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CHAPTER II LITERATURE REVIEW
A. Theory Development
The review will start with the understanding of service quality and customer satisfaction. In the next step this literature review intends to
elaborate a critical evaluation of the influence of service quality and promotion toward customer satisfaction.
1. Consumer Behavior Consumer is defined as someone who acquires goods or services for
direct use or ownership rather than for resale or use in production and manufacturing Ajibola Njogo, 2012. There are some powers that
consumers have. One of the present fundamental presumptions for the consumer behavior is the fact, that people often buy products not because of
their main function but for their main subjectively perceived value. It does not mean that product’s basic functions is not important, but that’s the
today’s roleof products exceeds its service limits Salomon, 2004. Consumerbehavior attitudes enable better understanding and
forecasting, not only of the subject ofpurchases but also of purchasing motives and purchasing frequency Schiffman, Kanuk 2004.In planning
marketing programs, the marketer should identify with the requirements of individuals and groups in it mix - product, price, place and promotions as
against reliance on culture, social prevalence and class-based orientation.
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2. Purchase Decision Process Decision making is painful Pfister, 2003. It requires effortful
processing of available information to reach a suitable judgement. Thus, consumers may rely on inferences to make a choice. Family members play
an important role in the unit of analysis in consumer purchase decision- making is well established Xia et al, 2006. There are many previous
studies that illustrated the purchase decision making from the view point of family e.g. Xia et al, 2006, while the others facused on the subject from
the view point of the couple Frikha, 2010. Sallam 2014 defines purhcase decision making as process by which 1 consumers identify their needs, 2
collect information, 3 evaluate alternatives and 4 make the purchase decision. These actions are determined by psychological and economical
factors, and influences by the environmental factors such as cultural, group and social values Xia et al., 2006.
Picture 2.1 Model of Buying Behavior
Source: Emerald Insight
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3. Customers Satisfaction Satisfaction is a post-activity measuring index that measures the
interior state of thecustomer’s feelings about past purchases and experiences of shopping. Measuring the degree of satisfaction of customers
is rather critical since satisfaction with the distribution service influences th
e customer’s decision whether to continue using thechannel. Oliver 1997cited inSun Lin 2009 described customer satisfaction as the
summary psychologicalstate resulting when the emotion surrounding disconfirmed expectations is coupled
with a customer’s prior feeling about the customer experience. Szymanski and Hise 2000 cited in Sun Lin
2009 contended that consumer perceptions of online convenience, merchandising product offerings and product information, site design and
financial security play important roles in e-satisfaction assessments. Oliver 1997, p. 233 cited in Sun Lin 2009 defined customer
loyalty as “a deeply held commitment to rebuy or patronize a preferred productservice consistently in the future, thereby causing repetitive same-
brand or same brand-set purchasing, despite situational influences and marketing efforts having the potential to cause switching behavior”.
This definition has been used extensively in related research on e- loyalty. Anderson and Srinivasan 2003, p. 417 cited in Sun Lin 2009
identified e- loyalty as “a customer’s favorable attitude toward an electronic
business resulting in repeat buying behavior”. Furthermore, they investigated the impact of satisfaction on loyalty in the context of electronic
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commerce. They concluded that although e-satisfaction has an impact on e- loyalty, this
relationship is moderated by consumers’ individual level factors and firms’ business level factors. Among consumer level factors,
convenience motivation and purchase sizewere found to accentuate the impact of e-satisfaction on e-loyalty, whereas inertia was found to suppress
the impact of e-satisfaction on e-loyalty. With respect to business level factors, both trust and perceived value, as developed by the company, were
found to significantly accentuate the impact of e-satisfaction on e-loyalty. As determined by Kotler 2008:136, customer satisfaction is a
person’s feelings of pleasure or disappointment that result from comparing a product’s perceived performance or outcomes to their expectations.
Satisfaction can be associated with feeling of acceptance, happiness, relief, and delight Hoyer, 2005:98. Customer satisfaction is a pleasurable
fulfillment response while dissatisfaction is an un pleasurable one Buttle, 2004.
Customer satisfaction is defined as a customer’s overall evaluation of the performance of an offering to data. This overall satisfaction has
strong positive effect on customer loyalty intentions across a wide range of product and service categories Gustafson, 2005.
