very Very Mean Good Average Poor Terrible Good Poor / SD Exterior of the bank (1.00) (9.33) (83.67) (6.00) Ambiance (11.00) (66.33) (22.67) Layout (0.33) (6.00) (67.0) (25.33) (1.33) Signage (0.33) (2.67) (55.33) (38.67) (3.00) Interactive System (4.00) (25.67) (54.00) (15.67) (0.33) (0.33) Facilities for interaction (4.00) (20.33) (54.00) (20.67) (1.00) 0.78 Process (0.33) (5.67) (24.67) (49.33) (19.00) (0.67) (0.33) Tangibles (0.33) (3.00) (77.33) (18.67) (0.67) 0.48 *P<.05; **P<.01 Source: Primary Data F ** 4.700** 3.908* *

4 56 K. Rama Mohana Rao & S. Gangadhara Rama Rao The objective of any service organization shall be providing the total quality service system to ensure quality perceptions to the customers at every movement they experience in the service production and consumption process. The opinion of the respondents indicates the gap between desirable and available. The management of the bank needs to focus its attention on those areas where the majority of the respondents rated negatively. It is also essential to strengthen further the areas where the majority gave positive ratings. Creating the feeling of excellence in every service movement is the most challenging task to every service organization and particularly to the banking organization.it demands continuous improvement with the support of research and technology adaptation besides feedback from customers. The opinion on the documents of the bank is obtained from the respondents and the data is presented in Table 2. A little over 88 per cent of the respondents revealed that the documents of the bank are simple. As many as 63.0 per cent of the respondents either agree or strongly agree to the statement that the documents are understandable. The majority of the respondents (64.7 per cent) were not convinced to the statements documents are user friendly. Their response was neutral for the statement the documents seeking unnecessary details. Table 2: What is your Opinion on the Documents of the Bank? (n=300) Particulars Strongly Strongly Agree Neutral Disagree Agree Disagree Simple (6.33) (82.00) (8.00) (3.67) Understandable (6.33) (56.67) (32.67) (4.33) User Friendly (4.00) (27.33) (64.67) (3.67) (0.33) Unnecessary details (3.33) (10.00) (75.00) (11.00) (0.67) Source: Primary Data Customer Employee Interactions Face to face interaction is considered as the best form of interaction due to several reasons. It provides an opportunity to eliminate communication gaps between the individuals much better than any other interactive system. Frontline employees of the banking organization interact with customers to know their problems and to provide necessary services to the best satisfaction of the customers. Customers will have different sets of needs, wants, ego systems, time pressure, situational pressures, adaptability, temperament, understanding, skill, knowledge and participative abilities. Similarly, employees also are human beings with varied needs, wants, ego systems, situational pressures, temperaments, styles, abilities and involvement levels. When employee and customer are interacting, the best result will come out only when they are working positively with high level of understanding and involvement in service process. Service organizations give priority to train the people in order to develop interactive abilities. Many problems in the service organizations will be solved when the employees are good in customer interactions. Employee to customer interaction is the key issue in interactive marketing. The respondents were asked to give their opinion on the interactive behavior of the employees of State Bank of India. The respondents were asked to give their rating on the following statements. The ratings of the respondents are collected on five point agreement scale which varied from strongly agree to strongly disagree. Table 3 reveals that the majority of the respondents gave positive rating to the statements employees of the branch are skillful, employees are presentable and employees are service oriented. The majority of the respondents preferred neutral position for the statements employees are courteous, employees are empathetic, employees are communicative, employees understand customer problems, employees extend support at time of necessity, employees suggest right things, employees are discriminative, employees are egoistic and

