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1 November 2015 Issue 1.0 Copyright SQPM, Essex, United Kingdom Quality Management and Changing Customer needs by Dr Nadith Kawshalya

2 2 An extensive study has been carried out by Dr Nadith Kawshalya - Chief Commercial Officer of London School of Marketing, Dr Penny Hood Founding Director of Hood International Consultants, to understand why students chose to study at privately funded higher educational institutions in the UK and their expectations. This study was carried out from January 2009 to October 2014, with over 12,700 students taking part in the research. This study formed a part of a research lead to Doctor of Philosophy (at Anglia Ruskin University) and funded by London School of Marketing concluded specific patterns and student needs that are unique to private higher educational institutions in the UK. You may use the article for academic purposes with the following reference: Kawshalya N (2015), Quality Management and Changing Customer needs, Service Quality and Performance Model for Independent Colleges in the UK, November, Issue 1.0, Essex

3 Quality and changing customer needs This research so far looked at various papers, including definitions and concepts of service quality (Kawshalya, 2015a) and service quality concepts (Kawshalya and Hood, 2015), this paper therefore aims to build on those arguments and develop how the quality performance and measurements need to adapt to meet changing customer needs. It is evident so far that the term 'quality' is a dynamic and on-going term that involves understanding the changing customer requirements as well as organisational objectives, in line with the Kotler et al., (2003) definition of functional and technical qualities of services. As argued by Parasuraman (2004) and Abdullah (2006a), service quality is something that must be based around customer expectations and their subsequent perceived level of service, supporting the disconfirmation theory and, as argued by Hewitt et al., (1999), that customers play a vital part in the service delivery. Petruzzellis et al., (2006) customer satisfaction must be tested against their expectations on a continuous basis throughout their service encounter to enable organisations to retain their customers, enabling the existence of closer relationships between the level of service quality and customer satisfaction (Eagle and Brennan, 2007; Hodgkinson and Kelly 2007). Several researchers, including Smith et al., (2007) and Douglas et al., (2006) supported that providing a higher level of overall service quality will enable organisations to retain customers and at the same time improve staff productivity. What is also important and critical in discussions of service quality is its effect on organisational performance and staff satisfaction (Brochado, 2009 and Abduallh, 2006a). Oldefield and Baron, (2000) argued that providing high quality service does not only serve as a basis for competitive advantage but also enables the organisation to differentiate itself from its competitors. It is also important not only to understand the customer needs now, but also to have a strategy to meet their expectations over time, as these are likely to change and develop during the customer encounter, states Pariseau et al., (1997). All of these arguments highlight the importance of understanding customers and how they go about accessing and encountering the service, along with how organisations can involve and understand customers and their interactions during the service delivery (Parasuraman, 2004). The manner in which consumers use services is also important to explore, in order to provide a more meaningful insight into how consumers make their decisions with regard to which services they use, and more importantly how they ultimately judge those services (Lamb et al., 2000). Lamb et al., (2000) further stated that the service process consists of three distinct phases: prepurchase, consumption and post-consumption. The pre-purchase phase usually involves the consumer looking for the necessary information about the service that he or she wants to consume. Because of the unique characteristics of services discussed earlier, particularly intangible services, this phase of the process can often be challenging for consumers as they do not know exactly the standard or quality of the service delivered by different providers. As such, consumers tend to depend on recommendations from friends, the service provider's promotions and communications, or from previous experiences, in line with the arguments by Grönroos, (1984) and Parasuraman et al., (1985). They support the use of a disconfirmation paradigm of the process where customers formulate their expectations, against which they compare actual service quality (Abdullah, 2006d). For example, in the educational sector the usage of student profiles, course prospectuses and websites can lead to pre-purchase expectations (Angell et al., 2008). Bitner et al., (1997) supported this view with the suggestion that effective and realistic expectation setting is important in meeting