Mittal Kamakura 2001 cited in Mosahabet al., 2010 defines that customer sati
sfaction is a key factor in formation of customer’s desires for future purchase. Furthermore, the satisfied customers will probably talk
to others about their good experiences. This fact,especially in the Middle
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Eastern cultures, where the social life has been shaped in a way that socialcommunication with other people enhances the society, is more
important Jamal Naser, 2002. Although satisfaction has been defined as the difference between
expectation and performance, but there are differences between quality and satisfaction. For example, Parasuraman et al. 1991 say that satisfaction is
a decision made after experience while quality is not the same. On the other hand, in satisfaction literature, expectations for goodsis “would”, while in
service qualit y literature, expectations for goods is “should”.
Cadotte Turgeon 1988 cited in Mosahabet al. 2010 have introduced another group of factors known as neutral factors. Besides,
Liljander Strandvik 1993 say that experience is not needed for evaluating service quality, and service can be evaluated on the basis of the
knowledge about service provider, while satisfaction is an inner view, resulted from
customer’s own experience from the service. The conducted research by Irawan cited in Amri 2009:24,
Marketing and Research consultant from Frontier says there are five primary drivers of customer satisfaction:
a. Product quality. Consumer satisfied after buying and using the product, where
actually the product is fine. This product quality is globally dimensions at least elements from product quality: performance,
durability, feature, reliability, consistency, and design.
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b. Price. For sensitive consumer usually low price is an important source
of satisfaction because they will get satisfaction of high value of money. This price component is not important for those who are
not sensitive toward price. c. Service quality.
Service quality always depends on three things: system, technology, and people.
d. Emotion. The feeling of product, confident, symbol of successes are
example of emotion value that serves as a basic for customer satisfaction.
According to Peter 2007: 181 service quality and customer satisfaction is growing concern to business organizations throughout the
world, and research on these topic generally focuses on two key issues, understanding the expectations and requirements of the customer and
determining how well a company and its major competitors are succeeding in satisfying these expectation and requirements.
4. Marketing Mix According to Lovelock et al 2005:25-26, there are seven elements
of service marketing mix, referred to as 7Ps of service marketing, represent a set of interrelated decision variables facing managers of service
organizations.
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a. Product Elements Managers must select the features of both the core product
either agood or service and the bundle of supplementary service elements surrounding it, with reference to the
benefits desired by customers and how well competing products perform. In short, we need to be attentive to all
aspects of the service performance that have the potential to create value for customers.
b. Place and Time Delivering product elements to customers involves decisions
on the place and time of delivery, as well as the methods and channels employed. Delivery may involve physical or
electronic distribution channels or both, depending on the nature of the service being provided.
c. Promotion and Education No marketing program can succeed without effective
communication. This component plays three vital roles: providing needed information and advice, persuading target
customers of the merits of a specific product, and encouraging them to take action at specific times. In service
marketing, there is so much communication id educational in nature, especially for new customers. Companies may need
to teach these customers about the benefits of the service,
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where and when to obtain it, and provide instructions on how to participate in service processes.
d. Price and Other Cost of Service This component addresses management of the costs incurred
by customers in obtaining benefits from the service products. Service managers not only set the selling price, trade
margins, and establish credit terms; they also seek to minimize, where possible, other costs that customers may
bear in purchasing and using a service, like related costs e.g., travel expenses, time, and mental and physical effort.
e. Physical Environment The appearance of buildings, landscaping, vehicles, interior
furnishing, equipment, staff members, signs, printed materials, and other visible cues all provide tangible
evidence of a firm’s service quality. f. Process
Creating and delivering product elements to customers require the design and implementation of effective
processes. A process is the method and sequence of actions in the service performance. Badly designed processes like
slow, bureaucratic, and ineffective service delivery, commonly annoy customers.
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g. People Many services depend on direct interaction between
customers and afirm’s employees like getting a haircut or talking to a call centerstaff. The nature of these interactions
strongly influences thecustomer’s perceptions of service quality.
5. Service Quality According to Kotler 2008:225, a service is any activity of benefit
that one party can offer to another that is essentially intangible and does not result in the ownership of anything. Its production may or may not be tied
to a physical product. A service is a time-perishable experience performed for a customer acting in the role of co-producer Fitzsimmons, 2007:4.
