A Thesis on

ANALYSIS OF GAP IN SERVICE QUALITY THROUGH

SERVQUAL MODEL:’’AN EVALUATION OF SERVICES
PROVIDED BY A PUBLIC BANK AND PRIVATE BANK—ANDHRA
BANK AND ICICI BANK AT RAJAHMUNDRY.
 TABLE OF CONTENTS

1. LIST OF TABLES and LIST OF ILLUSTRATIONS pg no 7

2. ABBREVIATION pg no 9
3. ABSTRACT pg no 10

4. INTRODUCTION pg no 11

4.1. OBJECTIVES AND LIMITATIONS pg no14

4.2. LIMITATIONS pg no 15
4.3. FINDINGS pg no16

5. INDUSTRY PROFILE pg no 18
6. COMPANY PROFILE pg no 20
7. REVIEW OF LITERATURE pg no 25

8. RESEARCH DESIGN pg no30

9. METHODOLOGY pg no 32

10. RESULTS AND ANALYSIS pg no34

11. SUGGESTION pg no48

12. APPENDICES pg no49

13. REFERENCES pg no51

14. GLOSSARY pg no 52

2
 (iii)

LIST OF TABLES & ILLUSTRATIONS

Table 1. Table showing preferences of the customers for banks. PG no 34

• Andhra bank
• Icici bank
• Both

Table2.% of customer’s preference for both the banks. PG no 35

Table3.Table showing the response of the customers towards the services offered by
Andhra bank. PG no 36

Table 4 .Table showing the response of the customers towards the services offered by
Icici bank PG no 37

Table 5.Total Customer Satisfaction PG no 38

Chart1. Chart showing the satisfaction level of customers satisfaction towards the
information provided by Andhra bank ,icici bank PG no 39

Chart 2.Chart showing the satisfaction level of customers satisfaction towards answering
queries by Andhra bank and Icici bank PG no 40

Chart 3.Chart showing the satisfaction level of customers satisfaction towards the quick
problem solving by Icici bank and Andhra bank PG no 41

3
Chart 4.Chart showing the satisfaction level of customer’s satisfaction towards the

intimation of offers by Icici bank and Andhra bank . PG

no42

Chart 5.Chart showing the satisfaction level of customers satisfaction towards the
intimation of new products by Andhra bank and Icici bank. PG no43

Chart 6.Chart showing the satisfaction level of customer’s satisfaction towards the
product specification by Icici bank and Andhra bank. PG no44

Chart 7.Chart showing the satisfaction level of customers towards the payment
specification by Icici bank and Andhra bank PG no45

Chart 8.Chart showing the satisfaction level of customers satisfaction towards the delivery
of products by Icici bank and Andhra bank. PG no46

Chart 9.Chart showing the satisfaction level of customers satisfaction towards the
employee response by Icici bank Andhra bank PG no47

4
 Abbreviations

PSBs: The Public Sector Banks

NPAs: Non Performing assets

VRS: Voluntary Retirement Schemes

CBS: Core Banking Solution

MoU: Memorandum of Understanding (MoU)

ONR: Ordinary Non Resident Rupee Account

NYSE: New York Stock Exchange

ADRs American Depositary Receipts

5
 SUMMARY
The research is survey oriented and primary data is collected by interviewing bank
managers of various branches of Andhra bank and ICICI bank and conducting survey to
the customers through questionnaire. The survey indicates the perception of customers
towards the banks using SERVQUAL model. The research also reveals the influencing
factors of the customers to go to that particular bank.

The research shows various aspects related to the success and failure factors of both the
banks. By thorough study of these aspects it was analyzed that the parameters evaluated
by the consumers for visiting a particular outlet. It also analyzes the perception of
customers on that bank.

The research includes the factors like influencing factors, various parameters like
convenience, credibility, ease of process etc., and also other factors which are related to
the success and failure of these banks.

The researcher used statistical quantitative techniques in designing the report.

Benefits to the organization

Research undertaken helps the organization to find its strengths and weakness. By
identifying weakness the organization can implement preventive measures to make it as
strengths. This will be helpful as a basis for implementing future strategies.

Achievements

Researcher got the customers perception towards the particular bank and their influencing
factors in a particular outlet. By this we can know the success and failure factors of each
bank and becomes the basis for implementing strategies which are helpful for the future.

By knowing these factors the company can have a constant check for smooth running of
the operations.

6
 INTRODUCTION
In general, the concept of service quality is defined as a form of attitude representing a
long run overall evaluation. It is a critical prerequisite and determinant of competitiveness
for establishing and sustaining satisfying 25 relationships with customer. Previous studies
suggest that organizations must focus on the satisfaction of customers to gain long lasting
competitive advantage. Various researches have developed alternative concepts for
service quality such as the European perspective [132-135] and the American perspective.
The European perspective states that service quality should include three dimensions like
technical quality, functional quality and corporate image. The American perspective
proposes that service quality may be evaluated on the functional quality dimensions
described by five components viz., tangibles, reliability, responsiveness, assurance and
empathy The following definitions provided by different authors give a clear picture
of service quality.

Services are defined as:

• service - work done by one person or group that benefits another; "budget
separately for goods and services"
• service - an act of help or assistance; "he did them a service"
• service - the act of public worship following prescribed rules; "the Sunday
service"
• service - a company or agency that performs a public service; subject to
government regulation
• service - employment in or work for another; "he retired after 30 years of
service"
• military service: a force that is a branch of the armed forces
• service - Canadian writer (born in England) who wrote about life in the
Yukon Territory (1874-1958)
• service - avail: a means of serving; "of no avail"; "there's no help for it"
• service - tableware consisting of a complete set of articles (silver or
dishware) for use at table
• service - servicing: the act of mating by male animals; "the bull was worth
good money in servicing fees"
• service - (law) the acts performed by an English feudal tenant for the
benefit of his lord which formed the consideration for the property granted to
him
• service - serve: (sports) a stroke that puts the ball in play; "his powerful
serves won the game"
• service - be used by; as of a utility; "The sewage plant served the
neighboring communities"; "The garage served to shelter his horses"

7
customer satisfaction is defined as:

• Customer satisfaction, a business term, is a measure of how products and

services supplied by a company meet or surpass customer expectation. ...

