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MSQ
15,3 A strategic service quality approach
using analytic hierarchy process
Clare Chua Chow and Peter Luk
278 Ryerson University, Toronto, Canada

Abstract
Purpose – The paper aims to develop a technique that considers competition using the analytic
hierarchy process (AHP) framework to measure service quality.
Design/methodology/approach – The present study adapted the AHP methodology to the
measurement of service quality, involving five steps – referred to as “analytical hierarchy process for
service quality” (“AHP-SQ”). Subsequently, the authors demonstrate how the technique can be applied
to the fast-food restaurants.
Findings – The AHP-SQ approach described in this study thus assists management to devise and
maintain a relevant, competitive plan for ongoing improvements in service quality. Specifically, such
analysis enables the following questions to be addressed: “How does the firm perform in terms of
service quality in relation to its competitors?”; “Given the firm’s resources, which service initiatives
will enhance its service competitiveness?”; “Which service areas require immediate improvement?”;
“How should the firm’s service improvement be prioritized?”, and “What opportunities exist for service
improvement in relation to the competition?”
Research limitations/implications – It would be important to consider the “right” dimensions of
service quality that are relevant to the respective industry. It would also be essential to collect
responses from customers who have utilized the services of the focal firm as well as its competitors in
order to have an accurate opinion.
Practical implications – The framework proposed here allows management to address two main
issues pertaining to its competitive advantage: establishing its performance ranking in the
marketplace; and identifying the service elements that most require improvement.
Originality/value – The paper develops a cohesive approach to help managers identify which
reliability, assurance, tangibles, empathy, responsiveness (RATER) service dimensions require attention
to create a sustainable competitive advantage. It offers a “bigger picture” in service-quality management.
Keywords SERVQUAL, Analytical hierarchy process, Gap analysis, Customer satisfaction,
Competitive strategy, Service quality assurance
Paper type Research paper

Introduction
In the presence of fierce competition, service firms strive to stay in the forefront of
today’s marketplace by offering quality service. Research has shown that service
quality is an essential strategy for winning and retaining customers (Ghobadian et al.,
1994; Buzzell and Gale, 1987, Zeithaml, 2000). Indeed, the quality of service is more
important than price in differentiating a service firm from its competitors and in
fostering customer loyalty (Kandampully and Suhartanto, 2000, 2003). Delivering

Managing Service Quality
Vol. 15 No. 3, 2005
pp. 278-289
q Emerald Group Publishing Limited
0960-4529
DOI 10.1108/09604520510597827
The authors would like to thank the editor and all the reviewers of this article for their valuable
comments. Also they wish to thank Professor Martin Evans and Professor Dan Remenyi for
reviewing this article prior to submission to the journal. The authors gratefully acknowledge
Dr Ross Gilham for his assistance. The authors propose that collected data from fast food
restaurants to help them illustrate that service quality can be managed with their proposed
approach.
quality service is thus vital if firms are to increase market share and profitability. A strategic
However, in attempting to increase market share, most assessments of service quality
do not consider the strategies of competitors. Parasuraman et al. (1990) noted that it is
service quality
essential for a service firm to compare its strengths and weaknesses against those of its approach
competitors when developing priorities for service improvement. The present paper
develops an approach that will assist managers in prioritizing aspects of service
improvement – while taking account of the service priorities of competitors. 279
The approach advocated here assists management in addressing the following
questions:
.
How does the firm perform in terms of service quality in relation to its
competitors?
.
Given the firm’s resources, which service initiatives will enhance its service
competitiveness?
.
Which service areas require immediate improvement?
.
How should the firm’s service improvement be prioritized?
.
What opportunities exist for service improvement in relation to the competition?