5 Customers Perception on Physical Facilities and Processes in Banks - A Case Study of State Bank of India 57 employees have gender bias. The opinion is divided almost equally between neutral and agreement in the case of the statement employees have no time sense. As many as 43 per cent of the respondents either disagree or strongly disagree to the statement employees of the branch are responsive. About per cent ventilated their disagreement to the statement employees are giving individualized attention. The opinion is highly divided among agreement, neutral and disagreement for the statement employees understand customer problems. The large number of respondents (41 per cent) preferred neutral to the statement employees are communicative, while 33.3 per cent of the respondents either disagree or strongly disagree to the statement.a further insight in to the table reveals that there is a highly significant difference between the zones on interactive behavior of employees. The statements such as employees of the branch are responsive (mean 3.04, F=26.297), employees are courteous (mean 3.24, F=7.805), employees are giving individualized attend attention (mean 3.31, F=5.136), employees understand customer problems (mean 3.09, F=7.238) and employees are presentable (mean 2.05, F=31.874) attracted different opinions among zones. The following are the other statements attract different opinion among the zones employees are communicative (mean 3.04, F=3.774) and employees are discriminative (mean 2.66, F=3.417). It can be inferred from the above, that the opinion of the respondents on interactive behavior of the employees in almost all the factors is not significantly positive and in some factors it is either neutral or negative. Table 3: Interactive Behavior of the Employees (n=300) Particulars Employees of the branch are responsive Employees are courteous Employees are empathetic Employees are communicative Employees are giving individualized attention Employees understand customer problems Employees extend support at the time of necessity Employees suggest right things Employees are skilful Employees are presentable Employees are service oriented Employees are discriminative Strongly Agree Agree Neutral Disagree Strongly Disagree Mean / SD ** (3.70) (32.70) (20.30) (43.00) (0.30) ** (2.00) (8.70) (53.30) (35.70) (0.30) (2.70) (6.00) (49.00) (41.70) (0.70) * (4.70) (21.00) (41.00) (32.00) (1.30) ** (20.70) (28.00) (50.70) (0.70) ** (0.70) (27.30) (36.00) (34.00) (2.00) (1.70) (34.00) (34.70) (28.00) (1.70) (3.70) (28.30) (59.30) (8.30) (0.30) (1.30) (78.00) (17.30) (3.30) ** (1.70) (49.30) (44.30) (4.70) (1.70) (46.00) (43.70) (7.00) (1.70) * (1.30) (36.70) (56.70) (5.00) (0.30) F

6 58 K. Rama Mohana Rao & S. Gangadhara Rama Rao Employees are egoistic Employees have gender bias Table-3:Contd., (1.30) (12.70) (73.70) (11.70) (0.70) (1.30) (16.30) (63.00) (19.00) (0.30) Employees have no time sense (2.30) (39.30) (37.70) (20.70) *P<.05; **P<.01 Source: Primary Data The respondents were asked to reveal whether they faced any problems in communicating their problem, getting specific attention to the problem, employee arrogance and non accessibility of concern employee in interacting with contact employees. The data presented in the Table 4 reveals as many as 66.7 per cent have faced problems some times in communicating their problems to the contact employees. Similarly, 65 per cent of the respondents that they faced some time the problem of getting specific attention of the contact employees. With regards to employee arrogance, 60 per cent of the respondents never experienced, where as 37 per cent of the respondents revealed that they had such experience sometimes. Non accessibility is never a problem to 82.3 per cent of the respondents, where as 16.3 per cent had such experience sometimes. Table 4: Problems Faced in Interacting with Contact Employees (n=300) Particulars Communicating your problem Specific attention your problem Employee arrogance Non accessibility Often Some Times Never (5.00) (66.67) (28.33) (3.33) (65.00) (31.67) (3.00) (37.00) (60.00) (1.33) (16.33) (82.33) Source: Primary Data Customers shall be provided with adequate comforts and support facilities to facilitate their effective participation in service production and consumption process. An attempt is made in the study to know the consumer opinion on the adequacy of physical facilities provided by the bank. The data presented in Table 5 shows that the ventilation at the bank service outlet is moderate as 76.3 per cent of the respondents expressed the same. The moving space in the branch is rated moderate by about 70 per cent of the respondents. The facilities for sitting was rated adequate by 20.3 per cent of the respondents, while about 69 per cent rated as moderate. The adequacy of writing pads were rated moderate by 53 per cent of the respondents, while 29.3 per cent of the respondents rated less. As many as 41.3 per cent revealed that the toilet facility is less in the bank outlets, while 28 per cent of respondents rated very less. The adequacy of drinking water, Air conditioning/fans, lighting, counters layout and security were rated moderate by the majority of the respondents. With regard to adequacy of pins and parking place, the majority are of the opinion that the facilities are either moderate or less. Further insight in to the table reveals that all most all the statements were getting a significance difference between the zones. It can be inferred from the above, that the respondents expressed their concern over the inadequacy of many physical facilities in the branch.