• Customer satisfaction is an ambiguous and abstract concept and the actual

manifestation of the state of satisfaction will vary from person to person and
product/service to product/service. ...

• Customer Satisfaction may be measured directly by survey and expressed

as a percentage, such as Percent of Customers Completely Satisfied.

• Comparison of expectations versus perception of experience.

• with a purchase depends on how well the product performance corresponds

with the customer’s expectations.

Measuring customer satisfaction

Organizations are increasingly interested in retaining existing customers while targeting

non-customers. measuring customer satisfaction provides an indication of how successful
the organization is at providing products and/or services to the marketplace.

Customer satisfaction is an ambiguous and abstract concept and the actual manifestation
of the state of satisfaction will vary from person to person and product/service to
product/service. The state of satisfaction depends on a number of both psychological and
physical variables which correlate with satisfaction behaviors such as return and
recommend rate. The level of satisfaction can also vary depending on other options the
customer may have and other products against which the customer can compare the
organization's products.

Because satisfaction is basically a psychological state, care should be taken in the effort of
quantitative measurement, although a large quantity of research in this area has recently
been developed. Work done by Berry (Bart Allen) and Brodeur between 1990 and 1998
defined ten 'Quality Values' which influence satisfaction behavior, further expanded by
Berry in 2002 and known as the ten domains of satisfaction. These ten domains of
satisfaction include: Quality, Value, Timeliness, Efficiency, Ease of Access,
Environment, Inter-departmental Teamwork, Front line Service Behaviors, Commitment
to the Customer and Innovation. These factors are emphasized for continuous
improvement and organizational change measurement and are most often utilized to

8
develop the architecture for satisfaction measurement as an integrated model. Work done
by Parasuraman, Zeithaml and Berry (Leonard L) [3] between 1985 and 1988 provides the
basis for the measurement of customer satisfaction with a service by using the gap
between the customer's expectation of performance and their perceived experience of
performance. This provides the measurer with a satisfaction "gap" which is objective and
quantitative in nature. Work done by Cronin and Taylor propose the
"confirmation/disconfirmation" theory of combining the "gap" described by Parasuraman,
Zeithaml and Berry as two different measures (perception and expectation of
performance) into a single measurement of performance according to expectation.
According to Garbrand, customer satisfaction equals perception of performance divided
by expectation of performance.

The usual measures of customer satisfaction involve a survey with a set of statements
using a Likert Technique or scale. The customer is asked to evaluate each statement and
in term of their perception and expectation of performance of the organization being
measured.

A bank is a financial institution licensed by a government. Its primary activities include

borrowing and lending money. Many other financial activities were allowed over time.
For example banks are important players in financial markets and offer financial services
such as investment funds. In some countries such as Germany, banks have historically
owned major stakes in industrial corporations while in other countries such as the United
States banks are prohibited from owning non-financial companies. In Japan, banks are
usually the nexus of a cross-share holding entity known as the zaibatsu. In France, bank
assurance is prevalent, as most banks offer insurance services (and now real estate
services) to their clients.

The level of government regulation of the banking industry varies widely, with countries
such as Iceland, the United Kingdom and the United States having relatively light
regulation of the banking sector, and countries such as China having relatively heavier
regulation (including stricter regulations regarding the level of reserves).

DESCRIPTION OF THE PROBLEM

Now a day’s every one prefers private banks instead of public bank. There are many
public banks who also offering good services to their customer but still failed to attract the
customer.

9
 OBJECTIVES OF STUDY

PRIMARY OBJECTIVE:

• To find out customer perception towards different services provided by Andhra

bank and Icici bank and to know the gap where these banks failed to give
satisfactory services to the customers using SERVQUAL model.

SECONDARY OBJECTIVE:

• To find out the strategies used by Andhra bank and Icici bank to satisfy the
customers and to retain the customers.
• To know the factors that influences the customers for going to that particular bank.

10
 LIMITATIONS

1. Secondary data can be general and vague and may not really help in getting
the complete picture.
2. The data collected through interaction may biased inputs by the person..
3. This project is limited to only one geographical location that is Rajahmundry
which may lead to less accuracy.
4. The research is limited to one particular geographic location that is
Rajahmundry city only hence the respondents may not accurately represent the
entire population

5. Time is one of the major constraints hence the data collected for the duration
of 16 weeks may not be replicable to the actual time period.

6. Unavailability of previous research studies by seniors.

7. The sample taken is small when compared to the total population and hence.
the results may not depict the true nature of the whole population.

11
 FINDINGS

Services provided by Icici bank is much customer oriented than that of Andhra bank,
customer perception towards the services provided by Icici bank is much high in
compare to Andhra bank.

the elite customers generally want uninterrupted internet banking. Since its inception Icici
Bank has adopted the latest technology keeping in view of the requirements of
customers in globalize environment. Of late Andhra Bank has switched over to
internet banking to retain its present clients, withstand the competition, and attract the
customers from other banks. However it will be time taking in stabilization of the
technology.

Customers want all his enquiries will be met with accurate information and
understandable ways.Icici bank is very prompt to meet the requirements of the
customers. But their style and functioning is not acceptable to a majority of
customers who want to be treated in native language with personal flavour.The
brochures, pamphlets of Icici bank though colorful are not acceptable to majority of
customers as they are not in native language. In Andhra Bank. Though employees are
less receptive to the customers enquires, their materials are more acceptable as they
are in local languages.

In Andhra Bank Branches no particular employee is designated as customer enquiry

redressal officer. Due to that any enquiry at the counter is casually answered. In icici
bank a specific employee is allotted specifically to answer all the queries and give
guidance. However due to lack of time and large number of customers the delivery of
service is not adequate. It can be bettered by modification. Moreover Icici bank
premises are having corporate look filling a greatness’ within the customers.
However it proves a demerit as majority of customers nurture strange phobia thinking
that it is meant for higher class customers. Andhra Bank is nationalized bank has its
own advantage than Icici Bank. With improvement in its latest e technology it can
compete with Icici Bank..

12
 • It was found that 64% of the customers got Influenced by Icici bank Modern
technology

Only 36% of total customer influenced by Andhra bank.