Literature review
Measuring service quality is a challenging task because the concept of service quality
is inherently intangible in nature and difficult to define (Kandampully, 1997).
Measuring improvements in service quality is even more challenging (Parasuraman
et al., 1990). Commonly used techniques for measuring service quality include customer
service audits (Takeuchi and Quelch, 1983), gap analysis (Zeithaml et al., 1988),
SERVQUAL (Parasuraman et al., 1988), SERVPERF (Cronin and Taylor, 1994), critical
incident technique (Bitner et al., 1990), and sequential incident technique (Stauss and
Weinlich, 1997). A common feature of all these methods is that they all focus on
measuring internal service quality without considering the strategies of competitors.
As Min and Min (1997, p. 582) pointed out with respect to SERVQUAL: “[It] alone may
not help evaluate the firm’s comparative service performance”.
Such consideration of competitors is important. Indeed, Parasuraman et al. (1990)
provided five guidelines for conducting service-quality research – one of which was
measuring service performance in relation to competition. In response to this need, a
few instruments have been developed that include an assessment of the competition in
measuring service quality. Parasuraman et al. (1988), Min and Min (1996, 1997), and
Min et al. (2002) all attempted to measure competitive service quality. Moreover,
Parasuraman et al. (1990) suggested adapting the SERVQUAL instrument to measure
service quality in relation to competition. SERVQUAL is a well-established
“gap-assessment” methodology that can be used to develop service-improvement
initiatives by examining the “gap” between expectations and perceptions. The adapted
SERVQUAL instrument (Parasuraman et al., 1991) uses a non-comparative evaluation
model – that is, customers of firm A are asked to state their perception or their
expectation of firm A’s services and another group of customers are asked to state their
perception or their expectation of firm B’s services. After obtaining the perceptions and
expectations, the SERVQUAL scores are calculated and gaps between the two firms
are assessed.
In addition to this adaptation, Johns and Tyas (1996) have extended the use of
SERVQUAL to include competitors. Moreover, Fick and Ritchie (1991) have employed
MSQ the SERVQUAL instrument to compare services provided by various types of
organizations within the travel and tourism industry.
15,3 The difficulty with these approaches is that SERVQUAL requires the collection of
several sets of data to do a competitive analysis. For example, if SERVQUAL is used to
conduct a comparative analysis of three firms, three sets of questionnaires are required;
each with 44 statements – assuming the original 22 items of Parasuraman et al. (1988).
280 Authors have questioned the value and purpose of the separate data sets (Johns and
Tyas, 1996).
The present study takes a different perspective. Rather than use a non-comparative
model, the approach advocated here uses a comparative evaluation model – that is, the
customers are asked to compare firm A and firm B with regard to a service dimension,
and then rate their satisfaction level for either firm A or B. The paper develops a
cohesive approach using analytic hierarchy process (AHP) to help managers identify
which reliability, assurance, tangibles, empathy, responsiveness (RATER) service
dimensions require attention to create a sustainable competitive advantage. AHP is
used as a comparative service-improvement technique for two reasons. First, the AHP
technique allows pairwise comparisons to be made among the alternatives with respect
to the service dimensions. This provides a more meaningful analysis for developing a
competitive set of service attributes that will satisfy customers and assist the service
provider in outperforming its competitors. Second, to determine comparative service
performances, AHP requires the collection of only one set of data – as opposed to
several sets with the adapted SERVQUAL instrument.

Conceptual framework for the study

The AHP technique, which was developed by Saaty (1980, 1990, 1994), uses a process
of pairwise comparisons to determine the relative importance (and thus the priority) of
alternatives in a multi-criteria decision-making problem. AHP involves decomposing a
complex and unstructured problem into a set of variables that are organized into a
hierarchy (as shown in Figure 1). It enables decision-makers to make choices among a
number of alternatives and criteria by formulating priorities and making a series of
tradeoffs. Although the AHP technique was originally developed for solving
multi-criteria decision-making problems, its practicality and versatility has allowed
AHP to be widely applied in many different areas – including marketing (Wind and
Saaty, 1980) and accounting/auditing (Arrington et al., 1984). Zahedi (1989) has
provided a comprehensive survey of the application of AHP.
The present study adapted the AHP methodology to the measurement of service
quality. The industry chosen for the study was the “fast-food” restaurant industry. The
service quality problem was structured into a two-level hierarchical form (as shown in
Figure 1). The first level – the “service-dimension level” – addressed the relative
importance of various service dimensions in defining service quality. Customers were
asked to compare pairs of service dimensions (for example, “tangibles” versus
“reliability”) and to indicate whether they felt that one dimension was “equal to”, “more
important than” or “less important than” another dimension. The second level of the
hierarchy – the “choice level” – compared the performance of service providers (in this
case, fast-food restaurants) with respect to the service dimensions. The customers were
asked to state their preference for the restaurants in a pairwise manner on a nine-point
relational satisfaction scale.
 A strategic
service quality
approach