4 4 expectations of customers, therefore supporting the idea that it remains the responsibility of organisations to create reasonable expectations in the forms they communicate with their potential customers (Jobber, 2004). Lamb et al., (2000) also highlighted the importance of customer referrals and how such referrals formed the basis of these initial expectations, supporting the arguments of Oldefield and Baron, (2000) and Pariseau et al., (1997). Groth and Dye, (2000) supported this by highlighting the importance of adding physical evidence, such as information leaflets, to overcome intangibility and how such materials can be used to support these initial communications, an argument also supported by Jobber (2004). Lamb et al., (2000) stated that the consumption phase is often referred to as the moment of truth when the consumer actually interacts with and uses the service from the provider. In line with Grönroos (1984) and Parasuraman et al., (1985), it is often at this stage that the consumer actually evaluates the service received and decides whether it is satisfactory or otherwise, establishing the disconfirmations between the expectations and perceived service quality. Parasuraman et al., (1985) argues that this will lead to satisfaction, dissatisfaction or in many cases an acceptance. Hewitt et al., (1999) and supported by Parasuraman (2004) highlighted the importance of customer involvement in the actual consumption process, giving customers the ability to provide regular and on-going feedback on the service encounter. Oldefield and Baron, (2000) supported this argument by highlighting the importance of allowing staff members to act as key observers in understanding changing customer needs. Abdullah (2006b) argued that in education these encounters last for a longer period as in many cases the duration of the qualifications is for several years, therefore it is vital to constantly assess and understand changing customer expectations, this is supported by Angell et al., (2008) and Buttle (1996). According to Grönroos, (2007) services can be grouped into two different categories: namely high touch and high tech services on one hand, and discretely and continuously rendered services on the other hand. High touch services are dependent on service staff, continuous participation of the customer and the service staff member during the consumption phase of the service. As argued by Parasuraman (2004), staff participation and involvement in such service is key to a positive service delivery. On the other hand, high tech services are mostly relying on systems, IT and other resources to create offerings like online shopping or telecoms, where the customer interacts with a non-human, such as a computer. Therefore, it is important to value and to understand these variations and how organisations can balance the service encounters of high-touch and high-tech services (Li et al., 2003), an argument agreed by Abdullah (2006b) as well as Buswell et al., (2003). On the other hand, continuously rendered services, like banking or security monitoring, can be distinguished from discrete services, such as one-off hotels or project-based consulting. Customer interactions with these services are ongoing (or one-off) and require a different level of service delivery (Grönroos, 2007). High touch services can also include the participation of customers in the production of the service, as argued by Sahney et al., (2008), as is the case at some educational institutions, restaurants and airlines; whilst high tech services, to a larger degree, involve the use of technologies or automated systems (Landrum et al., 2008). What is also important for high touch services is the participation of the customer during the service delivery, as the customer participation itself can lead to better service delivery and quality of service (Bitner et al., 1997). According to Lamb et al., (2000), the customer consumption phase is an integral part of delivery or service quality and must be used to enhance and improve customer satisfaction. Oldfield and Baron (2000) argued that in people processing services,

5 such as hospitals and educational institutions, which are high personal contact situations, those taking part in the provision of service may often be evaluated by the customer in terms of their technical or customer related skills, personality, consistency of performance and appearance, therefore highlighting the importance of the overall service experience. For instance, attending an induction day at an educational institution, where the customer experience of a service can be expected to influence their post consumption, there is an evaluation of the quality of service to be experienced (Grönroos, 2008). As per Abdullah (2006c), during this process the customer compares expectations with what they perceive they have received. Finally, the post-purchase phase is concerned with the consumer making judgements about all aspects of the service delivered and received from the provider, and then analysing the overall service standards against relative functional and psychological benefits (Lamb et al.,, 2000). As argued by Parasuraman et al., (1985), customers may conclude that services exceeded their expectations, met their expectations or, in many cases, were below expectations. Groth and Dye (2000) stated that organisations must use these judgments to improve their processes and attitudes towards quality and establish processes to improve areas in which they failed to meet customer expectations. Angell et al., (2008) argued that such feedback must be shared with all key staff members to enhance future service delivery and quality, in line with the findings of Abdullah (2006d). Teas (1994, 1993a, 1993b) supported these arguments by highlighting the link between customer satisfaction and loyalty, which in turn determined future growth of the organisation. Lamb et al., (2000) suggested that organisations must have systems in place to gather customer feedback and make improvements to enhance the areas in which the organisation failed to meet customer expectations. Therefore, the importance of effectively identifying customer expectations and understanding how these pre-conceived customer expectations are met by the organisations, are critically important to a loyal customer base (Bitner et al., 1997). This argument is supported by Parasuraman et al., (1985) as well as Abdullah (2006a), as key in setting service quality standards.