It was found that services delivery process by Icici bank is 18% is very high,27% is
high,21% is moderate and 4 % is low. While only 9% is very high in Andhra bank
and 12% high,10% is average and 2 % is low.

It was found that Andhra bank and Icici bank offers a wide range of products and services
to its customers.

o Loans to NRIs against Term Deposits

o Remittance facility for transfer of funds to India.
o Western Union Money Transfer Through Andhra Bank
o Remittance facility for NRIs in Gulf for transfer of funds to India
o Speed Remittance facility for NRIs in Gulf
o Facilities to Traveling NRIs
o Currency Exchange
o Baggage rules
o Swift message MT 103 format for remittance of money from abroad
o Remittance to India by way of SWIFT-the fastest way- Details
o HOUSING LOANS TO NRIs
o Click here for AB LOCK BOX facility
o AB Speedway

13
 INDUSTRY PROFILE

Banks in India can be categorized into non-scheduled banks and scheduled banks.
Scheduled banks constitute of commercial banks and co-operative banks. There are about
67,000 branches of Scheduled banks spread across India. During the first phase of
financial reforms, there was a nationalization of 14 major banks in 1969. This crucial step
led to a shift from Class banking to Mass banking. Since then the growth of the banking
industry in India has been a continuous process.

As far as the present scenario is concerned the banking industry is in a transition phase.
The Public Sector Banks (PSBs), which are the foundation of the Indian Banking system
account for more than 78 per cent of total banking industry assets. Unfortunately they are
burdened with excessive Non Performing assets (NPAs), massive manpower and lack of
modern technology.

On the other hand the Private Sector Banks in India are witnessing immense progress.
They are leaders in Internet banking, mobile banking, phone banking, ATMs. On the
other hand the Public Sector Banks are still facing the problem of unhappy employees.
There has been a decrease of 20 percent in the employee strength of the private sector in
the wake of the Voluntary Retirement Schemes (VRS). As far as foreign banks are
concerned they are likely to succeed in India.

Indus land Bank was the first private bank to be set up in India. IDBI, ING Vyasa Bank,
SBI Commercial and International Bank Ltd, Dhanalakshmi Bank Ltd, Karur Vysya Bank
Ltd, Bank of Rajasthan Ltd etc are some Private Sector Banks. Banks from the Public
Sector include Punjab National bank, Vijaya Bank, UCO Bank, Oriental Bank, Allahabad
bank, and Andhra bank etc.

ANZ Grind lays Bank, ABN-AMRO Bank, American Express Bank Ltd, Citibank etc are
some foreign banks operating in India

• Allahabad Bank
• American Express Bank Ltd
• Andhra Bank
• ABN AMRO Bank
• Bank Muscat (S A O G)
• Bank Of America
• Bank Of India
• Barclays Bank PLC
• Centurion Bank Ltd
• Citibank
• Corporation Bank
• Dhanlakshmi Bank Ltd
• Deutsche Bank India

14
 • Export-Import Bank Of India
• Global Trust Bank Ltd
• Hongkong Shanghai Banking Corporation Ltd
• ICICI Bank Ltd
• IDBI Bank Ltd
• IndusInd Bank Ltd
• Syndicate Bank India
• Industrial Development Bank Of India
• ING Vysya Bank Ltd
• JP Morgan Chase Bank
• Punjab National Bank
• Standard Chartered Bank
• State Bank Of India
• State Bank Of Indore
• Canara Bank India
• Reserve Bank Of India
• SBI Commercial and International Bank

Banks safeguard money and valuables and provide loans, credit, and payment services,
such as checking accounts, money orders, and cashier’s checks. Banks also may offer
investment and insurance products, which they were once prohibited from selling. As a
variety of models for cooperation and integration among finance industries have emerged,
some of the traditional distinctions between banks, insurance companies, and securities
firms have diminished. In spite of these changes, banks continue to maintain and perform
their primary role—accepting deposits and lending funds from these deposits.

15
 COMPANY PROFILE

Andhra bank

Andhra Bank is an Indian bank based in Hyderabad. The bank was established in the year
1923, and its founder was Dr. Bhogaraju Pattabhi Sitaramayya, a well known freedom
fighter. The initial authorized capital of the bank was Rs. 10.00 lacs, while the paid up
capital was Rs10.00 lac while the paid up capital was1.00 lac at the time of its registration
Financial Details:
Total Business volume of the bank in the third quarter of the 2008-09 financial year stood
at Rs. 95, 822 Crores, while the Total Deposit volume during the same tenure was Rs.
53,795.Crores.

As of 31st of December, 2008, Andhra Bank had a client base of more than 18.5 Million
customers with 2194 Business Delivery Channels. Till the same date, the bank had 1,410
branches spread across 22 states and 2 Union Territories, out of which 1,067 branches
have been enabled with Centralized Core Banking Solution (CBS). While the total
number of ATMs summed up to 685, the bank had a Per Employee Productivity of Rs
6.92.Crore.

Products And Schemes

Apart from regular banking services and solutions, Andhra Bank has introduced some
attractive services such as AB Premium Current Account and AB Privilege Corporate
Salary Savings Bank Account with extra benefits to the customers. Also, the bank has
launched AB Saral Housing Loan scheme featuring housing loans upto Rs. 20 Lacs.

Andhra Bank has also partnered with various financial institutions like Kotak Mahindra,
Reliance, Birla Sun Life Mutual Fund and Fidelity Mutual Fund, assisting them in sales of
their Mutual Fund products. The bank has also signed a Memorandum of Understanding
(MoU) with Maruti Suzuki Ltd. for financing 4 wheeler vehicles.

Pioneering efforts
Andhra Bank is the first bank in India to have launched mobile biometric ATMs. These
ATMs stop at predestinated sites, and instead of entering the personal identification
number (PIN), the customers have to match their finger prints with their recorded finger
prints in the bank database. This has enabled even the illiterate or uneducated customers
of the bank to enjoy the ATM facility being offered by the bank.

Social Activities
As an initiative to empower the society, the bank has established 10 Rural Training
Institutes, which have provided training to 76,300 candidates for getting successfully self
employed. The institutes offer free training, lodging, boarding facilities coupled with to
and fro travel expenditure to the candidates undergoing the training programmes.