281

Figure 1.
Service quality
management: AHP
framework

The AHP procedure thus provided a ranking order of firms with respect to the
dimensions that define service quality, as well providing relative standings of each
service provider with respect to its competitors.

Data collection
Questionnaire design
In accordance with the conceptual framework described above, the questionnaire was
structured into two sections.
The first section contained ten pairwise comparison items for customer evaluation of
the importance of service dimensions in “fast-food” restaurants”. To minimize
interpretation bias, respondents were provided with definitions of each service
dimension. The judgments were based on a nine-point relational scale of importance –
similar to the one used in the original AHP instrument (Saaty, 1980). According to the
scale used in this study, 1 represented Equally important; 2 ¼ Equally important to
somewhat important; 3 ¼ Somewhat important; 4 ¼ Somewhat important to
moderately important; 5 ¼ Moderately important, 6 ¼ Moderately important to very
important, 7 ¼ Very important; 8 ¼ Very important to extremely important;
9 ¼ Extremely important.
The second section of the questionnaire (corresponding to the second level of the
hierarchy), contained five questions to evaluate customers’ satisfaction with dining in
three fast-food restaurants (“McDonald’s”, “Burger King”, and “Harvey’s”) with respect
to the five dimensions. Within each of these five questions were three sub-questions
that compared McDonald’s with Burger King, McDonald’s with Harvey’s, and Burger
King with Harvey’s. Again, the judgments were based on a nine-point relational scale
of satisfaction. In this case, 1 represented Equally satisfied; 2 ¼ Equally satisfied to
somewhat satisfied; 3 ¼ Somewhat satisfied, 4 ¼ Somewhat satisfied to moderately
satisfied, 5 ¼ Moderately satisfied; 6 ¼ Moderately satisfied to very satisfied;
7 ¼ Very satisfied; 8 ¼ Very satisfied to extremely satisfied; 9 ¼ Extremely satisfied.
An example of the instructions and questions is provided in Figure 2.
MSQ
15,3

282

Figure 2.

Sample
Over a three-week period, the questionnaire was administered to customers who were
leaving or entering the McDonald’s restaurant at Bay Street, Toronto, Canada. Overall,
about one in four customers who were approached was willing to fill in the
questionnaire. Johns and Tyas (1996) also encountered the problem of respondents not
being willing to participate in a survey. In the present study, each respondent was
given a dollar for participating in the survey. The respondents were first screened to
ensure that they had patronised all three fast-food restaurants (McDonald’s, Burger
King, and Harvey’s) in the past four months.
A total of 80 customers participated in the survey. After checking for
inconsistencies (see “Data analysis”, below), eight respondents were excluded –
giving a response rate of 84 percent.

Data analysis
Each respondent’s weights and scores were computed using Microsoft EXCEL. Then
all respondents’ weights and satisfaction scores were analyzed using SPSS.
Applying the AHP methodology to service quality involved five steps – referred to
here as “analytic hierarchy process for service quality” (“AHP-SQ”). The AHP-SQ steps
were as follows:
(1) Step 1. Obtain customers’ tradeoff judgments for the service dimension and
restaurant choice displayed in the pairwise comparison matrices.
(2) Step 2. Check for consistency.
(3) Step 3. Compute the weights of the service dimensions and satisfaction scores
for the restaurant choice of each respondent.
(4) Step 4. Compute the mean overall weights and satisfaction scores over all
respondents.
(5) Step 5. Compute the quality gap.
Each of these is described below.