The fact that the perceived quality of a product is becoming the most important competition factor in business world has been the reason of
naming the present business era as “Quality Era” Peeler 1996 cited in
Mosahabet al. 2010. Avkiran 1994 has introduced a model consisting of four dimensions personnel’s contact, reliability, communication, access
to services, and seventeen components. Othman Own 2001 have offered a model called CARTER, consisting of Complaint, Assurance,
Reliability, Tangibles, Empathy and Responsiveness which includes 34 components.
Rahman Miazee 2010 stated that the relationship betweenservice quality variables and customer satisfaction of online
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shoppers can be shown infigure 2.1. The five e-service quality dimensions have been selected from the E-SERVQUAL model. E-SERVQUAL
measures website E-SQ Service Quality asperceived by customers. It is a method for measuring website E-SQ that is based on thesame principle as
the original SERVQUAL method and includes some dimensions similar to those of SERVQUAL. The E-SERVQUAL scale contains a core and
recovery scale, represented by four and three dimensions respectively Zeithaml, Parasuraman, and Malhotra; 2000, 2002 cited in Rahman
Miazee 2010 . Core scale is used to measure the customer’s perceptions
of service quality delivered by online retailers. Recovery scale refers to specific situations, when a customer has a question or runs into a problem,
in which the three dimensions of the recovery scale become silent. In simpler terms, it can be said that core scale refers to the quality of the
website itself, while the recovery scale is more concerned with the actual performance of the company, rather than with website performance.
Rahman Miazee believe that E-SERVQUAL is helpful for thier study because this scale has been widely used by academic and
practitioners to measure online service quality. Therefore, this model has been used as a point of reference in their study thesis.
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Figure 2.1 Relationship between E-Service Quality and Customer
Satisfaction based on E-SERVQUAL
Source: E-Service Quality and Customer Satisfaction, 2010
a. Efficiency Efficiency defines as customer’s ability to effectively access the
website, find their desired product and related information and check it out with minimal effort Zeithamlet al. 2002 cited in Rahman Miazee
2010. Efficiency refers to the speed of downloading, searching and navigation Jessica2003 cited in Rahman Miazee 2010. There was
complete agreement among respondents about the need forefficient service that is, fast downloading, fast loading of page and images and speedy
search mechanisms. Although service providers often blame the specifications of the
hardware in the consumer’s possession for inefficiency, providers can increase efficiency, even if consumers have low-
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speed PCs, by reducing the number of complicated graphics any given page contains few graphics and these are appropriateto page content,
graphics are not essential to site use. If graphics are turned off or atext-only client is used, the site remain fully functional and by using interlacing.
b. Fulfillment Fulfillment refers to a company’s actual performance in contrast
with what is promised through the website, and incorporates accuracy of service promises, such as having products in stock and timely delivery
Cristian, Iulian 2007 cited in Rahman Miazee 2010. Online marketers canuse trust to lessen the effects of perceived performance risk
and subsequent financialrisk through lack of fulfillment. Customers need to be able to trust that their order will be fulfilled: that is, delivered in the case
of physical goods or available to experience in the case of services. As Siyal and Barkat 2002 cited in Rahman Miazee 2010 put it, the risk is
to pay for something and get unexpected goods or nothing delivered. Financial risk is avoided
if the productis satisfactory and a customer’s financial details are not abused. Ha 2004 cited in Rahman Miazee
2010 suggests that marketers should give better information in their websites, rather than more. The result should be that customers are better
informed about when they can expect their order tobe processed and are given any other relevant information about the fulfillment of the
transaction, which helps to develop trust in fulfillment. Efficiency in fulfillment of the order reduces the amount of time spent by the customer in
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chasing delivery or querying the progress of the order. Likewise, if the right product is provided, it saves the customer time in searching for an
alternative elsewhere. c. Reliability
Reliability is a technical function of the website such as the extent to which it is available and functioning properly Cristian Iulian 2007
cited in Rahman Miazee 2010. Scholar Jessica 2003 cited in
Rahman Miazee 2010 said “reliability refers to the ability to perform
the promised service accuracy and consistently, including frequency of updating the website, prompt reply to customer enquiries and accuracy of
online purchasing and billing”. This findings is consistentwith the view of Parasuraman et al 1998 cited in Rahman Miazee 2010, he stated that
reliability is the mostimportant dimension in all services. Focus group participants repeatedly emphasized frustration that many websites do not
update frequently. In contrast, websites providing up-to-date information received high appraisals. Moreover, Reliability involves consistency of
performance and dependability. It means that the firm performs the service right the first time. It also means the firm honors its promises. Especially it
involves: accuracy in billing, keeping records correctly, performing the service at the designated time Berry et al. 1985 cited in Rahman
Miazee 2010. d. Privacy
The privacy dimension includes assurance that shopping behavior
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data are not shared and that credit card information is secured Zeithaml 2002 cited in Rahman Miazee 2010. The construct of privacy refers
to companies not sharing information with third parties unless the customer gives permission. It also includes the security of sensitive information
between the customer and the company Hoffman, Novak Peralta 1999; Wolfinbarger Gilly 2002 cited in Rahman Miazee 2010.