16
Head Office
Andhra.Bank, 5-9-11,
Saifabad,Hyderabad city ,Andhrapradesh500047l.

Deposit Schemes

o FCNR(B)
o Non Resident External(Rupee) Account
o Ordinary Non Resident Rupee Account(ONR)
o RFC Account

Services Provided by Andhra Bank

o Loans to NRIs against Term Deposits

o Remittance facility for transfer of funds to India.
o Western Union Money Transfer Through Andhra Bank
o Remittance facility for NRIs in Gulf for transfer of funds to India
o Speed Remittance facility for NRIs in Gulf
o Facilities to Travelling NRIs
o Currency Exchange
o Baggage rules
o Swift message MT 103 format for remittance of money from abroad
o Remittance to India by way of SWIFT-the fastest way- Details
o HOUSING LOANS TO NRIs
o Click here for AB LOCK BOX facility
o AB Speedway

TECHNOLOGY INITIATIVES:

• All branches of the bank are operating under CBS.

• Internet Banking with customer transaction facility was launched
• Facility of SMS alerts is received well by the market and 4.61 lakh
customers got registered.
• Instant issuing of non personalized debit cards and transaction PIN is
introduced.
• Besides bank’s own ATMs, our debit cards are made acceptable
in 38,000 ATMs.

17
• Debit Card base has increased to 40.78 lakhs.
• A web based inward remittance product ’AB SpeedwayÃ
¢â‚¬â„¢ is launched in association with Citi Bank for speedy, cost
effective and online transfer of funds from USA.
• Bank has launched the E-Trade facility to provide seamless on-line and
easy trading as well as delivery based and intra day trading. It also allows a
unique facility of Lien marketing of funds.

ICICI BANK

18
ICICI Bank started as a wholly owned subsidiary of ICICI Limited, an Indian financial
institution, in 1994. Four years later, when the company offered ICICI Bank's shares to
the public, ICICI's shareholding was reduced to 46%. In the year 2000, ICICI Bank
offered made an equity offering in the form of ADRs on the New York Stock Exchange
(NYSE), thereby becoming the first Indian company and the first bank or financial
institution from non-Japan Asia to be listed on the NYSE. In the next year, it acquired the
Bank of Madura Limited in an all-stock amalgamation. Later in the year and the next
fiscal year, the bank made secondary market sales to institutional investors.

With a change in the corporate structure and the budding competition in the Indian
Banking industry, the management of both ICICI and ICICI Bank were of the opinion that
a merger between the two entities would prove to be an essential step. It was in 2001 that
the Boards of Directors of ICICI and ICICI Bank sanctioned the amalgamation of ICICI
and two of its wholly-owned retail finance subsidiaries, ICICI Personal Financial Services
Limited and ICICI Capital Services Limited, with ICICI Bank. In the following year, the
merger was approved by its shareholders, the High Court of Gujarat at Ahmedabad as
well as the High Court of Judicature at Mumbai and the Reserve Bank of India.

Present scenario

ICICI Bank has its equity shares listed in India on Bombay Stock Exchange and the
National Stock Exchange of India Limited. Overseas, its American Depositary Receipts
(ADRs) are listed on the New York Stock Exchange (NYSE). As of December 31, 2008,
ICICI is India's second-largest bank, boasting an asset value of Rs. 3,744.10 billion and
profit after tax Rs. 30.14 billion, that ended on December

Branches and ATMS: ---ICICI Bank has a wide network both in Indian and abroad. In
India alone, the bank has 1,420 branches and about 4,644 ATMs. Talking about foreign
countries, ICICI Bank has made its presence felt in 18 countries - United States,
Singapore, Bahrain, Hong Kong, Sri Lanka, Qatar and Dubai International Finance Centre
and representative offices in United Arab Emirates, China, South Africa, Bangladesh,
Thailand, Malaysia and Indonesia. The Bank proudly holds its subsidiaries in the United
Kingdom, Russia and Canada

Products & Services of ICICI bank

19
Custodial Services Personal Banking

Deposits

Loans

Cards

Investments

Insurance

Demat Services

Wealth Management

NRI Banking

Money Transfer

Bank Accounts

Investments

Property Solutions

Insurance

Loans

Business Banking

Corporate Net Banking

Cash Management

Trade Services

FXOnline

SME Services

Online Taxes

Literature Review

20
As far as measurement of service quality is concerned, different instruments have been
proposed for measuring service quality in a convenient manner. However, ‘SERVQUAL’
and ‘SERVPERF’, two important service quality measuring instruments are widely used
in the literature as well as industries because of their generalization capability. But, the
dimensions and items of these instruments are being modified time-to-time depending on
purpose and applicability in a particular service setting.

The conceptual framework for understanding the inter-linkages among service quality and
various components of the company-customer perspective has been proposed by
Parasuraman. Jensen and Markland describe how different services have different
emphases in the elements making up quality using the instrument SERVQUAL
That evaluation of service quality requires a robust instrument for measurement after
thorough understanding of customer needs. The evaluation procedure not only facilitates
system design and implementation of quality planning activities but also provides
guidelines to improve upon in certain quality dimensions so that expectations of the
customers can be fulfilled.
‘SERVQUAL’ is the most extensively used service quality measurement instrument
because of easiness to use, possession of simple structure and capability of generalization.
Since quality of service largely depends on the human behavior, the quality dimensions of
a measuring instrument vary with service settings. For example, ‘empathy’ and
‘responsiveness’ are significant in health-care sector whereas ‘reliability’ is important in
transportation
The Indian banking system today has been transformed into a technology intensive and
customer friendly model with a focus on convenience. The increased volume of activity
that banks go through on a daily basis demands the attention of quality control and
improvement procedures. Although automation has helped banks perform their functions
in a quick and timely manner, the risk of errors has also increased. Customers expect an
error free performance. Human factors and behavioral characteristics such as courtesy,
contact and
Communication is quite important as they have a major impact on customer satisfaction.
Timeliness characteristics such as the waiting time and transaction processing time are
also of concern. Perfect accuracy is expected as far as service non-conformity
characteristics (such as errors in transactions) are concerned

The Need for Research:

‘SERVQUAL’ (and its modified versions), a multiple-item survey instrument, that

supports qualitative analysis with quantitative information are still popular among

21
researchers as far as assessment of service quality is concerned and have been
successfully applied to different service sectors
The instrument uses five core criteria (dimensions) consisting of twenty-two pairs of
components evaluated in a seven point Likert-type scale under which customers decide in
evaluating the service quality. SERVQUAL-based gap model (popularly known as
Perception minus Expectation or P-E gap model) has been effectively used for assessing
quality practices for providing guidelines for improvements

Service Quality Approaches Technical and Functional Quality Model

To compete successfully, a firm must have an understanding of consumer perception of

the quality and the way service quality is influenced. Managing perceived service quality
means that the firm has to match the expected service and perceived service to each other
so that consumer satisfaction is achieved. It has been identified that three components of
service quality viz., technical quality, functional quality, and corporate image are
adequate to define service quality. The arrows in the diagram indicate the interaction of
different components of the service quality model.