6 6 Recommended additional reading: Abdullah, F. (2005) HEdPERF versus SERVPERF the quest for ideal measuring instrument of service quality in higher education sector, Quality Assurance in Education, Vol. 13, No. 4, pp Abdullah, F. (2006a) The development of HEdPERF: a new measuring instrument of service quality for the higher education sector, International Journal of Consumer Studies, Vol. 30, No. 6, pp Abdullah, F. (2006b) Measuring service quality in higher education: HEdPERF versus SERVPERF, Marketing Intelligence & Planning, Vol. 24 No. 1, 2006, pp Abdullah, F. (2006c) Measuring service quality in higher education: three instruments compared, International Journal of Research & Method in Education, Vol. 29, No. 1, pp Abdullah, F. (2006d) The Development of HEdPERF: a new measuring instrument of service quality for the higher education sector, International Journal of Consumer Studies, Vol. 30, Issue 6, pp Abdullah, K., Jan, M. T., and Manaf, N. H. A. (2012) A structural equation modelling approach to validate the dimensions of SERVPERF in airline industry of Malaysia, International Journal of Engineering and Management Sciences, Vol. 3, Issue, 2, pp Brochado, A. and Marques, R.C. (2007) Comparing Alterative Instruments and Measure Service Quality in Higher Education, Technical University of Lisbon (available online at Brown, S.W. and Bond, E.U. (1995) The internal/external framework and service quality: Toward theory in services marketing, Journal of Marketing Management, February, pp Chowdhary, N. and Prakash, M. (2007) Prioritising service quality dimensions, Managing Service Quality, Vol. 17, No. 5, pp Covey, S. R. (1993) Principle-Centered Leadership, Summit Books, New York Crosby, P. B. (1979), Quality is Free: the art of making quality certain, New York: New, American Library Crossick, G. (2010) The growth of private and for-profit higher education providers in the UK, Universities UK (available at and accessed on 20 th November 2013) Deming, W. E. (1993), The New Economics, MIT Press, Cambridge Department for Business, Innovation and Skills BIS (2012) Applying student number controls to alternative providers with designated courses (Available at accessed on 30 th November 2012) Gronroos, C. (1993) Towards A Third Phase In Service Quality Research: Challenges and Future Directions, Advances In Services Marketing And Management, Vol. 2, issue 10, pp

7 HESA (2011), Press release 159: Survey of private and for-profit providers of Higher Education in the UK 2009/10, HESA (Available at accessed on 3 rd May 2011) Options.html (Accessed on 8 th August 2011, at 17.15PM) (Accessed on 11th December 2013) (Accessed, 10 th August 2013) (Accessed on 15 th June, 2012) Juran, J. M. (1974), Quality Control Handbook, McGraw Hill Kawshalya N & H Hood (2015), Definitions of quality and characteristics of service quality, Service Quality and Performance Model for Independent Colleges in the UK, October, Issue 1.0, Essex Middlehurst, R., and Fielden, J. (2011) Private Providers in UK Higher Education: some Policy Options, Higher Education Policy Institute (Available at accessed on 16 th January 2014) Murgulets, L., Eklöf, J., Dukeov, I. and Selivanova, I.(2002) Customer satisfaction and retention in transition economies, Total Quality Management, Vol. 12, Issue 7, pp Parasuraman, A., Zeithaml, V.A. and Berry, L.L. (1985) A conceptual model of service quality and its implication, Journal of Marketing, Vol. 49, Fall, pp Pariseau, S. E. and McDaniel, J.R. (1997) Assessing service quality in schools of business, International Journal of Quality & Reliability Management, Vol. 14 No. 3, pp Senge, P. M., Kleiner, A., Roberts, C., Ross, R. B. and Smith, B.J. (1994) The Fifth Discipline Field book, Doubleday/Currency, New York Teas, K.R. (1993) Consumer Expectations and the Measurement Of Perceived Service Quality, Journal of Professional Services Marketing, Vol. 33, Issue 40, pp Winder, R. E. and Judd, D.K. (1996) Organisational Orienteering: Linking Deming, Covey and Senge in an integrated Five Dimension Quality Model, Unpublished research paper, Brigham Young University, Utah (Available at accessed on 24 th June 2013)