Inaddition, this includes providing visual symbols, so customers know a secure connection is being achieved. Lessig 1999 cited in Rahman
Miazee 2010 mentioned that as the number of consumer’s purchases
through the internet increases, electronic vendors canincreasingly obtain online buyer’s private information such as demographic profiles or
consumer shopping behavior which can be passed on to third parties. However, Shapiro 2000 cited in Rahman Miazee 2010 argued that
many successful online service providers have customized their services and redesigned the offered products to match
individual customers’ needs identified through the customer’s personal information. Shapiro also found
that privacy problems can be solved from the interaction of law, code of conduct and markets which can strengthen the existing regulations about
compliance of online service providers to their own privacy policy as specified on their websites, letting consumers have control over their
personal information for their own benefits such as money, goods or services.
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e. Responsiveness Responsiveness measures the ability of a company to provide
appropriate information to customers when a problem occurs, have mechanism for handling returns and providing online guarantees Zeithaml
2002 cited in Rahman Miazee 2010. The ability to prompt provides service;examples of responsiveness include calling the customer back
quickly, serving lunch fast to someone who is in a hurry or mailing a transaction slip immediately Lamb, Hair, McDaniel, 2009 cited in
Rahman Miazee 2010. Accordingly
, Watson et al. 1998
cited in Rahman Miazee 2010
referred to responsiveness as
willingness to help customers and it can be measured by the time taken before replying to
customer’s inquiries. As suggested by Dubbs 2001cited in Rahman Miazee 2010, responsiveness is enhanced when the site provides flexible
return and exchange policies that will encourage customers to make online purchases since it reduces the perceived risk associated withthe purchase.
Liao Cheung 2002 cited in Rahman Miazee 2010, customers expect online stores to respond to their inquiries promptly. In sum, previous
researchers found that responsiveness of web-based services have highlighted the importance of perceived service quality and customer
satisfaction Yang Jun 2002; Zhu et al.2002 cited in Rahman Miazee 2010.
6. Promotion According to Levy and Weitz 2012:399 cited in Azhari 2015
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through promotion, companies communicate with customers tomake them aware of the existence of companies products and services to that they
interest to visit and make purchase. According to Cheney et al. 2015 that most owners used some form
of social media or electronic communication, but owners varied widely in how often they utilized social media orhow well it was integrated into other
marketing strategies. Facebook was the primary method owners used to communicate with customers. It was an easy way for them to quickly post
specials, feature new e- liquid “juice” flavors, and post pictures of newly
arrived products: We typically do weekly specials and then w e’llthrow in
those specials with them just a way for if people, if they keep up with our Facebook, theyare rewarded for it basically.
Picture 2.2 Types of Advertising
Source: Oklahoma, 2014
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According to Sullivan Adcock stated in Japarianto and Djati,2011:5, retail promotion is the activity of the company in order to
attract visitors and obtain information on how many the consumers. The retail promotion mix elements are as follows:
a. Sales Promotion Sales Promotion, are special incentives or excitement-building
program that encourage consumers to purchase a particular product or service Levy and Weitz 2012 cited in Azhari
2015. b. Advertising
Advertising is part of the promotional mix, simply advertising is defined as a message that offers a product aimed at the public
through a medium. Kasali2007:9 cited in Azhari 2015.
B. Previous Research
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