1. Technical quality is the quality of what consumer actually receives as a result of his/her
interaction with the service firm and is important to him/her and to his/her evaluation of
the quality of service.
2. Functional quality is how he/she gets the technical outcome. This is important to him
and to his/her views of service he/she has received.
3. Image is very important to service firms and this can be expected to build up mainly by
technical and functional quality of service including the other factors (tradition, ideology,
word of mouth, pricing and public relations).

Gap Model

Parasuraman et al. proposed that service quality is a function of the

differences between expectation and performance along the quality dimensions
[45]. They developed a service quality model based on gap analysis (Figure 2.5).
The arrows in the diagram indicate direction of influence of a component of the
model on another component. The various gaps visualized in the model are:
Gap1: Difference between consumers’ expectation and management’s perceptions of
those expectations, i.e. not knowing what consumers expect.
Gap2: Difference between management’s perceptions of consumer’s expectations and
service quality specifications, i.e. improper servicequality standards
Gap3: Difference between service quality specifications and service actually delivered
i.e. the service performance gap.
Gap4: Difference between service delivery and the communications to consumers about
service delivery, i.e. whether promises match delivery?

22
Gap5: Difference between consumer’s expectation and perceived service. This gap
depends on size and direction of the four gaps associated with the delivery of service
quality on the marketer’s side.
The service quality is a function of perception and expectations and can
be modeled as

This exploratory research was refined with their subsequent scale named ‘SERVQUAL’
for measuring customers’ perceptions of service quality . At this point, the original ten
dimensions of service quality collapsed into five dimensions such as reliability,
responsiveness, tangibles, assurance (communication, competence, credibility, courtesy,
and security) and empathy that capture access and understanding/knowing the customers.
Later, ‘SERVQUAL’ was revised in 1991 and 1994 by reducing the total number of items
to twenty-one, but five dimensional structure remains as such.

A Critique on Service Quality Measurement and Evaluation

SERVQUAL is a widely used instrument to measure customer evaluations of service

quality. Despite a leading instrument in measuring service quality,a number of studies
have raised concern about it. These criticisms relates to conceptual, methodological and
analytical issues in SERVQUAL. The primary issue raised in the literature is the
conceptualization of service quality as the difference between perception and expectation.
Cronin and Taylor, reiterate their views against the disconfirmation based SERVQUAL
scale of measuring service quality and continued to be proponents of their perception-only
approach to service quality measurement. Further, the use of the perception and
expectation gap measure of service also raises related analytical concerns about its low
reliability, poor discriminant validity and spurious correlations Parasuraman et al. indicate
that on the issue of discriminant validity, SERVQUAL performs just as well as the
perception-only model SERVPERF on various validity criteria
They also highlighted the fact that the inter-factor correlations in SERVQUAL have
always been recognized as being present In fact, they identify that the nature and causes
of these
interrelationship between factors representing the service quality dimensions are a useful
area for further research. The diagnostic value of different approaches to measure service
quality is also in dispute. Parasuraman et al. show that service quality measurement that
include customer expectations provide more information to managers than those that
focus on perceptions only

Integrating SERVQUAL and Kano’s model into QFD for service excellence
development

Kay C. Tan, Theresia A. Pawitra

23
With increasing market competition, it is not sufficient for organizations to rely solely on
continuous improvement in order to maintain and develop their competitive edge. There is
a need to begin a strategic move towards innovation. This paper proposes an integrated
approach involving SERVQUAL, Kano’s model, and quality function deployment. The
approach aims to help organizations to evaluate customer satisfaction, to guide
improvement efforts in strengthening their weak attributes, and to expedite the
development of innovative services through the identification of attractive attributes and
embedding them into future services. A case study is presented to evaluate the image of
Singapore from the Indonesian tourists’ perspective. Several strong and weak attributes of
Singapore tourism were identified and analyzed. Strategies to improve the weak attributes
were identified.

An empirical assessment of the SERVQUAL scale

Emin Babakus and Gregory W. Boller

The definition and measurement of service quality as a 5-dimensional construct, as in

SERVQUAL, appears to suffer from a number of methodological shortcomings. A review
of the potential problems and the findings from an empirical study are presented in this
article. The findings suggest that the dimensionality of service quality may depend on the
type of services under study. The use of mixed-item wording and the current
operationalization of service quality on the basis of gap scores appear in the process of
using SERVQUAL, the results of this study suggest to exercise caution. Suggestions are
provided with implications for theory development and measurement in the service
marketing area.

SERVICE QUALITY PERCEPTION AND SATISFACTION:

A STUDY OVER SUB-URBAN PUBLIC HOSPITALS IN
BANGLADESH
Md. Shahriar Akter Mohammad Upal Umme Hani

SERVQUAL
SERVQUAL is a multiple item scale used to measure expectations and perceptions of
service quality (Parasuraman, Zeithaml and Berry, 1985; 1988) and is the seminal work in
both the conceptualization and
operationalization of service quality. This 22-item scale was primarily used in service and
retailing organizations. The goal of the research was to quantify the latent construct,
“service quality”, so that firms
could identify areas, which needed improvement. Organizations can then use this
information to make changes that will better meet customers’ needs.