7 Customers Perception on Physical Facilities and Processes in Banks - A Case Study of State Bank of India 59 The quality of physical facilities is another important dimension that influences interactive behavior. The mean value of the opinion of the respondents on quality of toilets was 3.27, while it was 2.28 for drinking water, 2.28 for gum, 2.11 for pins, 2.23 for writing pads and 2 for facilities for sitting. The other variables secure a mean value of less than two. It indicates from the above, that the respondents are unhappy with the quality of toilets, gum, parking place, drinking water and facilities for sitting. However, in the case of other facilities also the opinion of the majority is not favorable in terms of adequacy. Table 5: How do you Rate the Physical Facilities Provided by the Bank? (n=300) Particulars Ventilation Moving Space Facilities for Sitting Writing pads Toilets Drinking Water Air Conditioning / Fans Adequacy Adequate Moderate Less Very Less Quality Nil Mean Adequate Moderate Less (20.00) (76.33) (3.67) (9.33) (88.00) (2.67) (19.67) (69.67) (9.00) (1.67) (12.33) (80.00) (6.33) (1.33) (20.33) (68.67) (8.67) (2.33) (12.33) (76.67) (9.67) (1.33) (12.00) (53.00) (29.33) (5.67) (9.67) (62.00) (23.67) (4.67) (2.00) (23.33) (41.33) (28.00) (5.33) (1.33) (16.67) (39.00) (39.67) (3.33) (10.33) (60.67) (21.33) (5.67) (2.00) (8.33) (63.67) (20.67) (6.00) (1.33) (23.00) (70.67) (4.00) (2.33) (12.00) (81.00) (4.00) (3.00) Very Less Nil Mean Lighting Counters Layout Pins Gum Parking Place Security (25.00) (71.67) (3.33) (17.00) (79.67) (3.00) (0.33) (17.67) (74.00) (7.00) (1.33) (15.00) (78.33) (6.67) (14.00) (50.67) (32. 00) (2.67) (0.67) (13.33) (65.00) (19.67) (1.33) (0.67) (14.00) (41.67) (35.00) (7.33) (2.00) (10.00) (60.67) (22.00) (5.67) (1.67) (8.33) (39.00) (40.00) (11.67) (1.00) (9.33) (53.00) (27.00) (10.00) (0.67) (19.00) (74.00) (3.33) (3.67) (12.33) (79.67) (4.67) (3.00) (0.33) Source: Primary Data CONCLUSIONS The findings of the study drives to the conclusion that though majority of the customers are satisfied with the physical facilities and interactive processes, there are gaps to be addressed to improve quality in performance as far as physical environment and interactive processes are concerned. The exterior of the bank branches need to be improved. User friendly documents need to be designed. As far as the interactive behavior of the employees is concerned the study revealed that the interactive skill of the employees, their presentability, service orientation and so on need to be focused for better employee customer interactions. The problems faced by the customers in communicating their problems and drawing immediate attention of the employees on the consumer problems are an indication of the concern of the customers. The survey revealed that the customers are unhappy with the facilities for sitting, parking place, maintenance of toilets, etc. at bank premises. Thus, the State Bank of India needs to improve the physical environment, simplify the systems,

8 60 K. Rama Mohana Rao & S. Gangadhara Rama Rao procedures and documents and reduce customer interactive time significantly. Though the consumers are not seriously grievous, they really unhappy with the kind of interactions with the bank. REFERENCES 1. Aubert-Gamet, V. and Cova, B. (1999). Servicescapes: From modern non-places to postmodern common places. Journal of Business Research, 44, Baker, J. (1998). Examining the informational value of store environment in Sherry, J. (Ed.), Servicescapes: The Concept of Place in Contemporary Markets, Lincolnwood, IL: NTC Business Books 3. Baker, J., Grewal, D. and Parasuraman, A. (1994). The influence of store environment on quality inferences and store image. Journal of the Academy of Marketing Science, 22, 4, Baker, J., Parasuraman, A., Grewal, D. and Voss, G. (2002). The influence of multiple store environment cues on perceived merchandise value and patronage intentions. Journal of Marketing, 66, Ballantyne, D., Christopher, M., and Payne, A. (1995). Improving the quality of services marketing: service (re)design is the critical link. Journal of Marketing Management, 11, Bitner, M. (1992). Servicescapes: the impact of physical surroundings on customers and employees. Journal of Marketing, 56, Holahan, C. (1982). Environmental Psychology. New York: Random House 8. Ittelson, W., Proshansky, H., Rivlin, L. and Winkel, G. (1974). An Introduction to Environmental Psychology. New York: Holt, Rinehart and Winston 9. K. Rama Mohana Rao (2011). Services Marketing 2/e. New Delhi: Pearson Education 10. K. Rama Mohana Rao and S.G. Rama Rao (2011). Interactive Marketing. Mumbai: Himalaya Publishing House 11. Lenka, U., Suar, D., and Mohapatra, P.K.J. (2009). Service Quality, Customer Satisfaction, and Customer Loyalty in Indian Commercial Banks. The Journal of Entrepreneurship, 18, Levitt, T. (1981). Marketing intangible products and product intangibles. Harvard Business Review, 81, Mohammed, A., and Mohammad, S. (2003). Service Quality Dimensions: A Conceptual Analysis. The Chittagong University Journal of Business Administration, 19, Rushton, A. and Carson, D. (1989). The marketing of services: managing the intangibles. European Journal of Marketing, 23, 8, Wakefield, K. and Barnes, J. (1996). Retailing hedonic consumption: a model of sales promotion of a leisure service. Journal of Retailing, 72, 4, Ward, J., Bitner, M. and Barnes, J. (1992). Measuring the prototypicality and meaning of retail environments. Journal of Retailing, 68, 2, Zeithaml, V.A., and Parasuraman, A. (2004). Service Quality. USA: Marketing Science Institute