Step 1
As described above, a questionnaire was used to gather the respondents’ pairwise
comparison judgments for the two levels in the hierarchy (see Figure 1). These were
used as inputs for two pairwise comparison matrices – one for the “service-dimension
level” and the other for the “choice level” (as shown in Tables I and II).
 The pairwise comparison matrix for the “service-dimension level” shows service A strategic
dimensions at the top and on the left (Table I). Based on the judgments of the
respondents, the matrix shows numerical values (based on the nine-point importance
service quality
scales) denoting the importance of the service dimension on the left relative to the approach
importance of the service dimension at the top. A high value denotes that the service
dimension on the left is more important than the service dimension at the top.
For the “choice level” of the hierarchy, the restaurants were compared with each 283
other to determine relative satisfaction with each restaurant with respect to each of the
service dimensions. Five pairwise comparison matrices were constructed at this level –
one for each of the service dimensions. However, due to the limitations of space, only
one matrix is displayed – for “tangibles” (as shown in Table II). The cell values in the
matrix denoted as aij represent the customers’ judgments. The remaining cells of the
pairwise comparison matrix were placed with the inverse of the respondents’
corresponding value (denoted as 1/aij).

Step 2
After the respondents’ judgments had been obtained, it was necessary to check the
consistency of each respondent’s tradeoff judgments. This was measured by a
consistency index (denoted as CI), equivalent to ðlmax 2 nÞ=ðn 2 1Þ where n stands for
number of service dimensions and lmax denotes the largest eigenvalue. Eigenvalues
are a set of scalars associated with a linear system of equations (or a matrix equation).
They are the square roots of judgment values, and a consistency index was derived by
Saaty (1980) to check for any inconsistent judgments. For example, if a respondent
prefers A to B, and B to C, that respondent cannot prefer C to A. The CI index should be
low, so that the ratings will not be affected.
For each respondent, the CI was computed for each pairwise comparison matrix. A
CI value of 0.15 was adopted as the allowable upper limit (Sato, 2004). Only those
samples with a CI value equal to or smaller than 0.15 were accepted for analysis.

Step 3
After checking for the consistency of the respondents’ judgments, the product of the
respondent’s importance judgments for each service dimension obtained in step 1 was

Service dimension level Tangibles Reliability Responsiveness Assurance Empathy

Tangibles 1 a12 a13 a14 a15

Reliability 1/a12 1 a23 a24 a25 Table I.
Responsiveness 1/a13 1/a23 1 a34 a35 Pairwise comparison
Assurance 1/a14 1/a24 1/a34 1 a45 matrix for service
Empathy a15 1/a25 1/a35 1/a45 1 dimension level

Based on tangibles McDonald’s Burger King Harvey’s

McDonald’s 1 b12 b13 Table II.

Burger King 1/b12 1 b23 Pairwise comparison
Harvey’s 1/b13 1/b23 1 matrix for choice level
MSQ noted, and the fifth root of the product was then calculated to obtain the relative
weights. The rows in the pairwise comparison matrix were then added together. The
15,3 weights were then normalized by computing the sum of each row and then dividing
each row by the corresponding sum.
The same computation procedure was performed for the respondent’s satisfaction
ratings of the fast-food restaurants. These were then converted into satisfaction scores
284 (or priorities).

Step 4
The results obtained in step 3 were then synthesized. The overall satisfaction score
was obtained by multiplying the weights with the satisfaction scores. All the
respondents’ overall satisfaction scores were then averaged to obtain a mean overall
satisfaction score for each restaurant. The mean overall satisfaction score was used to
rank the restaurants. The restaurant with the highest score was regarded as the
“market leader”.

Step 5
The quality gap (QGapi) of each service dimension was derived from the discrepancy
between the satisfaction scores of the focal firm (McDonald’s) and that of the best
performer (referred to as the “market leader” in step 4). The mathematical form of the
quality gap was defined as follows:
QGapi ¼ S iF 2 S iM ;i
where:
QGapi ¼ quality gap for dimension i;
i ¼ service dimension (tangibles, reliability, responsiveness, assurance,
empathy);
SiF ¼ satisfaction scores for dimension i of the focal restaurant; and
SiM ¼ satisfaction scores for dimension i of the market leader.
A positive value for QGapi indicates that the focal firm outperformed the market leader
on the dimension i. A negative gap indicates that the focal firm underperformed
relative to the market leader. A QGapi value of zero means that the focal firm
performed well on the dimension i compared with the market leader.