Applications of SERVQUAL

Parasuraman, Zeithaml and Berry’s (1985; 1988) SERVQUAL instrument has received
widespread acknowledgement as a breakthrough in service quality assessment and is
considered an established tool for measuring service quality. As such, SERVQUAL has

24
been adapted to many industries, such as banking, healthcare, finance, etc. However,
many studies have found that the instrument must be somewhat modified before it can be
used by different firms in different industries. Babakus and Boller (1992), for example,
argue
that the 5-dimension factor structure of SERVQUAL is unstable across various sectors of
the economy. In fact, they found that as few as 2 dimensions emerge, while Carman
(1990) concluded that as many as 8 dimensions exist. With these discrepancies across
industries, several researchers have tailored the SERVQUAL instrument to meet their
specific company’s and/or industry’s situation, such as healthcare (Brown and Swartz,
1989; Nelson, et.al., 1992; Reidenbach and Sandifer-Smallwood, 1990; Vandamme and
Leunis, 1993), banking
(Blanchard and Galloway, 1994; Howcroft, 1993) and local government (Scott and Shieff,
1993).

The healthcare industry is a good example. Brown and Swartz, found that gap analysis
(measuring P-E) was an appropriate method for measuring service performance and
verified the usefulness of gap analysis in measuring service quality. It was found that the
SERVQUAL instrument needs to be changed, as it is adapted from one service industry to
another. It is clear that at a minimum, the original SERVQUAL instrument must be
somewhat re-worded to apply to physicians, emergency room care, etc. (Vandamme and
Leunis, 1993). More importantly, with healthcare, the patient experiences multiple
services per visit by nurses, doctors, administrators, etc. (Reidenbach and Sandifer-
Smallwood, 1990). Hence, the patient must differentiate one provider from another

Blanchard and Galloway (1994) and Howcroft (1993) also adapted the SERVQUAL
instrument to fit their specific needs in the banking industry. The reason these researchers
altered SERVQUAL is because
they felt that the banking industry (in the U.K.) was sufficiently different from the
industries examined by Parasuraman, Zeithaml and Berry (1988). U.K. banks faced
growing competition after they were deregulated. These changes caused banks to become
more homogenous in the consumers’ eyes. Hence, U.K. banks sought differentiation via
service quality improvements.

Other variations/extensions/alternatives to SERVQUAL include Beach and Burns’ (1995)

Quality Improvement Strategy (QIS “kiss” model), Bolton and Drew’s (1991) multi-stage
model of customers’ assessments and Haywood-Farmer’s (1988) conceptual model of
service quality. Scott and Shieff (1993) examined service quality components in local
government. Johnston (1995) and Liljander and Strandvik (1993) discuss the concept of a
“zone of tolerance”. This zone represents a range of disconfirmation, within which a
customer will still be willing to remain a customer

RESEARCH DESIGN

25
Research is a process of finding a solution to a problem or a question through the use of
scientific tools and techniques. Marketing research is a methodical and purposeful study
conducted to obtain solutions for specific marketing problems. As marketing research is a
systematic and formalized process, it follows a certain sequence of research actions. The
marketing research process has the following steps.

Formulating the problem

Developing Objectives of the research

Designing an effective research plan

Data collection techniques

Evaluating the data and preparing a research report.

APPLYING THE RESEARCH DESIGN PROCESS TO THE THESIS

26
Identifying the services provided by private banks and government banks

Identify the services gap

Preparation of Synopsis report

a) Formal questionnaire to interview managers of

banks and observation technique

b) Through literature review

Collection of Phase-1: Data and evaluating the data

Presentation of Interim Thesis

Data collection Phase -2

Data Analysis

Formulation of Findings & Making valid recommendation

Preparation & Presentation of Final report

Methodology

27
 The objective of the study can be accomplished by interviewing the bank
personnel and the manager in the banks. The research design, data collection, analysis and
reporting of data and findings & suggestions are relevant for the undergoing research
process. The marketing research process that is adopted in the study will consist of the
following stages

Identifying problem:

The objective of conducting interviews is to know the customer perception

towards these banks and to find out services quality gap. using SERVQUAL model. To
compare the different services of private and public bank.

Developing the research plan:

Once the need recognition is completed, the next step is to prepare a design for
getting the information needed for the research. The present study consists of exploratory
study which is helpful for making further process wherein there is need to gather large
amount of information before making a conclusion.

28
 Data Collection: The data collected for the research work is divided into two
parts

 Secondary data: It is gathered through the web sites of the retail outlets. The
information regarding the company and its operations are known efficiently with
this type of data.

 Primary Data: It is to be gathered through personal interview. Several customers,

sales personnel and managers are required to be interviewed for this purpose.

Sample Technique – Simple random Sampling technique

Simple Random sampling is the purest form of probability sampling. Each

member of the population has an equal chance of being selected. Due to large
population, it is difficult to identify every member of the population, so the group
of available subjects becomes biased. In statistics, a simple random sample is a
subset of individuals chosen from a larger set of population. Each individual is
chosen randomly and entirely by chance, such that each individual has the same
probability of being chosen at any stage during the sampling process, and each
subset of k individuals has the same probability of being chosen for the sample as
any other subset of k .Sample size 100, Analysis of data (Mathematical Tools):
Data will be analyzed by using various mathematical tools like bar charts and pie
charts.

RESULTS & ANALYSIS

29
Table 1. Table showing preferences of the customers for banks.

• Andhra bank
• Icici bank
• Both

PARTICULARS PERCENTAGE NUMBER

Andhra bank 36% 36

Both 46% 46

Icici bank 18% 18

50%

40%

30% andhra bank

both
20%
icici bank
10%

0%
PERCENTAGE

INFERENCE:

From the above table it is inferred that 36% of the customers prefer Andhra
bank alone for their services followed by Icici bank with 46% of the customers’
preference. It is found that 18% of the total customers prefer both Andhra bank and
icici bank for their services.

Table2.% of customer’s preference for both the banks.

PARTICULARS PERCENTAGE NUMBER

30
Icici bank 64% 64

Andhra bank 36% 36

70%

60%

50%

40%
icici bank
30% andhra bank

20%

10%

0%
PERCENTAGE

INFERENCE:

Overall if we segregate and see it is found that 64% of the total customers prefer
Icici bank services and 36 % of the total customers prefer Andhra bank services.

31
Table3.Table showing the response of the customers towards the services offered by
Andhra bank.

PARTICULARS PERCENTAGE

Highly Satisfied 45%

Satisfied 20%

Moderate 15%

Dissatisfied 16%

Highly Dissatisfied 4%

50%

40%
HighlySatsfied
30% Satisfied
Average
20%
Dissatsfied
10% HighlyDissatsfied

0%
PERCENTAGE
INFERENCE:

From the above table it is inferred that 45% of the customers are highly
satisfied with the services offered by Andhra bank services and 20% of the
customers are satisfied and 15% of the customers are moderate. It is found that 16%
of the total customers are dissatisfied and 4% of the customers are highly
dissatisfied with the services offered by Andhra bank.

32
 Table 4 .Table showing the response of the customers towards the services offered by
Icici bank

PARTICULARS PERCENTAGE

Highly Satisfied 62%

Satisfied 24%

Moderate 10%

Dissatisfied 4%

Highly Dissatisfied

70%
60%
50% Highly Satsfied
40% Satisfied

30% Average
Dissatsfied
20%
Highly Dissatsfied
10%
0%
PERCENTAGE

INFERENCE:

From the above table it is inferred that 62% of the customers are Highly
satisfied with the services offered by Icici bank and 24% of the customers are
satisfied and 10% of the customers are moderate. It is found that 4% of the total
customers are dissatisfied with the services offered by Icici bank

33
 Table 5.Total Customer Satisfaction

Icici bank( CUSTOMERS 64) Andhra bank ( CUSTOMERS 36)

Particulars Very Very Very very

Good Low Good low
Good Average Low Good Average Low

1 Information 26 27 9 2 0 10 15 5 3 3
. Providing

2 Answering 21 30 11 2 0 6 11 4 7 8
. queries

3 Quick Problem 23 25 13 3 0 6 7 6 8 9
. Solving

4 Offers Intimation 29 30 5 0 0 5 9 9 7 6
.

5 New Products 14 31 19 0 0 8 7 7 6 8
. Information

6 Product 15 30 15 4 0 11 12 5 5 3
. specifications

7 Payment 27 21 13 3 0 13 14 4 3 2
. Specifications

8 Delivery Process 18 21 21 4 0 9 12 10 2 2
.

9 Employee 18 27 17 2 0 11 12 6 5 2
. response

1 Employee 21 27 12 4 0 7 13 8 6 2
0 knowledge on
. services

34
1 Time 26 23 15 0 0 8 10 7 6 5
1 Maintenance
.

1 Overall 21 27 13 3 0 14 11 5 5 1
2 Customer
. Service

Chart1. Chart showing the satisfaction level of customers satisfaction towards the
information provided by Andhra bank ,icici bank

30

25

20

icici bank
15
andhra bank

10

0
very good good average low very low

INFERENCE:

35
 From the above table it is inferred that 26% of the customers felt that the
information provided by Icici bank is very good and 10% towards Andhra bank, 27% of
the customers felt its good with Icici bank and 15% with Andhra bank, 9% of the
customers felt that its average with Icici bank and 5% with Andhra bank, 2% felt low with
Icici bank and 3% with Andhra bank, 0% of Icici bank customers felt very low and 3% of
Andhra bank customer felt very low .

Chart 2.Chart showing the satisfaction level of customers satisfaction towards answering
queries by Andhra bank and Icici bank

35

30

25

20
icici bank

15 andhra bank

10

0
very good good average low very low

INFERENCE:

From the above table it is inferred that 21% of the customers felt that the
answering for queries in Icici bank is very good and 6% towards Andhra bank, 30% of the
customers felt its good in Icici bank and 11% with Andhra bank, 11% of the customers
felt that its average in Icici bank and 4% with Andhra bank, 2% felt low in Icici bank and
7% with Andhra bank, 0% of the customers felt that its very low Icici bank and 8% with
Andhra bank.

36
Chart 3.Chart showing the satisfaction level of customers satisfaction towards the quick
problem solving by Icici bank and Andhra bank

30

25

20

icici bank
15
andhra bank

10

0
very good good average low very low

INFERENCE:

From the above table it is inferred that 23% of the customers felt that the quick
problem solving in Icici bank is very good and 6% towards Andhra bank , 25% of the
customers felt its good in Icici bank and 7% with Andhra bank , 13% of the customers felt

37
that its average in Icici bank and 6% with Andhra bank, 3% felt low in Icici bank and 8%
in Andhra bank, 7% of the customers felt that its very low in Andhra bank.

Chart 4.Chart showing the satisfaction level of customer’s satisfaction towards the

intimation of offers by Icici bank and Andhra bank .

35

30

25

20
icici bank

15 andhra bank

10

0
very good good average low very low

INFERENCE:

From the above table it is inferred that 29% of the customers felt that the
intimation of offers in Icici bank is very good and 5% towards Andhra bank, 30% of the
customers felt its good in icici bank and 9% with Andhra bank,5% of the customers felt

38
that its average in Icici bank and 9% with Andhra bank, 7% felt low in Andhra bank, 9%
of the customers felt that its very low in Andhra bank.

Chart 5.Chart showing the satisfaction level of customers satisfaction towards the
intimation of new products by Andhra bank and Icici bank.

35

30

25

20
ic ic i bank

15 andhra bank

10

0
very good good average low very low

39
INFERENCE:

From the above table it is inferred that 14% of the customers felt that the
intimation of new products provided by Icici bank is very good. and 8% towards Andhra
bank, 31% of the customers felt its good in Icici bank and 7% with Andhra bank, 19% of
the customers felt that its average in Icici bank and 7% with Andhra bank, 6% felt low in
Andhra bank and 8% is very low in Andhra bank,

Chart 6.Chart showing the satisfaction level of customer’s satisfaction towards the
product specification by Icici bank and Andhra bank.

35

30

25
ve ry g o o d
20 good
a ve ra g e
15 lo w
ve ry lo w
10

0
ic ic i b a n k a n d h ra b a n k

40
 INFERENCE:

From the above table it is inferred that 15%f the customers felt that the product
specification services provided by Icici bank is very good,25%the customers felt its good
and 13% felt that its average 3% felt that its low and 6% in Andhra bank customer felt
that its very good, 7% felt that its good ,6% felt that its average and 8% felt that its low
and 7% of customers felt that its very low.