Findings and discussion

The findings are summarized in Tables III and IV. As previously noted, McDonald’s
was selected as the focal firm in this study for illustrative purposes. In other words,
McDonald’s could use this study to establish which service dimensions should be
improved to achieve a competitive advantage.
Table III shows the mean importance ranking of the service dimensions. The results
show that the customers regarded “empathy” as the highest priority in assessing
service quality of a “fast-food” restaurant. It is apparent that it is important for a
restaurant to provide a caring and personalized service to customers. Customers
regarded “tangibles” (the appearance of the restaurant’s physical facilities, equipment,
personnel, and communication materials) as the second most important dimension of
service quality. “Assurance”, defined as the knowledge and courtesy of a restaurant’s
employees and their ability to convey trust and confidence (Parasuraman et al., 1988), A strategic
was viewed as the third most important aspect of the service experience. It is apparent
that diners like to have a knowledgeable employee when being served, and prefer to
service quality
dine in a comfortable atmosphere. “Reliability” (a restaurant’s ability to perform the approach
promised service dependably and accurately) and “responsiveness” (a restaurant’s
willingness to help customers and provide prompt service) were not rated as highly as
the other aspects of service quality. 285
However, the rankings depicted in Table III are not sufficient to develop a
service-improvement agenda. Although the service dimension of “empathy” was
ranked first in terms of importance to the customers, McDonald’s should not
immediately allocate limited resources to this dimension without first comparing its
own performance on this dimension against that of its competitors. Table IV shows the
service performances of McDonald’s in comparison with its competitors. The results
show that Harvey’s rated as the best overall performer, with McDonald’s and Burger
King approximately equal in overall ranking. For each service dimension, the
restaurants were ranked with the mean weighted satisfaction scores. It is apparent that
McDonald’s did well on the dimension of “empathy” – in which it ranked better than
Harvey’s (even though, overall, Harvey’s was the “market leader”).
To assess which dimension McDonald’s should accord highest priority to improve
its services, it is necessary to consider McDonald’s position on each dimension with

Service dimensions Mean importance Ranking

Tangibles 0.21 2
Reliability 0.16 4 Table III.
Responsiveness 0.15 5 Ranking of mean
Assurance 0.18 3 importance by service
Empathy 0.29 1 dimensions

Mean weighted satisfaction scores

QGapi
Dimensions McDonald’s Burger King Harvey’s Mean QGapi ranking

Tangibles 0.31 0.23 0.46 20.15 4

(2) (3) (1) SD ¼ 0:58
Reliability 0.15 0.26 0.59 20.44 1
(3) (2) (1) SD ¼ 0:35
Responsiveness 0.25 0.27 0.48 20.22 3
(3) (2) (1) SD ¼ 0:50
Assurance 0.17 0.24 0.60 20.43 2
(3) (2) (1) SD ¼ 0:32
Empathy 0.39 0.37 0.24 0.14 -
(1) (2) (3) SD ¼ 0:45
Mean overall satisfaction scores 0.30 0.31 0.39
Ranking based on overall
satisfaction scores 3 2 1 Table IV.
Note: Sample size is 62; the number in parentheses denotes the ranking of restaurants by dimension; Mean overall satisfaction
SD ¼ standard deviation scores and gap scores
MSQ respect to its competitors. Having established Harvey’s as the market leader, the mean
QGapi for McDonald’s was calculated for each dimension. Four out of the five
15,3 dimensions had negative QGapi values. This implies that McDonald’s under-performs
in the dimensions of “tangibles”, “reliability”, “responsiveness”, and “assurance” when
compared with Harvey’s. To develop a strategy of service improvement, it is necessary
to prioritize these services. The largest QGapi negative value implies that a large
286 satisfaction discrepancy exists between the focal firm and the market leader.
McDonald’s “reliability” dimension ranked first in this respect – which implies that it
needs to improve its ability to perform its services dependably and accurately.
“Assurance” ranked second on the “gap” (only slightly below “reliability”) – and this
should therefore be the second priority. McDonald’s should then focus on
“responsiveness”, followed by “tangibles”. The customers rated McDonald’s highly
on the “empathy” dimension relative to Harvey’s and Burger King.