Chart 7.Chart showing the satisfaction level of customers towards the payment
specification by Icici bank and Andhra bank.

30

25

20

icici bank
15
andhra bank

10

0
very good good average low very low

INFERENCE:

From the above table it is inferred that 27% of the customers felt that the payment
specification in icici bank it is very good and 13% towards Andhra bank, 21% of the
customers felt its good in icici bank and 14% with Andhra bank, 13% of the customers

41
felt that its average in icici bank and 4% with Andhra bank, 2% of the customers felt that
its very low in Andhra bank.3% of customers of both the banks felt that it is low.

Chart 8.Chart showing the satisfaction level of customers satisfaction towards the delivery
of products by Icici bank and Andhra bank.

25

20

15 icici bank
andhra bank
10

0
very good good average low very low

INFERENCE:

From the above table it is inferred that 18% of the customers felt that the delivery
of products in icici bank is very good and 9% towards Andhra bank, 21% of the
customers felt its good in icici bank and 12% with Andhra bank, 21% of the customers

42
felt that its average in Icici bank and 10% with Andhra bank, 4% of the customers felt that
its low in Icici bank and 2% in Andhra bank.

Chart 9.Chart showing the satisfaction level of customers satisfaction towards the
employee response by Icici bank Andhra bank

30

25

20
ic ic i ba n k
15 an dh ra ba n k

10

0
very g oo d g oo d a ve rag e low ve ry low
INFERENCE:

43
 From the above table it is inferred that 18% of the customers felt that the
employee response in icici bank is very high and 11% towards Andhra bank, 27% of the
customers felt its good in icici bank and 12% with Andhra bank, 17% of the customers
felt that its average in Icici bank and 6% with Andhra bank, 2% of the customers felt that
its low in icici bank and 5% with Andhra bank, 2% felt that its very low in Andhra bank.

SUGGESTION

• The management of both Andhra bank and Icici bank should identify the
segment of people who are not satisfied with the utility of their services
offered by them and make them aware of what the benefits they can be gained
by their services.

The management of both Andhra bank and icici bank should follow the customization
level of customer service rather than standard level of customer service in order to
make the customers perceive and exhibit the maximum satisfaction level.

Both the banks should focus mainly on services offered in order to retain and increase the
in-flow of customers

• Toll free phone number should be there to cater the customers round the clock.

• The customers are intending to deliver products to their door steps.

44
 APPENDICIES

QUESTIONNAIRE

Please assign a number from 1 to 7 in the appropriate box.

1 – Strongly disagree 2 – Partially disagree 3 – Somewhat disagree

4 – No opinion

5 – Somewhat agree 6 – Partially agree 7 – Strongly agree

1. The services of the bank are functioning properly ( )

2. The bank’s site is running properly all the times ( )

3. Links are problem free, accurate and the pages download quickly ( )

4. Information that is provided by the employees is accurate _ ( )

5. Information content and texts offered by the employees is easy to understand ( )

6. The bank’s site has unrestricted access to all financial information ( )

7. The bank provides the updated technology regularly for customer ( )

8. The bank is easy to approach and easy contact ( )

9. The web pages don’t freeze after you have put in all you information ( )

10. The bank’s site provide information about the transactions and products ( )

11. The vouchers,pamplets,forms are available in the language you can understand ( )

12. The bank authority care to listen to your queries and meet your personal needs ( )

13. Personalization of bank’s site for customers’ personal requirement ( )

45
14. The bank authority care to listen to your queries and meet your personal needs ( )

15. You can rely on the personal information remaining in the register ( )

16. You can rely on bank for not misusing your information ( )

17. The bank is secured for your credit card information ( )

18. The bank shows care in how it collects your personal information ( )

19. The bank provides financial security and confidentiality ( )

20. The speed of login of your account is fast ( )

21. Easy to find all information from the bank’s customers and from the website ( )

22. The bank’s site is easy to navigate and simple to use ( )

23. It is easy to find policy and notice statement on the bank ( )

24. The speed of logout of your account is fast ( )

25. The bank is willing to help customers, provide appropriate information and

prompt service ( )

26. You are able to talk to a customer service representative in the bank over

Telephone ( )

27. Knowledge and skill of the contact personnel ( )

28. Availability of online customer service representatives ( )

29. The bank takes care of problems properly and compensate for the problems

they create ( )

30. The bank’s site provides a confirmation of the service ordered quickly ( )

31. The bank’s site performs the service right at the first time ( )

32. The bank’s site does not confuse you in what you want to do. ( )

(a) Are you satisfied with the services that you are getting

from your bank? _ ( )

(b) Would you like to add/suggest more quality criteria that will help to satisfy your

46
need when you use banking service?

REFERENCES:

• Parasuraman, A., Zeithaml, V. A. and Berry, L.L. (1988), “SERVQUAL: A

Multiple-item Scale for Measuring Customer Perceptions of Service

Quality”, Journal of Retailing,

• Cui, C.C., Lewis, B.R. and Park, W. (2003), “Service Quality in the
Banking Sector in South Korea”, International Journal of Bank Marketing,

• Joseph, M., McClure, C. and Joseph, B. (1999), “Service Quality in

Banking Sector: The Impact of Technology on Service Delivery”,

International Journal of Bank Marketing,

• Asubonteng, P., Mccleary, K.J. and Swan, J.E. (1996),”SERVQUAL

Revisited: A Critical Review of Service Quality”, Journal of Service

Marketing,

• Baba kus,E and Boller,G.W(1992) An imperical assessment of SERVQUAL scale.

• Brown,s.and Swartz,T.A(1998) “A gap analysis of professional service quality”

journal of marketing.

47
 • Carman,J.M(1990) consumer perceptions of services quality:” an assessment of
the SERVQUAL dimensions”

GLOSSARY

Corporate net banking:provided by banks to its corporate client.

FX online:foreign exchange online for foreign customer to transfer amount from foreign
center to local center.

Custodial services:Bank offer services to its customers for keeping their valuable in its
custody for a nominal charge.

Demat account:A digital account where shares kept in digital form.

Wealth management: bank manages customers wealth as for the necessity of the
customers

NRI Banking: it means non-residential Indian banking. Bank facilitates for NRI
customers

48