Managerial implications and recommendations

Many restaurants utilize “customer feedback” cards to obtain information on customer
perceptions of the quality of service. Such cards typically pose questions about the
various dimensions of customer service – including questions on the knowledge of the
server, the timeliness of the service, and the physical appearance of the restaurant. It is
important to note that such customer-satisfaction surveys seek feedback only from
customers who attend the restaurant responsible for the survey; and the surveys ask
questions only about the service at that particular restaurant. Whether these
respondents are (or have been) customers of competitors is ignored, and their opinions
on competitors are also ignored. Data collected from such survey methods are clearly
insufficient for devising an adequate competitive strategy. The approach presented in
this paper addresses this issue. When applied correctly, the comparative knowledge
that can be obtained from the methods described in this study can drastically improve
important business outcomes.
Adapting the AHP methodology in the manner proposed in this paper allows
managers to prioritize service dimensions and to compute a gap analysis in a way that
provides a competitive perspective in managing service quality. Applying this
approach, managers are able to address the following questions:
.
What is the firm’s competitive position, and how does the firm’s overall
performance compare with its competitors?
.
Which service dimensions can be improved to enhance competitiveness?
.
Constrained by limited resources, which service dimensions should be given top
priority?
The framework proposed here allows management to address two main issues
pertaining to its competitive advantage:
(1) establishing its performance ranking in the marketplace; and
(2) identifying the service elements that most require improvement.
In particular, the satisfaction disparity indicates which dimension the firm should
concentrate on to enhance its competitive position.
Creating a competitive advantage does give a firm an edge over its competitors.
However, customers have many alternatives, and a competitive advantage might not
necessarily be sustained. Even if customers are satisfied with the services of a given
firm at the present time, they might find that they are even more satisfied with a A strategic
competitors’ improved services. All strategies that strive for a competitive advantage
must be constantly market-driven and market-aware. This can be achieved only if the
service quality
opinions of customers about competitors are known. The AHP-SQ approach described approach
in the present study thus assists management to devise and maintain a relevant,
competitive plan for ongoing improvements in service quality. It offers a “bigger
picture” in service-quality management. 287

Limitations and research directions

Although the customers in the present study had visited all three “fast-food”
restaurants during the preceding four months, a limitation of the present study is that
it did not investigate switching behavior among the respondents. Future research
could address this question.
A further limitation in the present approach is that it does not provide guidance on
action to be taken. Although it identifies which service dimensions require
improvement, the present framework does not provide guidance on an appropriate
action plan to address deficiencies. Future studies could extend the framework in this
respect.
A third limitation is that the framework adopted only the SERVQUAL service
dimensions. Future studies could consider incorporating other dimensions in
extending the framework proposed here.
With respect to generalizability, although the model was applied in the present
study to “fast-food” restaurants, the authors believe that it could be used by a variety
of service industries to evaluate service performance against that of competitors.

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Further reading
Ahmed, P.K. and Rafiq, M. (1998), “Integrated benchmarking: a holistic examination of select
techniques for benchmarking analysis”, Benchmarking: An International Journal, Vol. 5
No. 3, pp. 225-42.
Asubonteng, P., McCleary, K.J. and Swan, J.E. (1996), “SERVQUAL revisited: a critical review of
service quality”, The Journal of Services Marketing, Vol. 10 No. 6, pp. 62-81.
Babakus, E. and Boller, G.W. (1992), “An empirical assessment of the SERVQUAL scale”, Journal
of Business Research, Vol. 24 No. 3, pp. 253-68.
Babakus, E. and Mangold, W.G. (1992), “Adapting the SERVQUAL scale to hospital services: A strategic
an empirical investigation”, Health Services Research, Vol. 26 No. 6, pp. 767-86.
Barsky, J.D. (1992), “Customer satisfaction in the hotel industry: meaning and measurement”,
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